Digital transformation to drive tourism recovery

Vietnam’s online travel market, which refers to transactions over the internet for flights, hotels and vacation rentals, fell from $5 billion in 2019 to $2 billion this year, according to a recent report by Google, Temasek and Bain & Company.

This put Vietnam in the second to last place among six countries in Southeast Asia, raking the same as Singapore and only higher than the Philippines, the report said.

But it is set to grow 39% annually to reach $6 billion by 2025. People in Malaysia and Vietnam show the biggest leap in intent to travel internationally next year, doubling from 2022, the report added.

Tourist agencies, as well as those in service sectors like accommodation, entertainment, food, and transportation, are hoping to claim a bigger share in this potential market via digital transformation.

Tang Thi Huyen Tran, CEO of Fabulous Mekong Ecotours in Can Tho City, said bookings remain slow at around 10% each month. But with a large booking for December, she hopes that next month’s growth could reach 20%.

Tran said that one of the contributors for growth is her increased use of over-the-air services thanks to a boost from online marketing.

She is working on perfecting her website to not only sell tour packages but promote local culture and travel information.

"Digital transformation is a must. It is difficult to adapt and transition from a traditional work culture to digital. But once I started, I find it easier and quicker to manage my business and know it better thanks to a large amount of data."

Many other tourism-related businesses are putting more priority in technology development to increase revenue.

Around 62% of companies in the art-entertainment industry are looking for employees with information technology and e-commerce skills, followed by transportation-logistics (59%) and accommodation-food (55%), according to a survey by Vietnam E-commerce Association.

Online booking platform Klook’s director of the Philippines, Thailand and Vietnam Michelle Ho said that Vietnamese companies are active in their digital transformation process, driven by necessity.

The small number of international tourists, compared to pre-pandemic figures, is a key motivator for businesses to change their modes of doing business.

In the first nine months, only 1.7 million foreign travelers came to Vietnam, against 12.8 million in the same period of 2019.

Tourists are seen at Hoi An Town in Quang Nam Province in July 2022. Photo by VnExpress/Dac Thanh

Both domestic and international companies are looking to attract more customers with digitalization, partnerships and discounts.

Klook used to sell only tour packages and service tickets, but has expanded into hotel bookings and car rentals.

Popular platform Booking.com, which offers around 20,000 rooms in Vietnam, began a strategic partnership with Klook in early October.

Another platform, Agoda, used to provide only room bookings but has now expanded into air travel.

Traveloka offers a discount of up to 5.5% if customers use cashback reward platform ShopBack.

"They are burning millions of dollars in Vietnam and are ready to do so for dozens of years. Vietnamese businesses are not capable of doing that, so they need to form an ecosystem with each other," said Nguyen Hoang Le, founder and CEO of digital transformation consultancy Dr. SME.

Domestic companies have been making moves. Booking platform Gotadi in September launched Gotadi BTM, a solution seeking to make travel reservations easier for companies.

It also signed a partnership with the Ho Chi Minh City office of the Vietnam Chamber of Commerce and Industry earlier last month in the hope of boosting tourism digitalization and tourism activities in Vietnam’s biggest city.

"Digital transformation is an inevitable trend, and will help tourism recover in a sustainable manner within a new context," he said, adding that technology helps increase tourism supply amid rising cross-border competition.

But whatever the method of attracting customers, tourism quality is the most important factor to ensure sustainable growth, Tran said, adding that customer experience is key as it ensures local livelihoods.

"We are aware that what we are doing is part of a bigger picture."