Vietnam reimagines tourism

Vietnam reimagines tourism

A more local focus has become a pandemic-era necessity, but many changes will endure when international arrivals resume.

Da Bac district in Hoa Binh province of northwestern Vietnam offers a variety of activities from kayaking to trekking, appealing views of terraced rice paddies, and simple but comfortable homestay accommodation. (Photos courtesy of Da Bac Community-based Tourism)
Da Bac district in Hoa Binh province of northwestern Vietnam offers a variety of activities from kayaking to trekking, appealing views of terraced rice paddies, and simple but comfortable homestay accommodation. (Photos courtesy of Da Bac Community-based Tourism)

Rich in history, vibrant in culture and cuisine, with striking landscapes from mountains in the North to beaches along the coast, Vietnam has become one of the favourite destinations in Southeast Asia.

In 2019, the country welcomed a record 18 million foreign visitors and generated total revenue of US$32.8 billion (755 trillion dong) from both domestic and international tourists.

But tourism in Vietnam and everywhere else was put on pause in March last year when Covid-19 emerged. The Hanoi government moved quickly to close borders and ban international flights. Its decisive responses have paid off, as the country so far has recorded only 35 deaths from just over 3,000 coronavirus cases, and its economy shows the most promising signs in the region.

Data from the International Monetary Fund (IMF) shows that Vietnam's economy expanded by 2.9% in 2020, making it one of the few countries to record growth. Gross domestic product (GDP) in the first quarter of this year rose 4.5% from a year ago, the country's General Statistics Office (GSO) said recently.

Figures for the manufacturing, agricultural and retail sectors, as well as imports and exports, have all shown positive signs of recovery, the GSO said. Yet one key sector is still feeling the pain caused by the prolonged global pandemic, and that is international tourism.

Like some of its other Southeast Asian neighbours, Vietnam relies heavily on tourism. The sector contributed approximately 18.5% to GDP in 2019, according to data from the Ministry of Culture, Sports and Tourism.

And while international travellers made up just 17% of the tourists in the country in 2019, their spending accounted for more than half the total, averaging $673 per person per trip, compared with $61 for domestic travellers.

"The first outbreak in March 2020 caused us to lose a lot of guests and we were struggling to find customers for some months afterward," said Do Dong Hung, a coordinator of Da Bac CBT (Community-based tourism) Enterprise, a travel company based in Da Bac township in mountainous Hoa Binh province in the country's northwest.

Da Bac CBT Enterprise works with four ethnic minorities including the Dzao and Muong people in the district, located about 60 kilometres southwest of the capital Hanoi. Its main tasks, according to Mr Hung, are to serve as "a bridge" connecting local people with tourists, while monitoring and improving the quality of community-based tourism products and services. Local villagers are the hosts of all activities in their respective areas.

In normal times, more than 80% of the Da Bac group's customers are international travellers, primarily from Australia, Europe and North America.

"At the end of 2020, we decided to change the target group from foreigners to domestic customers," Mr Hung told Asia Focus.

"We contacted some agencies that have experience with domestic travellers and offer a cooperative system," he explained, adding that the company also improved its online marketing channels to attract a bigger Vietnamese audience.

The initial result of the change was that during the most recent long holidays from April 20 to May 1, the company welcomed almost 200 tourists to its destinations.

Besides accommodation, the company has two package tours: cultural discovery and outdoor sports. For international travellers, trekking, kayaking, boating on the lake, watching dances, or even harvesting are among activities on offer.

In contrast, domestic visitors prefer more flexibility, according to Mr Hung. "They prefer to arrange visits by themselves or … just stay in a homestay and relax. They don't want to attend activities," he said.

Recent figures from the GSO show that revenue from tourism in the first quarter of this year totalled $1.34 million (3.1 trillion dong), down 60.1% year-on-year.

The number of tourists from travel agencies was 3.7 million, down 80.1%, while international arrivals decreased 78.7%.

The sharp decline in the numbers of both domestic and international travellers has sent ripple effects through the accommodation, food and beverage service sectors, causing a significant loss in revenue to $258 million (61.8 trillion dong), down by 43.2%.

DOMESTIC FOCUS

The majority of international tourists in Vietnam come from Asian countries including Japan, China, South Korea and Taiwan, accounting for around 80% of foreign tourism spending, according to a recent McKinsey and Company report entitled "Reimagining tourism: How Vietnam can accelerate travel recovery".

The report suggested that with a strong zero-case-first approach to Covid, a resilient local market as well as proactive tourism campaigns from the government, the sector should be able to recover to pre-crisis levels in 2024.

For now, the lifeline of the tourism sector is domestic travellers. In 2019, Vietnamese tourists spent $15.5 billion, of which $5.9 billion was spent overseas.

But since people are restricted to their home country for now, the growing travel itch needs to be scratched, and travel companies should grasp the opportunity, said Matthieu Francois, an associate partner with McKinsey Vietnam.

"Domestic tourists in Vietnam are looking for more luxury trips, outdoor tourism and in-destination experiences such as cave discovery, highland hiking, isolated island stays, water sports and food festivals," he said.

This is reflected in the records of Agoda, the giant multinational online booking platform that represents 41,732 properties in Vietnam.

"Vietnamese travellers are choosing to pamper themselves a little more in 2021 than in other years, with a higher prevalence of bookings to 4- and 5-star resorts than previously recorded," said an Agoda spokesperson.

Agoda has also launched the GoLocal campaign to promote hotels in both famous destinations and those off the beaten track.

Do Dong Hung, coordinator of Da Bac CBT Enterprise, a travel company based in Hoa Binh province.

SAFETY FIRST

Despite the lifting of restrictions on most local travel and the relatively low coronavirus case total, health and safety is still the main concern among Vietnamese travellers.

Customers expect proactive responses and reassurance that hygiene measures at their destination will be rigorous. Agoda has responded by introducing HygienePlus, a verification feature that shows health and hygiene measures carried out by the hotels on its platform.

Daily room disinfection is the top factor that 24% of Vietnamese respondents consider, according to an Agoda survey. Others are a personal hygiene kit, and daily disinfection of public areas.

Mr Hung agrees that safety comes first. Da Bac CBT enterprise has trained its local partners about Covid prevention and provided hand sanitiser as well as thermometers.

"Every tourist coming to our villages has to make a health declaration," he said. "We also provide a checklist for homestay sanitation. A reminder for house cleaning is always issued when there is a new tourist group."

Besides safety, customers also look for more flexibility when booking hotels and properties in case conditions change suddenly. Agoda in March last year created EasyCancel, offering free cancellations up to 24 hours in advance, to meet this demand.

"People wanted the flexibility to be able to change plans, and still get a great deal," said the Agoda spokesperson. "Hotels that opted to offer customers this option saw production increases."

TIME TO INNOVATE

To attract domestic travellers and to be ready to welcome international visitors, operators such as hotels are providing discounts and pre-sales packages to encourage domestic spending, Mr Francois has observed.

However, such a strategy is not sustainable for the longer term. "Pure discount plays could put operators under pressure as they compress margins," he said. Instead, operators should come up with innovative ideas to promote their products.

Offering product bundles is one strategy that provides upselling and cross-selling opportunities. Not only does it diversify revenue streams and enhance premium products and pricing, but it also creates opportunities to work together with other players in the sector.

The other two strategies Mr Francois recommends to local operators are digitising large parts of their value chain and investing in sustainability.

Online booking of travel is now second nature for consumers worldwide, and operators can do more to maximise their impact on digital platforms.

"Strategic collaborations -- such as online travel agencies providing ticket-booking services via instant messaging and social media platforms -- could offer an opportunity for increased market penetration," said Mr Francois.

The airline industry also needs to step up its digital game. VietJet, the international low-cost airline, is focusing on digital transformation to maximise its capabilities and operational effectiveness.

In February, the airline was fully back in business, resuming domestic flights and opening more routes to meet increasing demand in the post-Tet (Vietnamese new year) period and summer.

Investing in sustainability, meanwhile, will have longer-term implications. Since the tourism industry is probably going to operate at limited capacity for the next couple of years, and as travel demand slowly revives, there is a window of opportunity to reposition the tourism model to make it more sustainable.

"Such a move would also be aligned with the growing focus from global and local players in finding environmentally sustainable development models," Mr Francois noted, adding that other sectors in Vietnam will also need to show their sustainability commitment to benefit from the demand recovery.

One particular trend that he observed is that travellers are craving a more authentic and original experience.

"An increasing number of people tend to book their trips based on the experiences they can access, such as hiking, food tours, cultural discoveries, homestays and sports destinations," he pointed out.

With the growing demand in this segment, the opportunities are there to grasp and could lead to a tourism model that is more sustainable and diversified.

"The local authorities are proactively promoting specific experiences tailored for a domestic audience by showcasing the cultural diversity in Vietnam, such as food festivals, hiking destinations and sports," says Matthieu Francois, an associate partner with McKinsey Vietnam.

FUTURE HOPES

As global tourism will not show signs of recovery soon, proactive responses to boost domestic tourism are crucial. The McKinsey report suggests the country needs to keep Covid cases low and cannot risk opening its borders until the majority of the population is vaccinated.

Vietnam still trails most countries when it comes to mass vaccination. So far the country has inoculated only 0.60% of its population, according to Our World in Data.

International travel bubbles, meanwhile, have to be explored carefully. Vietnam has resumed some international commercial flights to Taiwan, Seoul, Tokyo, Phnom Penh, Vientiane and Guangzhou.

On March 25, Da Nang, one of its main tourist destinations, welcomed its first international travellers from Taiwan, but a 14-day quarantine is still required. In light of recent new cases, authorities reserve the right to keep people in quarantine for a few days after the 14-day period expires.

Given the spotty state of virus containment and the emergence of more contagious new variants, "our country doesn't agree the idea of bubble tourism", said Mr Hung, noting that it might bring "a lot of risks" to the country. In his opinion, international flights will fully resume in 2022 at the earliest.

For Dong Duong, a 40-year-old travel company owner whose business mainly relies on international tourists, "the future for tourism is still overcast", since the government hasn't yet decided when more flights can resume operating and when vaccinated foreign visitors can come to Vietnam.

For now, the government and the Vietnam National Administration of Tourism have been driving ecotourism and rural experiences, such as homestays, in line with the increased focus on local travel.

"The local authorities are proactively promoting specific experiences tailored for a domestic audience by showcasing the cultural diversity in Vietnam, such as food festivals, hiking destinations and sports," said Mr Francois.

The country launched stimulus campaigns last year with the themes "Vietnamese people travel in Vietnam" and "Viet Nam tourism -- a safe and attractive destination".

The government has also helped ease the financial burden of travel and tourism businesses. "They extended the time to collect enterprise taxes to six months. Thanks to that policy, we have been able to survive until now," said Mr Hung.

This year, "Link, Act and Develop" has become the motto of the the tourism industry as it strives to restore and developing domestic tourism. A notice on the GSO website states that the country will need to focus more on a number of issues: restructuring the tourist market in a sustainable and effective direction, targeting high-quality, long-stay and high-spending customers, as well as developing new products and services.

It will also focus on diversity and improving product quality together will promoting public-private cooperation.



Do you like the content of this article?
COMMENT

Jan-Sept exports rise 15.5% y/y - commerce minister

Thailand's exports rose 15.5% in January-September from a year earlier, Commerce Minister Jurin Laksanawisit told a news conference on Tuesday.

14:59

Asean was ready to receive Myanmar representative at summit, Indonesia says

JAKARTA: A summit of the Association of Southeast Asian Nations (Asean) had prepared for Myanmar to have a representative at its virtual summit on Tuesday, but its junta opted not to have one attend, Indonesia's foreign minister said.

14:45

Teacher accused of fraudulent dealings

Thirty people on Tuesday filed a complaint with the Crime Suppression Division accusing a teacher in Bangkok's Dusit district of fraud in the purchase of their motor vehicles, some of which later surfaced Cambodia.

14:03