Ensuring efficiency for travel in a brand new era of tourism

Kenneth M. Atkinson - Vice chairman Vietnam Tourism Advisory Board

The sector was devastated in 2020 and revenues which had contributed over 10 per cent to 2019 GDP figures fell from almost $36 billion to approximately $11 billion. Foreign visitor arrivals were down to three million and domestic tourists fell to 50 million. Last year was another bad one as lockdowns and restrictions on provincial travel deterred domestic travellers, with almost zero foreign visitors on top of that.

The sector saw light at the end of the tunnel with the pilot projects to allow foreign visitors to certain destinations by way of organised tours, but these pilots have only attracted small numbers thus far. However, these baby steps have enabled Vietnam to learn and with no major negative impact from this soft opening, it has given confidence to the government to consider further relaxation of travel restrictions.

So what can we expect for 2022? First and foremost, the government seems to be listening to the request from the Vietnam Tourism Advisory Board and the Private Sector Committee No.4, together with the consortium members of the Vietnam Business Forum, to remove all travel restrictions on inbound and outbound travel from May. A letter requesting the above was submitted to Prime Minister Pham Minh Chinh on January 12 and subsequently, the PM ordered the Ministry of Culture, Sports and Tourism (MCST) to create a safe and effective tourism reopening roadmap to help revive the industry.

On January 18, it was announced that foreigners with valid TRCs or visas could return to or visit Vietnam without additional approval and Vietnamese citizens could return to Vietnam on commercial flights.

The following week, there was a live workshop with virtual attendance from Ho Chi Minh City, and 15 cities and provinces. The meeting was led by the MCST with the purpose of discussing the reopening of tourism in Vietnam and making timely global announcements.

All major ministries participated in the meeting and whilst the Ministry of Health was conservative in their views, all other participants fully supported a reopening with pre-pandemic conditions, including the reinstatement of visa exemptions with e-visa issuance and more exemptions in due course. Subsequently, we have seen changes in COVID-19 test requirements and also the conditions for the grading of localities as far as risk is concerned.

The rationale for reopening in May is based on the high vaccination rate in Vietnam, and the three-month period beforehand would enable travel firms, hospitality businesses and carriers, to make reopening plans and localities to complete the booster shot campaign.

It also seems that the government has recently shifted to a pragmatic stance in the face of rising yet milder Omicron cases. Thus, by eschewing the previous kneejerk response of triggering lockdowns, it further points to commitment towards treating the pandemic as endemic, following the trajectory of countries that have taken such steps.

On the face of it, this sets a far more positive picture for the sector for 2022. A recent survey on domestic tourism demands and trends carried out by the Vietnam Tourism Advisory Board and Private Sector Development Committee No.4 with over 10,000 respondents concluded almost 90 per cent wanted to travel within the next 10 months. Around 27 per cent wanted to travel within the first month, indicating pent-up demand that could lead to stronger returns.

This represents a significant increase in potential domestic travellers as compared to earlier surveys. The survey also showed that there is a preference for shorter trips of 4-5 days and in smaller groups of family and friends.

Other findings were that 65 per cent of tourists prefer travelling by air and 20 per cent by their own vehicles; epidemiology safety (56 per cent) and reasonable prices (51 per cent) are also decisive factors in travelling.

Foreign visitors who contributed more than 60 per cent of sector revenues in 2019 also seem quite active in searching online for Vietnamese destinations. Analytical data from Google’s Destination Insights shows a 40 per cent increase in searches for Vietnam from foreigners. However, it must be stated that most airlines do expect a return to pre-pandemic passenger numbers until 2024 or 2025.

It is also likely that tourism will be the first to rebound and that business travel will take longer to achieve pre-pandemic levels, which is probably not good news for the 5-star city hotels. The current forecast would seem to be looking at a figure of 3 million foreign visitors in 2022, well down on pre-pandemic levels.

There are also many challenges facing the sector which will have an impact. There needs to be more central leadership to avoid the current situation of a plethora of different regulations from different provinces. Many hoteliers and restaurateurs are also fearful that a significant percentage of the labour force will not want to return to jobs in hotels and other tourism-related jobs, as it is no longer viewed as a secure job.

There is an urgent need to identify how the demands of domestic and foreign visitors have changed in the light of the pandemic and those companies that have invested in technology during the last two years are likely to be beneficiaries. There also needs to be a properly funded marketing campaign announcing to target markets that Vietnam is open again as we are already well behind regional competitors like Thailand.

I have no doubt that tourism and business travel will rebound and that Vietnam will be a major beneficiary if we can get our act together and address these issues.