Recommendations to reduce the impact of coronavirus to tourism sector in Vietnam

Last week, Ken Atkinson, founder and senior board advisor at Grant Thornton Vietnam and Vice chairman of the Vietnam Tourism Advisory Board had assessed the impacts of the coronavirus epidemic on the Vietnamese tourism sector.

As hoteliers, retailers and popular sites worry about long-term impact of crisis, just few days ago, the Tourism Advisory Board had sent to Vietnam’s Government the recommendations for industry and government actions, which could help to reduce the impact of the coronavirus to local tourism sector. Details as below:

“Further to our letter dated February 6th, we would like to continue our congratulations for the Governments handling so far of the Coronavirus situation (COVID-19) and the measure taken. We would like to thank you, your excellency for publicly used our early letter to support argument and immediate and apt policy. As you are aware, we are sure, that the current situation is having a devastating effect on the industry, in Vietnam.

Our initial research shows that hotels have suffered between 20% to 50% decline in occupancy comparing to the same period last year, depending whether in cities (Hanoi and HCMC) or resort destinations (Sapa, Quang Ninh, Danang, Quang Nam, Cam Ranh, Nha Trang and Phu Quoc). As for Destination Management Companies and Tour Operators (HCMC, Hanoi and Ha Long), we are seeing about 50% decline. Meetings, Incentives, Conventions and Exhibitions (MICE) has been a big looser as many major International companies have suspended foreign travel by their employers. Hotel operators in Cam Ranh/Nha Trang have reported China focused hotels occupancy is down by as much as 98%, whereas mixed market hotels have experienced an average 50% cancellation and a 70% fall in future bookings. The strongest performing markets overall are from the UK, Europe and Australia, where future bookings are only down by 20%, USA are 40% down and Russia are 50% down.

Local airlines have been harder hit with flights suspended or significantly curtailed to China, Hong Kong, and Taiwan and with an approx. drop in of 50% in regional bookings and 40% in domestic bookings. One brighter spot is long haul markets where demand has so far fallen only by about 20%.

Tourism sites and main tourism destinations have also suffered. For example, during Tet and on regular days Ha Long Bay was receiving 7000 to 8000 visitors a day but on Monday, February 12th this had reduced to 2300 most of whom were European. Shop keepers and market stall holders, in HCMC and other cities are generally reporting falls of 50% in Business with no Chinese, and few Korean or Japanese guests.

During SARS, as many as 400,000 foreign tourists cancelled their tours to Vietnam in 2003 as a result of the SARS outbreak . However, tourism industry back then was much smaller and their direct contribution to Vietnam GDP was much smaller (less than 4%). Today, tourism industry is contributing 9.2% to Vietnam GDP and their indirect and induced contribution could be as high as 18% of Vietnam GDP. Also, back then, we could diversify markets geographically and reach out to Australia, Europe and Korea instead of concentrating on Japan. Because of that, we believe the impact of the COVID-19 on Vietnam tourism industry will be much higher this year.

Base on discussions with members of TAB, we would like to make the following recommendations for industry and government actions.

Scenario Planning Corresponding to Four Levels of the Epidemics and our recommended actions for general tourism guidelines

Periods and key recommended actions for Vietnam tourism industry

• Period 1; Fighting the Epidemics
• Period 2: Between Vietnam ‘s containment and global containment
• Period 3: After global containment

Recommended government policies to be applied as soon as possible

1. We repeat our request for urgent visa exemptions, extended to 30 days and can come back any time for the most resilient markets being the UK, Europe, Australia, New Zealand and Canada. This could first be for a period of 12 months.
2. There should be a source of information for people planning to visit Vietnam on what the current regulations are as regards health checks on arrival, quarantine requirements etc. There needs to be access to a website where this information is kept updated in English and Vietnamese at a minimum.
3. We would like to recommend a set of Best Practices to be implemented by hotels, airlines, airports and at train and bus stations, to protect staffs, guests and communities during the peak of the outbreak
4. Immediately reduce VAT for tourism related business from 10% to 5%. Extend tax payment period from 6 to 12 months without penalty. This payment extension could be applied for VAT payments of Q4, 2019 and income tax payments of FY2019.
5. We would recommend a series of support measures for companies operating in the sector;We welcome the move by the State Bank of Vietnam with its directive to support businesses affected by COVID-19 and the move by several banks to lower interest rates on loans to affected business and loan payment moratoriums.However, we strongly recommend against subsidies and emergency loans to large corporations as it would create a distorted and unfair treatment in the market. We further recommend concerted efforts by the State Bank, Ministry of Finance and the Ministry of planning and Investment in developing financial support measures.Other measures that could be considered such as waiving social and health insurance contributions for companies and the accrual of personal income tax and corporate income tax payments until the virus is over.
   We suggest a reduction of land use fees to 50% for all hotels, resorts and theme parks for FY2020 and 2021.
6. Instruct government agencies to reduce unnecessary inspections to businesses in the sector. Those inspections take out lots of time and resource from the already fragile businesses.
7. Disbursement of national tourism fund to Marketing and Promotion action plan through VNAT and TAB Marketing Group’s platform (Vietnam.travel and Visit Vietnam Offices). Immediately take earlier recommendations by TAB on the implementation of the tourism fund.
8. Speed up government investments in much needed infrastructure for future growths. We need to speed up the process of Long Thanh, upgrade Tan San Nhat Airport, upgrade Phu Bai and Dong Hoi Airports, build new Chu Lai Airport and push for expansion of Hanoi Airport. We also need to complete the Saigon Can Tho, highways and several sectors of North South highways.
9. Ease and speed up licensing procedure for important businesses of the industry such as Airlines, Airports and General Aviation businesses.
10. Encourage provincial governments of key destinations to increase and maintain high level of sanitation standards, hygiene and sympathetic behaviors amongst the local people with visitors and avoid by all means discrimination of any group of people. This should continue even after the outbreak is fully contained.

As stated in our previous letter, we are very encouraged by your determination, clear guidance and swift policy during this challenging time. While we know the situation could get worse before it gets better, we believe with your leadership Vietnam will not only protect our people, contain the outbreak but also take this as an opportunity to restructure this spearhead industry to be stronger in the future. We hope you could quickly implement our recommended policies and direct the government agencies to take smart and timely actions basing on our suggested scenarios and periods of our fight.

The Tourism Advisory Board committed to follow your direction, support your government, the Ministry of Sports, Culture and Tourism for a sustainable growth. We will continue monitoring the situation and report to you should we see the needs and opportunities.”