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Vietnam economy: tourism industry to suffer billions-of-dollars loss

Vietnam economy: tourism industry to suffer billions-of-dollars loss

Wednesday 12, 02 2020
"A stimulus program is needed to keep tourists coming back, but it must be deeply discounted, at least 30-50%," said Nguyen Thi Khanh

According to initial estimation, within the next three months, the acute respiratory infection caused by a new novel of coronavirus (nCoV) can greatly affect Vietnam's economy and make the tourism industry lose about USD 5.9 to 7.7 billion.

Loss of millions of visitors and billions of US dollars

The General Department of Tourism estimated that the loss in the next 3 months of the industry is huge. Based on the average tourist spending figures and the declining number of tourists (estimated), the tourism industry is expected to lose USD 5.9 - 7.7 billion. In particular, the number of international visitors may decrease from 3.7 to 4.7 million while that of domestic tourists may decrease by from 10.9 to 15.3 million.

Specifically, the Chinese market, which accounts for about 30% of total international visitors to Vietnam, was the hardest hit. The number of visitors from this market can be reduced by 90-100%. Tourism industry can lose 1.7-1.9 million visitors from this market, equivalent to USD 1.8-2 billion as the average expenditure of a Chinese visitor is USD 1,021.

Not only China, the number of visitors from the other international markets can also be reduced by 50-70%, equivalent to 2- 2.8 million visitors. With an average spending of USD 1,083/visitor, the loss would be USD 2.2-3 billion.

Regarding the domestic market, the number of tourists is estimated to fall by 50-70%, equivalent to 10.9 to 15.3 million visitors. The average spending of domestic tourists is VND 5.8 million / overnight visitor and VND 1.92 million / non-overnight visitor. Loss from this market is USD 1.9 to 2.7 billion.

Vietnam economy: tourism industry to suffer billions-of-dollars loss

Dealing with the decline

Due to the fact that the epidemic is unpredictable, the tourism industry has put forward a number of preparedness scenarios to recover the market when the outbreak is over. According to the Vietnam National Administration of Tourism, if the epidemic ends at the end of March 2020, communication and tourism promotion activities will start in April 2020. If this really happens, the tourism industry can boost domestic tourism, which usually enters the high season from the end of May. Travel agencies can promote outbound segment to offset the losses from early 2020.

International tourists are expected to return to Vietnam in June 2020. In order for the market to grow again in the peak season from October 2020 to April 2021, during the period from April to September 2020, tourism industry needs to conduct domestic and foreign promotion activities.

Currently, some world health experts predict that the nCoV epidemic may be completely pushed away as early as the summer of 2020, so the Vietnam National Administration of Tourism also offers another scenario. When the nCoV epidemic ends in the summer, tourism activities may return in the fourth quarter of 2020. In this case, promotion activities to stimulate domestic tourism will be difficult because of too little time. However, international tourism promotion activities are still carried out as mentioned above to attract tourists coming back after the epidemic.

The Vietnam National Administration of Tourism said that it is necessary to exploit the key markets with convenient air routes and high growth rates such as Korea, Japan, Taiwan and ASEAN countries. In addition, it is also necessary to focus on exploiting large and potential markets like India. Moreover, attracting tourists from markets including the US and Canada markets in the favorable context that there is a direct flight between Vietnam and the US should also be focused.

Comprehensive demand stimulus, restructuring of the market

So far, the tourism authority, central and local tourism associations have held meetings to discuss measures to cope with the problems caused by the nCoV. The general opinion from these meetings is that the tourism industry will prepare a large demand stimulus program to attract visitors back after the epidemic. Next, the regulatory authority should ask the government to consider waiving fees, simplifying visa procedures for tourists traveling in groups provided by international travel companies, and allowing the deployment of visa at the border. In addition, it is necessary to propose the People's Committees of provinces and cities to consider discounts, free tickets and entrance fees from 1-2 months after the end of the epidemic to stimulate tourism.

Along with the stimulus policy for tourists, travel businesses, hotels and transportation companies also need to be supported by tax breaks, tax reduction, and interest rate extensions. "A stimulus program is needed to keep tourists coming back, but it must be deeply discounted, at least 30-50%," said Nguyen Thi Khanh, Vice President of the HCMC Tourism Association.

She said that she was working with tour operators and hotels, aviation companies, ground transportation service providers and many local authorities to prepare for this program. "Not only is it crucial to attract international visitors, but domestic visitors are also very important, a campaign is needed to make them travel again" she said.

Many businesses have the same opinion. They believed that this stimulus program must be implemented for all destinations in Vietnam, like the "Impression of Vietnam" program that the tourism industry launched in 2009 to deal with the drop in the number of visitors caused by the global financial crisis. The new program not only needs to be bigger, but the discounts must also be larger, and the products offered in the program need to be more diverse and accessible to markets that may have an early impact, such as those within the region.

However, some businesses believe that this decline is also an opportunity to accelerate the restructuring of the market, avoiding too much dependence on a few big markets. When there are incidents such as epidemics, wars, financial crisis, etc. all tourism businesses will be affected, but they will be affected even more if they only focus on a few markets.

"For example, China, which is a huge market and located right next to Vietnam, should not be underestimated, but we should not be too dependent on it. Businesses must expand to other markets to avoid a severe loss when there is an incident like the nCoV epidemic this time" said Mr. Cao Tri Dung, Chairman of Danang Tourism Association.

>> Vietnam’s Travel & Tourism Industry: Top 10 Companies

Source: thesaigontimes

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