Tourist arrivals drop 5-10 per cent in Vietnam due to COVID-19 impacts

February 28, 2020 | 11:18
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Tourism is highlighted as one of the sectors most heavily impacted by the coronavirus (COVID-19). The impact could result in tourist numbers dropping by 5-10 per cent this year.
tourist arrivals drop 5 10 per cent in vietnam due to covid 19 impacts
Michael Kokalari, chief economist at Vinacapital

One month has elapsed since the novel coronavirus (COVID-19) first came to light, so we now have enough concrete information and granular data to make well-educated estimates of the economic impact of COVID-19 on Vietnam.

According to the Vietnam General Statistics Office (GSO), tourism accounts for 7 per cent of Vietnam's GDP, but if the figure included the indirect contribution of tourism (tourists shopping in local stores and eating in restaurants, among others), the actual contribution is closer to 14 per cent.

tourist arrivals drop 5 10 per cent in vietnam due to covid 19 impacts
International visitors in Ho Chi Minh City in February 2020. Photo: Le Toan

Tourist arrivals to Vietnam are currently down 50-60 per cent due to COVID-19, according to the GSO, so occupancy rates at tourist-oriented hotels and resorts are currently around 20 per cent, versus the 80 per cent that would be more typical for this time of year, according to lodging industry executives (the overall hotel occupancy rate is currently down to 30- 50 per cent, in Vinacapital's understanding).

Furthermore, medical outbreaks tend to last around six months, with the maximum economic impact in the first three months, thus we expect that tourist arrivals to Vietnam would rebound later in the year after the virus is contained.

Also, Asian countries including Thailand suffered a comparable plunge in tourist arrivals during the initial phase of the SARS epidemic, but Asia-wide tourist arrivals ultimately fell by 10 per cent in 2003, so we expect Vietnam's tourist arrivals to drop 5-10 per cent this year, after having grown 16 per cent last year and 23 per cent (CAGR) over the last five years. This 5-10 per cent drop would equate to a circa 1 percentage point reduction in Vietnam’s GDP growth this year.

By Michael Kokalari

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