Digital transformation needs for a tourism recovery

Hoang Viet Tien - Head of Strategic Advisory, Insider

According to a report by the World Tourism Organization (UNWTO), the global tourism industry in 2021 suffered a loss of $2 trillion. The industry increased 4 per cent compared to 2020, but still 72 per cent lower than before 2019, according to preliminary UNWTO estimates.

Despite the new advances and the order to reopen tourism in many countries, the appearance of new variants such as Delta and Omicron and uneven vaccination rates among countries will affect the ability to stay resilient in the global tourism industry in 2022.

In the UNWTO’s Q3 2021 report, international tourists from January to September 2021 were 20 per cent lower in numbers than in 2020. The estimated 2022 international tourist arrivals will be only 70-75 per cent. However, UNWTO Secretary-General Zurab Pololikashvili expressed optimism that the situation in 2022 will be much better than last year due to digital transformation.

With this, Vietnam’s tourism can recover fast thanks to application platforms that will promote a change in tourism behaviour. Aiming at professionalisation and optimising convenience in online services, focusing on domestic customers to create a premise to welcome international guests, optimising revenue by 50 per cent compared to before the pandemic will be the goals of many tourism companies this year.

Vietnam’s tourism-hotel industry faces numerous potentials and challenges when integrating with digital transformation and innovation. Over the past two years, the development of the tourism and travel industry has been severely affected, and the third-quarter report of 2021 conducted by CBRE shows that the average occupancy rate is 26.2 per cent and the revenue per room is only $24.70 per night.

As a result, the importance and demand for digital transformation have increased. Travel business owners have been implementing various solutions to align their digital presence and deliver better digital experiences.

Although the situation has caused the hotel-tourism industry to face many challenges, there is always a very positive prospect for recovery in Vietnam. Applying IT is considered as the top solution for tourism businesses to improve the user experience as well as to strengthen customer services.

Historically, every previous epidemic or economic crisis has affected tourism and hospitality. According to a survey by Savills covering 2001 to 2019, the number of international visitors fell by 8 per cent during the SARS epidemic in 2003 and a decrease of 12 per cent during the global financial crisis in 2009.

Consumer consumption trends are also changing after the pandemic and businesses face many challenges in finding the right products, and travel habits have changed because people are prioritising their health.

With the development of technology trends and new customer habits, new products and services will be launched to meet their needs.

Specifically, touchless hotels can optimise the customer experience in both online and offline environments. The software to support effective hotel operations is an indispensable tool, ready for the recovery stage of tourism activities.

In addition, in order to promote consumption demand and reach customers, it is necessary to have effective customer access channels to take advantage of domestic customers and prepare to welcome international visitors. For example, small group tours, short trips, and last-minute bookings, as well as being close to nature and enjoying a culinary culture, should be flexibly developed.

The more organisations and businesses that focus their resources on the digital transformation of the industry, the better Vietnam’s market will have a chance to recover fast. According to a recent McKinsey report, a full recovery is expected in 2024, on condition of low infection rates and focused domestic tourism.

Immersing in the innovation and transformation culture of the industry will help shorten the recovery process. The recovery depends on many factors, but we can focus on several measures in particular.

Firstly, Vietnam should focus on the domestic market as nearly $10 billion was spent by domestic tourists in 2019. Businesses also need to consider a new price model instead of just reducing prices or promotion campaigns in the short term to stimulate demand.

In addition, it is a good time to adopt digital technologies and create a ready-made foundation to serve when international tourism reactivates. Also required is an expansion of new experiences for customers both online and offline. Finally is the role of the state in supporting the digital transformation of the industry.

Digital transformation or changing strategic thinking to adapt to the needs and behaviour of customers in the technology age is a concern for many businesses. Before the pandemic, the hospitality industry experimented with new technologies such as the Internet of Things, big data, and virtual assistants. But COVID-19 not only accelerates the transformation of the travel industry but also changes consumer behaviour.

From 2022 there will be three main changes: touchless tech such as face-scans and automated check-ins; cleaning and sanitising rooms; and systems to optimise flexible rescheduling and cancellation policies. Now is the time for tourism businesses to find answers in changing their operating processes. Only when owners change their minds can they access and benefit from the advantages that digital transformation brings.