Possible futures for tourism industry and accommodation service after pandemic

Tourism industry and accommodation service in Vietnam is facing the biggest crisis ever, when the number of international and domestic tourists decreased sharply in the early 2020. In just the past few months, the number of international arrivals to Vietnam has decreased from millions to the bottom at some point. This is due to external border control and restriction on cross-border movements.

Domestic arrivals have plummeted in the first 3 months of 2020

According to the Vietnam National Administration of Tourism (VNAT) data, in the first three months of this year, international visitors to Vietnam have reached 3.7 million, down 18.1% over the same period last year. Vietnam international arrivals in March 2020 reached nearly 450 thousand, down 68.1% year on year and tumbled 63.8% compared to the previous month. Number of domestic travelers reached 13 million, of which 6.8 million stayed-over.

International visitors to Vietnam in the first 3 months of 2020

Source: VIRAC, VNAT

The estimated tourism revenue in the first 4 months of 2020 is 88 billion, reduced 97.5% over its corresponding figure in 2019. Due to the spread of the coronavirus, Vietnam temporarily suspended visas for foreigners. Also, many tourist attractions shut down during the period of social distancing.

According to a survey conducted by the Vietnam Tourism Advisory Council (TAB) and the Private Economic Development Research Board (Board IV), 71% of businesses in the tourism and hospitality industry announced their revenue in Q1/ 2020 decreased by more than 30% compared to the same period in 2019.

Top international visitors in Vietnam, Q1/2020

Source: VIRAC, VNAT

Tourist arrivals from other countries to Vietnam dropped sharply in the first 3 months. Although China and South Korea remain at the top of the list with nearly 900 thousand international visitors, the disease outbreak in these two countries has caused a significant diminution in the number of arrivals. In China, this figure has dropped 31.9% over the same period last year. The visitors plunge in the worst drop of the coronavirus outbreak in March. Number of tourists from South Korea also has slumped 26.1% from the same period.

Accommodation service was severely affected

In Q1/2020, the hospitality market recorded the lowest performance year over year with a significant decline in the average capacity. The decrease in capacity was due to a sharp downturn in international visitors, first to Chinese visitors, then to South Korea and Europe.

Accommodation capacity in the two largest cities, Hanoi and Ho Chi Minh City, has dropped sharply due to the consequences of the pandemic. In Hanoi, the average capacity of Q1/2020 decreased by 30% compared to Q4/2019, down 26.5% compared to the average of 2019.

Average accommodation capacity in Hanoi, Q1/2016 – Q1/2020

Source: VIRAC

The operating capacity of hotels in Ho Chi Minh City in the first 3 months of 2020 dropped 20% in comparison with Q4/2019, and 18.75% against 2019. Hotels cut down personnel, up to 50% in some places to lessen operation costs.

Average accommodation capacity in HCMC, Q1/2016 – Q1/2020

Source: VIRAC

According to the General Statistics Office (GSO), revenue from accommodation and catering services in the first 4 months was estimated VND 16.8 trillion, down 23.6% over the same period last year. Due to the outcome of the Covid-19 pandemic, people avoid travelling and eating out. Moreover, the suspension of visas for Chinese guests also affected accommodation and catering services.

In most provinces and cities, revenue recorded by accommodation services has dropped unprecedentedly. Some of the most overtouristed cities such as Da Nang and Khanh Hoa, earnings in the first 4 months of the year have decreased significantly year over year.

The decline in accommodation service revenue in some provinces in the first 4 months

Source: VIRAC

Possible futures to revive the tourism industry and accommodation service

Attracting domestic visitors

While it is still uncertain about when international destinations reopened to tourists, hotels and airlines are offering up to 50% discounts to attract locals. Domestic tourism has not reached its full potential yet, the tourism industry and accommodation service need to adapt to serve local tourists.

Exploiting newly opened international flight routes

Airlines are targeting on opening more international routes to develop cultural, economic and social exchanges. At the beginning of 2020, Vietjet opened 5 new routes to Nagoya, Fukuoka, the third and fourth largest cities in Japan. Three direct flights connect Da Nang, Hanoi and Ho Chi Minh City to New Delhi and Mumbai, two major political and cultural centers of India.

Bamboo Airways has also promoted activities to expand flight networks to many countries such as the Czech Republic, the Federal Republic of Germany, Korea, China, Japan, Singapore … and officially sold many international tickets. 

Consequently, the newly opened routes in this period will boost the number of tourists imminently, especially when the pandemic is completely controlled. Up to now, Vietnam is highly appreciated by the international community for its ability to control diseases. In particular, the treatment for foreigners in Vietnam and Vietnamese returning from the outbreak areas in the past have made an astonishment. This makes Vietnam an attractive, friendly and safe destination for international visitors.