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Vietnam needs to change approach to digital transformation

Mr. Hoang Quang Phong, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), said the Covid-19 pandemic has forced all travel firms to choose digital transformation or death.

Ms. Do Thi Hong Xoan, President of the Vietnam Hotel Association, said that digital transformation was only taking place strongly at 4–5-star hotels.

Mr. Bui Van Manh, Director of the Department of Tourism of Ninh Binh Province, revealed that the province has nearly 800 accommodation establishments, most of which have older owners who are weak at IT skills. Most of the local hotels seek guests through foreign online travel agents (OTAs). They have to pay high charges, up to 20%, to these services.

To improve competitiveness in both domestic and international markets, Vietnamese travel firms have realized that it is time to approach new technology to promote their business. However, digitalization is more difficult for small and medium-sized tourism businesses.

Ms. Nhu Thi Ngan, General Director of the Hanoi Tourism Corporation, pointed out that, in travel firms, there are many different specialized divisions, so it is difficult for digital applications to be used throughout the processes.

Travel firms can choose to perform digital transformation partly but, in that case, the tools for use and management will be broken, and then they are forced to handle them by manual measures. This is not to mention financial difficulties and personnel training problems.

Mr. Nguyen Quyet Tam from the Digital Government Development Committee of the Vietnam Software Association, founder of TravelMaster and iTourism, said that tourism is a general economic industry, so it needs a general data standard for connection between the segments of accommodation, travel, food services, etc.

In addition, data systems are different for provinces and agencies.

Realizing the difficulties of small and medium-sized tourism enterprises in implementing digital transformation, Mr. Nguyen Quyet Tam said that his company targets this kind of customer. In addition to providing digital transformation for travel businesses, the company also offers a training program to improve tourism human resources.

Mr. Phong emphasized that provincial Departments of Tourism and local tourism associations must connect with each other, because data is at the heart of digital transformation.

Vietnamese businesses must be protected

Ngo Minh Duc, founder of Gotadi platform, Chairman of HG Holdings, said that his company has to pay a very high price when investing in OTA because foreign OTAs are 20 years ahead, and have a lot of money and are powerful. Vietnamese OTAs can be "killed" easily without being protected or supported by the government.

Duc added that foreign OTAs are not registered to operate in Vietnam but they sell products in Vietnam almost without tax. The fees that local hotels have to pay agents like Booking and Agoda, are 20-30% or even up to 48%.

After a business trip to India, Duc understood why the Indian technology firms can grow well. It is because the Indian government provides tremendous protection for their businesses. For example, when doing business, Amazon had to set up its company there. Cross-border platforms are also hard to sustain because India doesn't allow cross-border payments. Indian credit cards can only pay on domestic platforms.

Duc said that, if Vietnamese enterprises want to compete with foreign rivals, they must make their own product eco-system and apply smart policies to dominate the market. They also need the Government’s assistance and the support of Vietnamese media and consumers.

Ngoc Ha

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