Tourism during Covid Time: Great Potential from Domestic Tourists

The unpredictable Covid-19 epidemic exerted an adverse impact on the Vietnamese economy, with tourism hardest hit by the contagion. In the face of closing flight routes, domestic tourism has been defined as a "lifesaver" for the tourism industry to live through this difficult period for development.

Focus on the domestic market

In Vietnam, domestic tourism accounts for 40-45% of revenue. The total domestic tourism revenue was VND254 trillion in in 2018 (accounting for 39.9%) and VND334 trillion in 2019 (accounting for 44.2%). Domestic tourist arrivals reached 56 million, down 34.1%.

According to Mr. Nguyen Van Hung, Deputy Minister of Culture, Sports and Tourism, Vietnam stopped receiving international visitors from March 2020, leaving only domestic tourism active. International tourist arrivals to Vietnam were only 3.8 million in 2020, down 78.7% year on year. Of the sum, more than 96% of international visitors arrived in Vietnam in the first quarter of 2020. Since the second quarter, Vietnam has not resumed international tourism. So, tourists will be mainly foreign experts and technical workers working for projects in Vietnam.

In that context, Deputy Prime Minister Vu Duc Dam emphasized that it is necessary to focus on the potential domestic market with 100 million people. The middle-class people have grown rapidly. Many Vietnamese travelled abroad while they have not visited all destinations in Vietnam. This is a big question for all levels, sectors and businesses to attract more domestic customers, enabling Vietnamese people to experience high-end services previously designed for foreign visitors.

Dam said, it is important to keep the current safety rather than rush to open international routes to welcome foreign visitors. Travel firms should focus on developing domestic tourism because developing available services for domestic tourists is much better than opening up the door with unpredictable risks.

According to Vietnam Airlines, the tourism industry will be unlikely to recover in the short term. It will take 2-3 years or even longer to recover. Before Covid-19 outbreak, each year, Vietnam had about 9-10 million citizens traveling abroad. This is one of potential sources of tourists for domestic tourism.

By effectively controlling the epidemic, Vietnam's domestic tourism market began to revive as soon as social distancing measures were relaxed. This was most evident through recent holidays. Many destinations welcomed thousands of visitors to explore and experience, showing that the Vietnamese tourism demand is extremely huge and will continue to increase if the tourism industry has appropriate stimulus solutions.

What solution to attract domestic tourists?

It is certain that, with numerous untapped potential, domestic tourism is the fulcrum for Vietnam's tourism to recover and maintain stability. However, after the social distancing period and serious influences from the Covid-19 epidemic, Vietnamese and global tourism trends have changed a lot.

Mr. Nguyen Quoc Ky, General Director of Vietravel, said that the domestic tourism market is gradually recovering with changing trends, requiring travel businesses to move up to adapt. Tourists mainly choose near destinations, usually within 300 km. Small group or individual travelling is most popular.

Because tourism trends have changed, it is very important to understand tourists’ needs and preferences. To do so, tourism authorities and travel businesses should have specific solutions to survey to give the most objective and correct assessment on domestic tourism. Building right products, targeting right customers and giving them best experiences are urgent measures and a foundation for the tourism industry to develop steadily in the later stages, even after accessing the international tourism market.

Ms. Tran Thi Nguyen, Business Director of Sun World, said, the tourism industry needs to invest in new products, upgrade services for specific market segments; research and deploy isolated tours, and develop travel bubble program.

Besides, digital transformation is considered a vital requirement. At the conference on tourist market restructuring, Ngo Minh Duc, President of HG Holding, said, digital transformation is a must for the time being. To do well, we must have good products, platforms, sharing and linkage of ecosystems developed by the Vietnamese people. Authorities must have protection policies to ensure fairness. We also need to focus on communications.

Digital transformation not only helps authorities to better manage tourism but also brings many benefits to businesses. Applying information technology to tourism helps businesses manage customer data, operate quickly and economically. Most importantly, digital transformation makes it easier for them to reach customers, provide best customer conveniences and experiences.

Furthermore, the linkage of localities, travel firms, airlines and service providers should be strengthened to reduce product costs, ease tour booking for domestic tourists, especially small groups. Incentives and promotions will also help stimulate tourism demand. Programs such as “Vietnamese travel Vietnam” and "I love Vietnam" should be launched to boost domestic tourism.

Indeed, with great potential for domestic tourism development, tourism firms should turn risks into opportunities and take advantage of this chance to fully tap domestic tourists. They need to actively create attractive products, suitable to Vietnamese tastes, speed up digital transformation, and broadly promote tourism to attract Vietnamese to travel Vietnam. This is not only a necessary action to stabilize the tourism industry in the context of complicated Covid-19 outbreak but also a solution for the tourism industry to pursue sustainable development, reduce much dependence on foreign markets, and stay ready to respond to any fluctuations in the world.

By Giang Tu, Vietnam Business Forum