Great expectations but no stimulation: travel firms the black sheep?

By Nguyen Tran Hoang Phuong   December 16, 2020 | 08:00 am GMT+7
Believe it or not, a friend earning revenues of VND85 billion ($3.67 million) a year has lost everything in less than a year.
Nguyen Tran Hoang Phuong

Nguyen Tran Hoang Phuong

I had to watch as one after another, he sold everything – air conditioners, tables, chairs and even phones.

After more than a decade of working in the tourism industry, he has lost everything to the Covid-19 pandemic.

From a boss with 70 employees, he is left empty-handed.

In 2017, he'd opened his own company, offering tours for foreigners to visit Vietnam. Most of his customers were from Thailand, Japan and South Korea. After just two years in the business, he had two offices in HCMC and earned revenues of VND85 billion per year.

As impressive as this growth was, the collapse of the business was as sudden. He was caught completely off guard by the pandemic.

In April, my friend shut down one of his company’s offices and cut his staff down to just 20, but he did not give up. He and the remaining staff waited patiently and tried their best to save the company’s budget in different ways. The second Covid-19 outbreak that hit in late July, however, proved to be a knockout blow.

By August, he'd lost everything. The worst loss, by far, was his future orientation.

I am no stranger to the tourism industry, having worked in it for 12 years. And I have never seen it fall as far and as fast as this.

In fact, my own story is not much better than that of my friend. I also own a travel company with a staff of more than 60. Now, I have just 15 left and it is possible that I will also have to let them go.

Last year, the tourism industry contributed more than 9.5 percent to Vietnam’s economic growth and generated revenues of VND775 trillion ($32.8 billion), up 16 percent year-on-year. To put this into perspective, in Thailand, which has an economy heavily dependent on tourism, the industry contributed 15 percent of the nation’s gross domestic product last year.

The 2019 Tourism Highlight report by the United Nations World Tourism Organization (UNWTO) listed Vietnam seventh on its list of fastest-growing tourism destinations, up three spots from the previous year. The country was in the midst of a tourism boom, and its visitor numbers last year rose at one of the fastest rates in the world at 16.2 percent to 18 million, the report said.

To get such results, the industry had spent decades working hard to make the needed changes. The results raised high hopes that it is the tourism industry that will help bring Vietnam "shoulder to shoulder with the great powers of the five continents."

Two new categories

Da Nang Airport in central Vietnam is almost empty after Covid-19 hit Vietnam, February 2020. Photo by VnExpress/Nguyen Dong.

Da Nang Airport in central Vietnam is almost empty after Covid-19 hit Vietnam, February 2020. Photo by VnExpress/Nguyen Dong.

Before the pandemic, enterprises in the tourism industry were classified on several factors hinging around the quality of products and services (scale, location, staff expertise, value for money and so on) since there was fierce competition. But now, there are just two main categories: those that are still standing and those that have gone bust.

Around 80 percent of travel companies in Vietnam have either shut down or cut their staff by up to 90 percent. Those that have been hit hardest are companies offering international outbound and inbound travel services – taking Vietnamese tourists abroad and bringing international tourists to Vietnam. Of these, 95 percent have shut down or switched to other businesses.

As for domestic tourism firms – those serving people traveling within the country – a rough survey I’ve done indicates there is no way their revenues this year would cross one third of last year.

Without naming them, it is obvious that many hotels, restaurants and travel agencies have failed to cover rent for their premises. Many have had to move their offices to their homes. It is also obvious that many have been caught in a debt spiral and have had to borrow money at usurious rates. There are cases in which travel companies had accessed loans and mortgaged assets to deposit a large amount for air tickets, but airlines are refusing to return the deposits.

And as if pandemic related problems were not enough, in October and early November, a peak travel period when Vietnam did not experience a single community transmission of the novel coronavirus, the central region Vietnam, which hosts many tourism hotspots including the ancient town of Hoi An, was hit hard by historic flooding and a series of deadly landslides.

And just as the nation limped back to normalcy after the disasters, the biggest city of Vietnam, HCMC, recorded the first case of Covid-19 in the community on November 30 after a break of four months. Nationally, the break was 89 consecutive days.

We are ignored

After the three outbreaks and their impacts, the tourism industry is truly cornered.

For almost a year, businesses in the industry have been waiting for a helping hand from the government. The help could either be a stimulus package or a preferential policy to support those that once contributed 9 percent of the nation’s economic growth.

The Communist Party's Politburo, Vietnam’s main decision making body, issued a resolution in 2017 to develop tourism into a spearhead economic sector by 2020.

But in the past three years, not much has been actually done to boost the sector’s development, apart from conferences and meetings with general discussions that have not come up with any specific solutions to facilitate recovery.

The Vietnam Tourism Association and professional organizations have proposed plans for rescuing the sector but I am yet to see any hint of an effective solution that could actually save my business and that of my friend.

It seems like we are being treated like the black sheep in the family.

It’s been more than eight months since the first wave of infections and we have not seen any specific support policies for travel companies. With every passing day, our hopes dim.

Not very far from us, Thailand has approved two stimulus packages worth 22.4 billion baht ($745 million) since July to revitalize its tourism industry. With those packages, each citizen gets 2,000 baht for airfare and hotel fees for a two-day one-night domestic trip. By the end of September, the Tourism Authority of Thailand estimated 70 million trips that contributed $13.3 billion to the nation’s economy.

For the past five years, China has been stimulating tourism with similar measures.

In Australia, each person working in the travel industry has been helped with at least $200 per month since June, not to mention nationwide campaigns encouraging travel. The government has said it will do everything to ensure no travel companies will go bankrupt because of Covid-19.

Since May, the South Korean government has paid up to 90 percent of the basic salary for those working in the tourism industry.

A friend of mine who works as a tour guide in Seoul sent me this message: "So happy! I've just received the fund just four days after registering myself as a jobless tourism worker."

The fund was transferred straight into his bank account along with a confirmation book sent directly to his private address.

In all, he gets 60,000 won ($55) each day for 240 days, starting May 1. "I can sit in peace and wait for the day when the pandemic is gone," he says.

I am happy for my friend, but I can’t help feeling pity for myself and my peers.

Our policymakers mention often their vision of a sustainable, multi-billion dollar, smokeless "economic spearhead." It is difficult to understand how they say this and then ignore our plight completely.

During normal times, it should be expected that businesses find their own way to survive, but these are not normal times. It is going to be a very tough task without government help.

I guess we will have to find a way. Doing nothing is not an option.

*Nguyen Tran Hoang Phuong is a businessman with 12 years of experience in the tourism industry. The opinions expressed here are his own.

 
 
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