The industry must now work at innovative measures to revive and restore their operations, and find best workable solutions to market and sell their products and reach out to potential customers. Speaking with Saigon Investment, Mr. NGUYEN TIEN DAT, Director of AZA Travel Company, shared these thought and many other solutions.
JOURNALIST: - Sir, how do you assess the current state of the tourism industry and its ability to recover from the effects of the Covid-19 pandemic?
Mr. NGUYEN TIEN DAT: - The recent and sudden outbreak of the Covid-19 pandemic has been a huge blow to the tourism industry in Vietnam and across the globe. Currently, all tourism businesses are facing many difficulties. The bigger enterprises are being able to stay open and survive but are still unable to operate, while the smaller businesses with little capital are almost on the verge of bankruptcy or have shut down completely in the second quarter of 2020.
Revenue in the tourism business mainly comes from three main sources, namely, domestic tourism, outbound tourism that takes Vietnamese tourists abroad, and travel activities to welcome foreign visitors to Vietnam. However, since the outbreak of the Covid-19 pandemic, all these three activities have been frozen, and travel businesses now have no source of revenue. More than a month ago, the Government announced that the pandemic had been contained and had allowed the reopening of domestic tourism, but only a short while later the pandemic returned in the form of a second wave. This once again shut down all tourism activities and it is not clear when we will open again.
In fact, domestic tourism brings in very little and an insignificant amount of income compared to foreign tourism, but it was being seen as a temporary solution for businesses to continue to operate in moderation to maintain themselves. For example, in our company, revenue from tourism activities is still near nil as we owe the bank and continue to pay an interest amount every month. Other than this we have to also cover expenses paid to airline companies for international travel activities, which is a huge sum of money, and now in the current scenario it may be impossible to recover.
Recovery for all the tourism companies depends heavily on how the disease can be controlled and contained. Even if an effective vaccine is introduced in the world that can be used to contain and control the disease in mass communities, it will still take one or more years for tourism businesses to begin to start working normally again. Therefore, the coming months and years pose a fierce challenge for the tourism industry. For sure, many businesses will either shut down completely or declare bankruptcy. For the tourism industry, the post pandemic scenario also does not look very good, as it will be a very slow recovery.
- Sir, have Government support policies for businesses in general, including tourism businesses, been effective?
- I think the Government policies to support businesses in the current pandemic phase are necessary, but how effective they are still has to be seen. Regarding preferential loan support packages for businesses, many tourism businesses are still unable to access these and see their benefits. Our company, for instance, cannot borrow any money from this capital. Tax exemption or tax reduction schemes too have not had much effect. Since the Covid-19 outbreak up until now, tourism has been sporadic and any business without corporate income tax cannot be considered a preference.
The Covid-19 pandemic is still very complicated and unpredictable, and it is not clear when it will be controlled, so it is best that the tourism industry accepts this situation and learns to live with this situation, and find the most effective ways to innovate and maintain operations to continue to generate revenue.
In addition, access to other credit packages from banks is also very difficult. Due to difficulties that the tourism businesses are facing, banks are hesitant to lend money for fear of rising bad debts. Therefore, I think that the support policies of the Government need to be more specifically aimed at the tourism businesses. For example, it is possible to build a business support fund from the state budget which enterprises can borrow directly from to reinvest in their business.
- Sir, after the resurgence of the second wave of the Covid-19 pandemic in some localities, domestic tourism was suspended once again. Some argue that this activity should be maintained with enhanced disease safety control measures in place. What is your opinion on this?
- I think that domestic tourism should still be maintained, because this is the best way for tourism businesses to continue to operate and save themselves. The Covid-19 pandemic exploded again recently due to the poor control measures at our borders. In addition, if mandatory social distancing measures are to be enforced, they must do so in segregated zones and not across all other localities, because this is not necessary. Moreover, because the Covid-19 pandemic is still very complicated and unpredictable, and it is not clear when it will be controlled, so it is best that the tourism industry accepts this situation and learns to live with this situation, and find the most effective ways to innovate and maintain operations to continue to generate revenue.
Currently, the tourism industry is constantly fluttering between various options to operate. Previously, tourism was often operating as a large organized group and concentrated on tourist destinations. It can now organize by households for short-term resort tourism such as homestays or farmstays. This would meet the needs of both customers and businesses, and revenue can still continue to come in despite the pandemic. In addition, many businesses are now cutting costs and manpower, and when later these enterprises want to recover their operations they will find it difficult due to lack of trained and experienced manpower.
- Thank you very much.