EuroCham Vietnam (EuroCham) is a well-recognized organization that has received many Certificates of Merit from the Government as it has continuously proven its role and contribution to the tourism and hospitality sector as well as the whole economy of Vietnam. Destination Review had a chance to talk with Mr. Martin Koerner, the Chairman of EuroCham’s Tourism and Hospitality Sector Committee, to listen to the opinion of European companies in the sector on the reopening of international travel.
What roles does EuroCham hold to the tourism and hospitality companies and to the Vietnamese tourism and hospitality market?
EuroCham is the European Chamber of Commerce in Vietnam. Basically, we are an organization that gives each individual business a stronger voice in the country. Most European countries, including those in Central and Eastern Europe and Scandinavia, as well as Germany, France, the Netherlands, Belgium, Spain, and Portugal are members of EuroCham. At the moment, we have almost 1,000 members, many of which are multinational corporations alongside small- or medium-sized companies.
EuroCham is completely non-political. We focus on advocating the business perspective to the Government and other relevant stakeholders. This gives us good leverage since our main focus is to enhance the business and investment environment in Vietnam. A lot of EuroCham members are related to the tourism and hospitality industry in sectors such as airlines, hotels, tour operators and travel agents. These members are interested in ensuring that the business environment in Vietnam is good for them and so we are highly active in exchanging with our Vietnamese counterparts to facilitate cooperation between both sides. Just to give one example, as an individual hotel or individual tour operator, our members do not have much influence. However, when they come together as a large organization, they have the chance to raise their common voice through EuroCham.
Most EuroCham members we represent are foreign direct investors. So what does it mean for the tourism and hospitality industry in Vietnam? According to the Government’s Resolution 103/NQ-CP issued in 2017 to implement the Politburo’s Resolution 08-NQ/TW 2017, tourism should spearhead the economy and become a vital part of Vietnam’s economic growth. And, for that to be successful, Vietnam needs Foreign Direct Investment (FDI) and foreign companies within the country to develop, especially those in tourism.
Furthermore, as tourism is a very fragmented industry, a lot of work needs to be done in order for a tourist to arrive in Vietnam. When a tourist from Europe decides to travel to Vietnam, many things impact their decision to actually step into the country. There are lots of stakeholders involved, including many different companies.
For the tourism industry to further succeed, Vietnam must rely on both overseas and local partners. The local partners can be hotels, many of which are also managed by international hotel companies. Overseas partners, meanwhile, may include foreign companies and investors. The EuroCham Tourism & Hospitality Sector Committee creates a common platform for our businesses to work together to achieve this goal. We wish to facilitate and have an open exchange and cooperation with different stakeholders in Vietnam. In particular, we can help the Vietnamese tourism industry by ensuring that the expertise, knowledge and experience of FDIs can be shared with Vietnam.
As the representatives for the European players, what is your evaluation of the drawbacks these businesses had to face during the crisis of Covid-19?
To be clear, all our members were impacted by Covid-19. I do not think anyone is happy about the pandemic and, although a few companies made a profit last year, this pales in comparison to the overall loss. In 2020, due to the pandemic, not only was international tourism basically set back to zero after the February-March period but domestic travelers also fell quite significantly. This represents about a 30-40 percent year-on-year decline since we had no more incoming tourists because of the travel ban.
Many of our city hotels and inbound tour operators were heavily impacted due to this lack of tourists. Some companies were lucky to have full support from Europe to pay for their staff here. But, unfortunately, others had to remove their office in Ho Chi Minh City. Some had no choice but to reduce their headcount while keeping the core staff, while others had to significantly reduce their operations or even shut down altogether.
For hotels, tour operators and even airlines, companies who were financially strong endured the crisis while other, financially weaker players were pushed out of the market. So when the industry recovers, those stronger companies may earn a larger market share since the weaker companies have left. As long as these businesses are still here, they will be in a much stronger position in the market once the business comes back.
The Tourism and Hospitality Sector Committee has been active in working and sharing suggestions with the Government to further support tourism and hospitality businesses. These include looking at taxation policies or other forms of support by releasing supporting packages and so on. Besides, we participated in conferences to share our insights, our industry experience and knowledge in order to ensure a safe re-opening of domestic travel. We also wrote one or two letters in which we outlined our concerns and recommendations to the Government to support our members, who were impacted by the crisis. As a result, we received the Government’s support last year and we appreciate these actions.
To facilitate a successful reopening of international travel, from EuroCham’s perspective, what Vietnam should concentrate on?
I think there will be an even stronger trend for travel as people have been spending so much time – about 12 months – in their own homes and their own countries. So, there must be a pent-up demand for travel. In Europe, some of the hotels are already pre-booked and travelers have even booked hotels in Vietnam although they do not know whether they will be able to enter the country. I think, from the travelers’ point of view, there is a very strong interest and demand to go out and travel.
The only question is how much the Government allows this travel to happen. We know the demand is there, the supply is ready, but how about the policies and regulations controlling travel arrangements to ensure it can happen safely? If we want to have a strong rebound, we have to look at vaccination passports, visas, safety certification and find out a clear answer to achieve the Government’s double goal and support the tourism industry.
In most Southeast Asian countries, such as Singapore or Thailand, it is easy for tourists to enter as they have a clear plan for the visa. This leads to these countries having a strong inbound number. As for Vietnam, there are only a few countries that have visa exemption. German and French passport holders have visa exemption, but those from the Netherlands and Switzerland do not. From the European perspective, it does not make sense as they all come from Europe and the income level in these countries is almost the same. So, the reason for this distinction is unclear. If Vietnam wants to attract international tourists from rich countries with high travel budgets, we need to make it as easy as possible for all of them to come. It is not just about the money, but also about convenience for travelers who just want to book and fly to their destination, hassle-free.
Even if travelers are visa-exempt, a 15-day period is too short as many people may want to stay for three or four weeks. We struggle to find a reasonable ground for limiting their stay to just two weeks. For instance, the average German tourist spends longer than two weeks in Thailand, but is limited to just 14 days in Vietnam. They may want to come to Vietnam for more than two weeks but, due to the current regulations, they have to cut their stay or apply for another visa. It is important to keep incoming high-spending customers for as long as possible. This needs to be reflected in the Government’s policies and legal framework to better support the business community.
EuroCham has continuously made efforts to raise this with our Vietnamese counterparts, recommending certain policy changes or suggesting some changes in current policies to the Government. However, further actions need to be taken.
It is very important that the Vietnamese Government looks into vaccination passports now. We know that there are countries already vaccinated like EU Member States, the UAE, the US, and the UK. It is important to now start talking about how we can deal with vaccinated travelers. To find out, the questions of how vaccination passports and the related legislation and visa policies work need to be clearly laid out and focused on by the Government now to give the industry clear directions and set the path for the industry’s continued development.
Other countries have already allowed vaccinated travelers to be quarantine-exempt. In Vietnam, there is no clear guideline on this despite some discussions. From the European tourism and hospitality industry’s perspective, we need to have an idea of how it is going to develop. For example, will someone from France with a vaccination passport be visa-exempt in Vietnam? They were visa-exempt before, but since the visa-exemption program was stopped, how is it going to be processed further? Those are regulatory questions that need to be addressed. Only when these are resolved will Vietnam be able to reactivate international tourism.
In most European countries and in the U.S., travel insurance is widely used. Many insurance companies in Europe are now asking questions about how travel insurance works in Vietnam. For example, do hotels or transportation providers have any safety certificates related to COVID-19? European travel insurance companies want to know if hotels have any certificates or are practicing all the safety measures in relation to the pandemic like hand sanitizers, disinfection, and so on. Usually, hotels or service providers get certificates from the World Travel and Tourism Council (WTTC). However, this is not yet applied in Vietnam since, while local certificates are available, we have no internationally-recognized certificate. EuroCham’s Tourism & Hospitality Sector Committee already raised this point with the relevant authorities last year and we understand that this matter has been under discussion.
There are also many compliments coming together for this successful recovery after COVID-19. For EuroCham, as we receive a lot of information from the private sector, we try to share our knowledge and expertise about the situation with our Vietnamese counterparts in order to help the country and its tourism industry to recover as soon as possible.
What is your advice for the companies and for the market to prepare for the future?
I think, at the moment, everyone is holding their breath and trying to get through the current challenges. Companies, at the end of the day, have to balance their costs and revenue through optimization in order to reduce costs while increasing revenue. For now, they only have the domestic market to rely on. Companies that have been heavily dependent on overseas travelers may have to temporarily change their strategy to target more domestic travelers so that, once international travel resumes, they can go back to their previous business model. That is the only advice I can give at the moment since other developments will depend on the policies and regulations set by the Government.
It would be good if the Government could start working on reopening plans now. I know this is a complex process; however, if there is at least a guideline or masterplan for international travel to resume, things will be much brighter. If there is no Governmental official written plan for the safe reopening of international tourism, the industry’s recovery will take more time.
Besides, Vietnam has some great advantages as it can proudly market itself as a safe destination for its remarkable success in dealing with the pandemic. Companies in Europe may not know about this, which means that Vietnam’s PR, media and communication strategy in major tourist markets could be strengthened. So, once we see the international borders reopen, Vietnam should reserve some budgets for marketing itself as a safe destination. I am sure that many tourists will want to come to Vietnam.
Basically, the Vietnamese market is already business-friendly, but there is always something we can further improve for the long-term. The measurement of statistics is one thing which could be improved as most countries have much more advanced and detailed analysis of their flow of traveler information while we only have the general numbers. Usually, international-quality statistics should show the number of tourist arrivals: the detailed number of leisure travelers, business travelers, and those visiting their friends and families. In other words, they have a break-down of who is coming. So far, from Vietnam’s statistics we can only know how many people with foreign passports are coming; not the reason for their travel. As we know, many “Viet Kieu” come back to the country with foreign passports for Tet or just to visit their family. These travelers do not really engage in the tourism sector; they just stay at home and visit their families. They are unlikely to stay at a five-star hotel. If the industry can access the percentage of each type of traveler and identify their target stakeholders; our members like international investment companies, hotel operators or conference operators can have sufficient data to analyze further and make their decisions to further invest in Vietnam accordingly.
Thank you so much for sharing your profound viewpoint with us!