Listed as a UNESCO World Heritage Site and since 1995, Luang Prabang attracts tourists from international and regional markets through a combination of preserved cultural experiences and natural beauty within the province.

Luang Prabang is located in north central Laos on a peninsula bounded by the Mekong River to the north and the Khan River to the east. The following article gives a brief overview of Luang Prabang, its tourism industry and recent dynamics of the local lodging market.

Laos Overview

Map of Laos

Source: Google Maps

The Lao People's Democratic Republic is a landlocked nation in the central region of the Indochina peninsula. The country borders Thailand to the west and Vietnam to the east, Cambodia to the southwest and Burma and China to the northwest. As one of Asia’s least developed countries, the population of 7.1 million people is distributed unevenly throughout the rugged mountainous terrain. The capital city Vientiane is located on the Mekong River at the border between Laos and Thailand.

Historical and Forecast Economical Indicators - Laos

Source: Economist Intelligence Unit, December 2019

Real GDP growth for Laos has been in the region of approximately 6.5-7.6% between 2014 and 2018. GDP growth for the country is expected to grow gradually as it slowly opens up to the international and regional market with more air and road access. In 2017, total contributions by the travel and tourism sector to Laos’ GDP accounted for 13.7%, and is expected to increase further with improved infrastructure and various travel campaigns.

Even though economy of Laos is showing signs of development, it is still considered as one of the least-developed countries in Asia, with current account deficit. The government relies heavily on foreign aid from international donors, notably from China to finance key infrastructure and development projects. Export should continue to gradually increase with mainly agricultural products and natural resources.

Amidst the outbreak of COVID-19, the economy of Laos is projected to contract as an effect of a global economic downturn. To control the outbreak of COVID-19 in Laos, the government enforced two months of national lockdown starting in late March that has heavily affected the tourism industry as well as retail shops and restaurants.

According to the World Bank, the impact of the COVID-19 pandemic will likely to increase the fiscal deficit and unemployment rate. To reflect the expected fall in private consumption, tourist arrivals and foreign direct investment, Economist Intelligence Unit has downgraded Laos’ real GDP growth forecast for 2020 to 2.8%, from 6.5% previously. They projected that growth will rebound in 2021, to 4.6%. The economic outlook will be dependent on the duration of the global outbreak of COVID-19 and effectiveness of economic relief measures from the government for the time being.

Historical Visitor Arrivals - Laos, 2013-2019

Source: Ministry of Information, Culture and Tourism, Tourism Development Department of Laos

In 2018, Laos’ visitor arrival figures performed well, gaining momentum from a rigorous tourism campaign titled 'Visit Laos Year 2018', breaking into a total of seven million tourist arrivals from domestic and international travelers. At the time of writing, domestic tourism figures for 2019 were not published.

The launch of the campaign boosted travel activities from foreign travelers, which are dominated by tourists from Thailand, Vietnam and China. Laos welcomed 4.58 million international visitors in 2019, representing growth of nine percent over 2018.

Grace to the success of the Visit Laos-China Year, Chinese travelers grew the fastest with a 27% increase in visitor arrivals from 2018, reaching just over one million arrivals. Other markets progressed as well with American visitor arrivals increasing by 22% while Vietnamese visitors increased by 11%.

Read the full report here