Tuan Hung

While Vietnam’s tourism industry feels fresh hope, challenges remain for the smokeless industry

Swimming back to a distant shore

Tourism in Vietnam is breathing fresh air again. Even foreign tourists, a major source of income for local tourism companies, feel this keenly. Data from the travel trends monitoring tool Google Destinations Insights reveals that overseas searches about tourism in Vietnam started to rise in December 2021. From then until early January 2022, the search numbers skyrocketed, with searches on January 1, 2022 up by 222% compared to the previous month and 248% compared to January 2021. From the start of January 2022 until now, the number of searches made by foreign tourists for Vietnamese airlines has remained exceedingly high: up by 425% at the start of February 2022 compared to February 2021. 

However, as of press time, few international visitors have actually arrived in Vietnam. March 2022 saw about 41,700 arrivals. Although this doesn’t compare to pre-pandemic numbers in 2019, this figure is 2.2 times higher than the same period in 2021. Arrivals promise to increase in the near future as tourism opens up and restrictions ease worldwide. While signals from the international market remain unclear, local travel has already exploded, primarily because of the approaching April 30 – May 1 holidays and summer vacations. Hotels in tourist hotspots like Nha Trang, Phu Quoc, and Dalat are already fully booked, and airlines are once again seeing ticket shortages. Many ticket agencies admitted that tickets to Phu Quoc have peaked at prices of around VND 7 million to 9 million/round trip/person).

However, according to experts, these encouraging statistics are just “early signs of recovery”. Restoring the tourism sector after it has been laid low for two years remains challenging.

A difficult return

The most prominent and conspicuous problem on the industry’s road to recovery is workforce shortages. After two years of trouble from the pandemic, many tourism employees abandoned that sector for other fields.  Travel businesses suffered great losses because of the pandemic, so salaries and bonuses for employees fall short of those before the pandemic. Representatives of several large enterprises stated that staff ready to return to the sector must be willing to share these hardships with their employers. They may have to begin at minimum wage or even from zero.

Given this situation, few employees are willing to return, especially those with experience. At the Vietnam International Travel Mart 2022 (VITM Hanoi 2022), held at the beginning of April, tourism company Best Price had to put up recruitment banners to refortify their lineup.

However, a representative conceded that “hiring people is a real headache.” The majority of applicants ask the same question: “Will tourism be able to bring me a good future?” Meanwhile, former personnel refuse to return because Vietnam’s tourism industry is not yet back to 2019 levels.  “On average, it takes three to six months to train a fresher. It is even more difficult to attract experienced people. They need security and steady work,” said Mr. Bui Thanh Tu, Marketing Director for Best Price.

Dr. Prof. Nguyen Van Dinh of the Vietnam Tourism Association provided statistics showing that human resources will be a major problem for the tourism sector post-pandemic. Although his survey only covered Ho Chi Minh City, Dr. Dinh worries about a nationwide lack of personnel, especially for highly qualified workers, particularly as Vietnam reopens and rebuilds its tourism industry.  Among tourism workers who lost their jobs, 43.66% of those who changed sectors had between five and ten years of work experience. This figure was 23.56% for workers with over ten years of experience. Over 70% of tour guides, many of whom speak two to three foreign languages, switched careers.

Hiring issues aside, many businesses must bear the loss of tour packages previously sold at low prices but not yet reintroduced due to the pandemic. This means that they have customers to serve but cannot generate income or profit from these customers. Businesses face even more difficulties as prices and personnel costs rise. Disruption in the supply chain for international tourism services is another difficulty. Many companies serving inbound travelers struggle to find partners, as many restaurants catering to foreign guests have shut down with no signs of returning.

Yin & Yang, a restaurant catering to foreign guests in Ba Dinh District, Hanoi, has been closed for two years. Even though foreign travelers are now able to visit Vietnam, the owner Le Truong Lam has no intention of reopening. He believes that the number of international guests remains unstable and exceptionally low, while prices for raw materials are exceedingly high. “A 45kg tank of gas costed VND800,000 before the pandemic; now, it costs twice as much. Food prices have risen by 20 to 30%. Given how few tourists there are, we would end up with surplus inventory if we reopened. Restaurants dedicated to inbound tourists do not have enough regulars to return as quickly as local places. Of the restaurants specialized in serving international guests that I know, nearly 100% will not reopen until the market is stable again,” Mr. Lam revealed.

In fact, restaurants, hotels, and travel agencies are wrestling with their own problems. In the joyful picture of Vietnam’s tourism reopening, insiders see many issues.

Climbing back to the peak

Industry insiders must find solutions for the tourism sector’s future. However, efforts from the tourism industry alone are not enough to restore a sector that once contributed over 9.2% to the national GDP. With 20 years of experience in the industry, CEO Pham Ha of Lux Group has always wondered whether Vietnam truly considers tourism an economic sector. The hassles caused by Vietnam’s visa policy have discouraged international tourists from returning to Vietnam.

In the first reopening after March 15, foreign visitors from 13 countries received only 15 days of visa-free stay in Vietnam with one entry/exit. If, for example, visitors detoured to Cambodia and returned to Vietnam for Vung Tau (Ba Ria-Vung Tau), they had to reapply for a new visa. “The tourist visa policy demonstrates the level of attention on the tourist economy and tourists themselves. A friendly visa policy means that tourists feel welcome and want to travel to a country. Our policy is a step behind the reopening of tourism on March 15. After that, because they must be guided through the process, tourists from outside the 13 visa-free countries face a lot of trouble trying to get their visas at embassies. The E-visa form and interface are not mobile-friendly and only available in English and Vietnamese, while the website’s interface looks unprofessional. It is much harder to get a visa and pay for it here than in Thailand,” said Mr. Pham Ha.

In this reopening, Vietnam faces competition from regional rivals such as Singapore, Thailand, Malaysia, and even Korea and Japan. The fight over the small number of tourists is more competitive than ever before. Welcoming foreign guests means adding income to the national economy. Despite our many potential attractions, such as fantastic natural scenery, culture, cuisine, and people, Vietnam has not done very well in keeping tourists and making our services worth their money.

Before 2020, the number of international guests to Vietnam rose steadily, with Northeastern Asians (Chinese, Korean, and Japanese people) accounting for nearly 70%. Visitors from major markets with greater spending power such as Europe, the Americas, and Oceania, were less present. Compared to Thailand, tourists to Vietnam spend less. An average international guest spends up to nine days in the Land of Smiles and shells out about USD1,600. In the peak year of 2019, these statistics for Vietnam were 8.1 days and USD1,074.

Vietnam desperately needs changes to help its tourism industry compete with regional rivals. As well as attracting more visitors, Vietnam must aim to improve quality to lure a steady stream of well-paying customers. “Vietnam’s tourism will not be able to return to its 2019 pace until 2025,” predicted Mr. Pham Ha, “though I believe this could be sped up if we resolve bottlenecks and enact policies that value tourism. The blossoming of international financial markets and global political stability would also help.”