The rapid spread of the novel coronavirus (COVID-19) has severely affected many industries, but tourism is arguably one of the hardest hit.
Foreign tourists at the HCM City Book Street.
It started with a sharp drop in tourist arrivals from China and then other countries followed by a decrease in local demand, which impacted hotels and restaurants and meeting and event hosting venues.
Việt Nam, like everywhere else in the world, has seen tourist numbers plummet in the first quarter.
The latest report from the Việt Nam National Administration of Tourism showed that the number of foreign visitors in March was down 63.8 per cent from the previous month and 68 per cent year-on-year to 450,000.
A further decline is expected in the coming months.
Saigontourist Travel Service Company, a leading travel firm, reported a year-on-year drop of 80 per cent in customer numbers in February and 90 per cent in March, resulting in a VNĐ500 billion (US$21.1 million) fall in monthly revenues.
Vietravel saw a year-on-year reduction of 80 per cent in customer numbers last month and 90 per cent this month.
Exotissimo Travel Agency reported that its customer numbers fell by 50 per cent last month and 70-80 per cent this month.
The Việt Nam National Administration of Tourism every day oversees the shutdown of 10 inbound and outbound tour operators due to the coronavirus crisis, Ngô Hoài Chung, its deputy head, said.
The mass cancellations of tours and hotel room bookings resulted in revenue losses, Chung said.
Mauro Gasparotti, director of Savills Hotels Asia Pacific, said: “This is the first time international arrival numbers are expected to drop after 10 consecutive years of growth. Following the evolution of the outbreak as well as corresponding controls and prevention measures, such as air traffic restrictions and country lockdowns, the decline is anticipated to be even greater than expected.”
The initial drop in arrivals in Southeast Asian countries was primarily due to the high reliance on Chinese travellers, who were the first category to be impacted by the situation, he said.
Việt Nam faces a similar situation since China and Korea represent the most significant source markets, accounting for 56 per cent of its international arrivals last year.
In the past two weeks the outbreak has worsened in Europe and the Americas, which accounted for 17 per cent of Việt Nam’s tourist arrivals last year.
The Government promptly restricted entry for foreign visitors as a precautionary measure against the spread of the virus.
“This would be a great help in minimising the exposure to potential sources of infection even if the entire tourism sector is impacted dramatically,” Gasparotti said.
Vinpearl, a leading hotel operator in the country, temporarily shut down seven of its resorts and golf courses last month.
According to STR, a global provider of data on hotel performances, all destinations across the Asia Pacific reported significant drops in hotel occupancy rates in February compared to a year earlier and Việt Nam experienced one of the largest drops in the world.
Gasparotti said, “If we look at recent data, Việt Nam experienced an occupancy drop of approximately 26 per cent in February compared to the same period last year.”
Central cities such as HCM City and Hà Nội, despite the slowdown, were able to manage acceptable occupancy rates of 48 per cent and 60 per cent, he said.
But due to the new ban on international travellers and rising concerns domestically, rates plunged dramatically in the first three weeks of March to single digits in many destinations in the country, he said.
Among coastal destinations, Đà Nẵng and Hội An are the most affected due to their strong reliance on foreign guests and a significant number of new hotel openings last year.
Many properties have occupancy of below 10 per cent and are considering closing temporarily.
In March central cities suffered from a rash of cancellations, resulting in single-digit occupancy for HCM City and slightly higher levels for Hà Nội due to corporate contracts with companies such as Samsung.
By late March 145 hotels and resorts in Việt Nam had registered to act as Covid-19 quarantines areas, not only helping earn some income during this low period but also assisting local authorities.
The outlook for the next couple of months is not positive with a vast number of cancellations already received, Gasparotti said.
Outbreak control efforts
Chung said for now the nation’s priority is the fight against the coronavirus, which demands a concerted effort from all sections of the economy.
The tourism sector has come up with marketing and promotion initiatives and stimulus programmes to revive tourism after the virus is controlled, he said.
Dr Nuno F. Ribeiro, senior lecturer and tourism and hospitality research cluster lead at RMIT Vietnam’s School of Business and Management, said: “Right now we are in a race against time, and the safest country will win. Doing so will allow Việt Nam to cement a position of superiority over other destinations such as Thailand, Singapore, Hong Kong, Australia, and others in the Asia Pacific region.
“Travel and tourism has become a necessity, not a luxury. And people will travel to not only the most beautiful and interesting countries in the world, but primarily to the safest.
“Việt Nam is doing a fantastic job in proving that it is one of the safest destinations in the world.”
Gasparotti said Việt Nam has been successful so far in controlling the outbreak thanks to prompt action by the Government.
“Local demand largely depends on the ability of the Vietnamese Government to contain the spread of the virus and ensure safety across the country. If the outbreak is well contained, local travel will be the first category to recover.
“Hospitality is always highly vulnerable to negative events, as seen in global events such as the September 11 attacks, global financial crisis, SARS, and specific country events such as the Japan earthquake – tsunami. Typically, recovery is sharp and often takes place within a six-month period.”
Since COVID-19 will have a pronounced economic impact, local travel is expected to recover within a short period while international travel is expected to make a slower but steady recovery, he said.
In terms of international arrivals, the first category expected to return are business travellers, especially to main gateway cities, followed by FIT (Free Independent Traveler) and MICE (Meetings, Incentives, Conferences and Exhibitions) and finally international groups, he said.
A total rebound should not take longer than six months following the announcement that the pandemic is contained, he added.
Coronavirus relief package
On March 4 the Prime Minister signed Directive No.11/CT-TTg on urgent action to support businesses and ensure social security.
It directs the State Bank of Việt Nam to launch a credit support package worth VNĐ250 trillion (US$10.5 billion) for businesses and the Ministry of Finance to offer a support package of VNĐ30 trillion (US$1.2 billion) for the same purposes.
Ribeiro said: “Tourism businesses are hurting desperately right now – no tourists, no tourism. This rapid decline has an enormous impact on tourism businesses, and it affects the livelihood of hundreds of thousands of Vietnamese people.”
Most tourism and hospitality businesses have high overheads, and most functions have to be done by humans, he explained.
Thus, extending credit to tourism businesses would give them a lifeline to stay afloat and meet their financial obligations, especially payroll, he said.
Another likely positive impact of the assistance, in addition to decreasing unemployment in the tourism sector, would be to allow tourism businesses to be ready for the inevitable rebound, he said.
While this truly is an unprecedented event, the history of tourism since 1945 shows us that, while tourism is vulnerable to cyclical crises, it has also rebounded faster and stronger than any other economic sector, he added.
Kenneth M Atkinson, founder and senior adviser, Grant Thornton Vietnam, and deputy chairman of the Tourism Advisory Board, said, “Of course whatever measures that are taken will not alleviate the immediate challenges faced by various sectors, for example tourism and hospitality, as no measures are going to bring back the tourists until regionally or globally Covid-19 is seen to be under control and the fear factor has died down.
“The main things that businesses need generally and the economy is keeping people in jobs and generating incomes.”
The next step is to prepare marketing and promotion plans to be implemented as soon as Covid-19 is seen as under control and the number of new cases starts to fall globally, he said. This would be important especially for sectors like tourism and transportation and so plans need to be ready to be implemented at the press of a button, he added. — VNS
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