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Which Scenario for Vietnam Tourism?

Posted by Khoi Pham on April 28, 2020

Experiencing serious crises by external impacts, Vietnam tourism industry has quickly recovered, but Covid-19 is another story.

In 1998, the Asia financial crisis caused a decrease of 11% in international arrivals to Vietnam. However, tourism recovered strongly with an increase of 17% in international tourists arrivals in 1999 and of 20% in 2000. This was the first period of the tourism economy boom. Most foreign tourists were French, Australian and USA, about 1.5 million per year; domestic tourism was not developed.

Just recovered, Vietnam tourism fell into the next crisis. In 2003, due to the impact of the SARS epidemic, the industry declined by 8% and recovered strongly in 2004 (up 21%), from 2.5 million in 2003 to 3 million in 2004.

After years of steady growth, Vietnam attracted more diversified tourists, as an influx of Japanese tourists, but once again hit by the global financial crisis from 2007 – 2009, causing the growth to drop to negative, 11%. However, in 2010, this industry recovered stronger than previous times, up to 34%, reaching 5 million tourists.

Nguyen Duc Chi, a tourism expert, said that the crises provided Vietnam tourism industry important lessons for developing. For example, the 2009 crisis made the industry focused more on domestic tourists, compensating for the decline in revenue of the industry from the slow recovery of international tourists. This is also the first year, Vietnam stimulated domestic tourism.

“At the time of the global financial crisis in 2009, Vietnam only attracted nearly 4 million international tourists. To help tourism recover quickly, the government specially set up joint-venture tourism companies as the outbound (bringing Vietnamese tourists to foreign countries) and at the same time issuing some reasonable marketing policies. As a result, it only took 6 months for Vietnam tourism to return to normal”, Chi said.

Polish tourists visited and took photos at the Ho Chi Minh City Post Office when Covid-19 did not break out. According to forecasts, until 2022, Vietnam tourism will return as good as 2019. Photo: Nguyen Nam

In the following years, Vietnam’s tourism industry was often among the strongest growth group in the world. However, when Covid-19 broke out earlier this year, the resilience will be more unpredictable and the scenarios are predicted to be more complex. In the first 3 months, international tourists to Vietnam reached about 3.7 million, dropped 18.1% over the same period in 2019; particularly in March, 68% decrease compared to February and the forecast in April will show the “bottom”.

The epidemic has caused the entire tourism industry to “hibernate”. The domestic and international tourism market is almost “completely frozen”. A series of workers fall into unemployment, struggling to make a living.

Current forecasts indicate that the global tourism industry in general and Vietnam tourism in particular needs more time to recover after Covid-19, compared to previous crises.

According to Dr. Tran Trong Kien, Chairman of the Tourism Advisory Council, the foundation of tourism is now at zero. Therefore, tourism businesses have to calculate how to reduce costs to get enough cash flow to survive.

“The best scenario is Vietnam tourism can recover in a V-shape, drop to the bottom and then rebound to the level of the initial decline, or a U-shape, depending on the rate of how Vietnam and the global economy control and recover from the disease”, Mr. Kien said.

According to this expert, the domestic market will recover first, following by the Chinese and other Asian countries and finally the European and American tourists. The time for tourism industry to recover completely can be from 12 to 18 months.

Ho Chi Minh City People’s Committee headquarters is empty on 2/4. This place is always crowded on weekdays. Photo: Giang Son Dong

As Mr. Le Tuan Anh, Director of the Tourism Information Center, it is estimated that until 2022 or even longer, Vietnam can once again have same number of international tourists arrived as in 2019. Therefore, the tourism industry is necessary to stick to the reality in order to forecast scenarios and propose plans for recovery after the pandemic.

According to Mr. Tuan Anh, with restrictions on travel and immigration applied in many countries around the world, the number of international tourists to Vietnam from April to June will not be good. When the epidemic is over, markets close to Asia will likely recover sooner than markets far away as Europe, America and Australia… Under this scenario, international tourists in 2020 can reduce by 70% compared to 2019, only 5.5 million.

The second scenario that happens when the epidemic ends at the end of September, 2020, the number of international tourists by 2020 will decrease by 75%, only 4.6 million.

If the situation worsens, by the end of December, 2020, Covid-19 has not ended, Vietnam will have almost no international tourists. The total number of international tourists to Vietnam in 2020 decreased by 80% compared to 2019, stopping at the first 3 months of the year with about 3.7 million arrivals.

Statistics of international tourists to Vietnam in the first quarter of each year

Therefore, for international tourists to Vietnam in 2020, Mr. Tuan Anh said the recovery model will be L-shape, meaning it takes a long time. When the epidemic ends, international tourists will not have enough time to plan trips right at the end of the year. Therefore, regardless of the scenarios, 2020 will be the year of the most serious tourists decline.

However, most of the major tour operators in the country believe that, with the determination and initiatives from the Vietnam’s Covid-19 prevention, Vietnam will quickly control the epidemic.

“As soon as the epidemic is controlled, domestic tourism will explode rather than grow gradually because most people are “bored”, said a representative of a large tourism business in Ho Chi Minh City.

Not sharing the same opinion, Mr. Nguyen Duc Chi said the summer is no longer a good time for tourism this year because of the late semester, which lasts until August. After that, maybe family-based tours will increase, especially on September 2nd. Not to mention, many companies having the hard time need to focus on their own revival; people’s income is not abundant and the fear of crisis will create difficulty for the tourism to have “large travelling groups” as before,” Chi said.

According to Mr. Tran Trong Kien, the long period of anti-epidemic also led to the changes in customers’ habits. For example, older people may not want to travel as much as before. Tourists also do not like to enter large theme parks anymore, they will travel less but more selective and more careful.

The Ministry of Culture, Sports and Tourism proposes to bring the following subjects to the assistance of VND 62,000 billion to help people facing difficulties due to Covid-19: small and medium enterprises, homestay owners, workers who lost their jobs in tourist accommodation establishments and tourism businesses affected by tour cancellation… At the same time, offering free of charge for renewing and changing international or domestic travel licenses or guide card in 2020.

Source: Nguyen Nam, Vnexpress

Survey result of people’s travelling need after the social distancing on Vnexpress, which 47% says YES, WILL TRAVEL RIGHT AFTER THE EPIDEMIC ENDS

Challenges always come before opportunities. The tourism industry will certainly be affected, but once again, the Covid-19 challenge will be the precondition for Vietnam tourism to grow stronger with the image of a decisive and unanimous anti-epidemic from the government and its people.

The world see Vietnam in a positive way through the fight against Covid-19. This is also a precondition to create a strong wave of foreign investment in Vietnam after the epidemic

How Vietnam prevents the Covid-19

This is a good opportunity to invest in tourism real estate. Contact Realtique for advices on potential tourism real estate projects:

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