Tourism wrestles with fresh COVID-19 blow

Hotel and resort owners now count on state support to survive

Over past weeks the number of visitors cancelling tours, as well as the number of locations going under lockdown or temporarily closing their doors to tourists, have been on the rise.

Not only did tourism take a dive in pandemic-hit locations, it was universal as customers are besieging travel agents for full refunds.

“More than 1,000 tourists requested to cancel bookings and asked for a refund, while all tickets, catering, and accommodation services have been booked. This caused a total loss of VND8-10 billion ($350,000-435,000) to our company,” Doan Hoa, head of Domestic Tour Department at Xuyenviet Trading – Travel Co., Ltd., which has offices both in Hanoi and the northern province of Hung Yen.

Hoa agreed that cancelling tours at this time is reasonable to ensure the safety and health of travellers and society in general. While option to move trips to a later time exists, most travellers would rather get their money back. “The company could ill-afford spending that money right now,” Hoa added.

The first outbreak of the pandemic in Vietnam during March and April caused a huge loss for the company which was forced to let go half of its employees and pay only 50 per cent of wages to the remaining staff. The market warmed up a little in June and July; however, tour agencies aggressively trying to recoup losses created fierce competition.

“Many foreign travel companies switched their focus to the domestic market, and the large number of tourists placing bookings for the summer holidays have pushed hotel prices high. Travel companies like Xuyenviet that earned very little during these months are worried for their survival,” added Hoa.

Multiple challenges

According to Hanoi Department of Health, almost 100,000 visitors returned to their homes from Danang from mid-July to mid-August, which illustrated the popularity of the destination. However, the recent outbreak of the pandemic has put Danang and Quang Nam under gridlock, with dire impacts for all other tourism destinations across the country such as Nha Trang, Phu Quoc, Dalat, Hanoi, and even western provinces.

Ho Chi Minh City Department of Tourism also reported a huge wave of cancellations. As many as 31,000 travellers at 11 major travel companies cancelled their bookings, including 20,000 at Vietravel and 10,000 at Saigontourist, along with Ben Thanh Tourist and Lu Hanh Fidi, among others.

Not only travel companies, the larger hospitality industry has also run into choppy waters. Talking to VIR, Pham Tien Dung, manager of Acoustic Hotel & Spa in Hanoi’s iconic Hoan Kiem district, shared his worries about paying the rent.

After the first outbreak of COVID-19 in March and April, his 5-star hotel, which used to serve foreign visitors, cut prices by 50 per cent to attract domestic customers.

In May, arrivals equalled 30 per cent of the previous year and revenue was only enough to cover operation costs. In June and July, this volume rose to 50-60 per cent, so the revenue could cover operation costs and rent.

“In addition to discounting our rates to attract more visitors, we also had to send away half of our employees and cut the salary of the remainder by half to survive,” said Dung.

According to Savills Vietnam, in the second quarter, about 40 hotels in Ho Chi Minh City ceased operations even after social distancing ended. Thus, the segment had 12,400 rooms, down 23 per cent on-year in total supply. Hospitality in other locations was also in the same situation.

Unite and overcome

Amidst massive difficulties, every business and organisation has built backup plans for a lack of tourists. Meanwhile, many businesses are still scampering for solutions and are petitioning the government for supportive policies like preferential loans, giving unsecured loans for travel companies, or providing extensions for businesses with tax arrears.

“Hotels and resorts would like to see lower electricity bills and need preferential loans to maintain operations and keep employees during the pandemic,” the manager of one hotel in Ho Chi Minh City said.

Most travel and hospitality companies are small- and medium-sized, so they would need modest loans of around VND500 million-1 billion ($21,750-43,500) to pay rent and employees. However, businesses cannot access loans even though they have previously deposited hundreds of millions at the bank.

To resolve the issues from the massive cancellations, Phung Quang Thang, general director of Hanoitourist and vice chairman of the Vietnam Society of Travel Agents, highlighted the cooperation among airlines, travel agents, tourist sites, and hotels to provide a reasonable offer to tourists.

“In the long term, all must team up to offer attractive, top-quality tours at reasonable prices focusing on three key factors: a safe destination, competitive prices, and professional quality,” Thang said, also suggesting to design special tours for specific groups of tourists.