Tourism Rocked by Covid-19

Novel coronavirus (Covid-19) is causing enormous damage to the tourism industry. This is the time for this industry to restructure its customer segments, take measures to recover and accelerate short-term growth and formulate long-term development strategies.

Statistics show that Covid-19 infections, originated from China, reached more than 75,000 confirmed cases as of February 21. Vietnam had 16 infections, with 14 recovered cases.

According to economic experts, tourism is hit hardest by this epidemic.

High impact

According to data released by the General Statistics Office (GSO), Chinese tourists accounted for up to 32% of 18 million international visitors to Vietnam in 2019. The sharp drop of Chinese tourists will result in a strong slump of tourism revenue.

A lot of tour bookings and hotel room reservations were cancelled, especially in Chinese-favored destinations like Da Lat, Da Nang and Nha Trang. Current room occupancy is only 30-40%. This rate in small hotels is even only 10-15%.

The Covid-19 epidemic has had substantial impact on tourism of Da Nang City. According to a report by the Da Nang Tourism Association, tourists from Japan, South Korea and Southeast Asia fell by 20-30% and hotel room occupancy decreased by 30-40%, even by only 10-20% from a year earlier. Tourist destinations also witnessed a sharp drop of 30-40%. Tourist transport capacity shrank to 40-50%. Tourism companies faced enormous difficulties because most of them used bank loans. Under these circumstances, tourism and service companies had to take temporary measures like downsizing the staff, reducing working hours, and minimize marketing, advertising, electricity and water costs.

In the first two months of 2020, Covid-19 also pushed Nghe An tourism into a serious crisis as revenue declined on falling tourist arrivals. According to statistics, in the first week of February, Nghe An province saw nearly 100 delegations with nearly 7,000 visitors cancel their arrivals. In February, the province was expected to welcome only 128,000 tourists, and fetched accommodation revenue of VND36.8 billion, down 60% year on year. Tourist arrivals to local destinations were forecast to fall by 60% and travel revenue was estimated to slump 70% as compared to the plan.

Mr. Pham Ha, founder of Lux Group, said that, as a domino effect, international tourists were also afraid to come to Vietnam and Asian countries at this time.

Lux Group's traditional customer segment is high-class customers from Europe and the United States. Given the Covid-19 outbreak and domino effects from China, a lot of tourists cancelled tours to Asian countries, including Vietnam. Lux Group's February sales dropped by about 70% from a year-ago period. Many tours in March and April were canceled or delayed.

“The epidemic impact is considerable to Vietnam’s tourism. If the contagion cannot be controlled well and there is no urgent solution in the first quarter, we cannot make light of a worse scenario which will hurt businesses in the second quarter of 2020,” he said.

Struggling to overcome challenges

Fearing a worsening plague that threatens human safety and wrecks the tourism industry, central and local tourism authorities and businesses urgently gathered to discuss solutions and quickly deal with damage.

Ms. Nguyen Thi Anh Hoa, Deputy Director of the HCM City Tourism Department, said that the department timely released information about the disease to residents and visitors; issued documents on good disease prevention and fighting; listened and recorded information about disease response measures by tourism businesses. In particular, the tourism industry sent a message about a safe and friendly destination to domestic and international tourists by keeping information up-to-date, supporting and offering free medical masks for people and visitors at many attractions such as Notre Dame Cathedral, Post Office, City Theater, Reunification Hall and War Remnants Museum.

Mr. Nguyen Manh Cuong, Director of the Nghe An Tourism Department, Nghe An province established three inspection teams and recommended disease prevention measures at 15 accommodation, travel, and tourism facilities. At the same time, in order to help Nghe An tourism to escape this crisis and revive growth, the Nghe An Tourism Department further promoted information and affirmed Nghe An as a very safe destination where there has been no Covid-19 infection so far. The department also hosted training courses to improve human resources for tourism units in the time of epidemic and coordinated well with the health sector to meet disease prevention and control requirements.

In order to stimulate tourism right after the nCoV or Covid-19 epidemic ends, tourism companies also planned human resource training, marketing and product development to attract tourists.

Mr. Pham Tien Dung, Director of Goldentour Company, said, “We see that this is a tough period for the tourism industry in general and for businesses in particular. This is a good time for us to restructure our operations, boost core competencies, strengthen employee training, tighten business partnerships, and research new in-depth products, especially markets that are likely to recover from this incident quickly.”

Mr. Nguyen Van Quang, Director of Viet Orient Hotel Consulting & Management Company (VOH), added that this is a “break” time for VOH to review its health to align its business operations and structure to promote its strengths.

“On one hand, we have to optimize our business operations, enhance training, improve customer service, cut down office expenses, and reduce unnecessary workers. On the other hand, it is necessary to systematize business and marketing, and enhance business capabilities to catch up with market development trends as soon as the epidemic is over,” he emphasized.

In addition, most travel businesses believe that it is necessary to have supportive measures to cope with the plague like training sale and marketing employees, propose tax exemption and reduction for tourism companies to the government, and seek quicker soft bank loans.

According to the Vietnam National Administration of Tourism (VNAT), from now until the end of February 2020, VNAT will send four working groups to some key tourism attractions to work and capture Covid-19 epidemic impacts with local tourism businesses. Then, they will propose solutions, ask the government for support to tackle hardships faced by localities and enterprises, and suggest healing solutions to spur tourism development as soon as the disease comes to an end.