With flights yet to resume, cheap beach destinations could turn into exotic holidays

The virus has been destabilizing for Southeast Asia, whose rosy economic outlook before Covid was premised in large part on booming international travel.

Representational image| Pixabay

Singapore/Bangkok/Hanoi: With cash flow drying up at Thailand’s popular beach resort of Phuket, hotels are racing to restart tourism — starting with local travelers.

“If nothing changes in the next three months, we won’t be able to afford paying for staff,” said Angkana Tanetvisetkul, president of the Kata Karon Business Association, which represents more than 40 locally-owned hotels in Phuket.

Across Southeast Asia — one of the most tourism-reliant regions in the world — hotels and travel businesses are slowly kicking into gear after countries like Thailand and Vietnam successfully flattened their virus infection curves and began easing lockdown restrictions.

While international leisure travel is still a long way off, hotels and airlines are slashing rates to lure locals. Even in countries where infection rates are still a worry, like Indonesia and Singapore, governments are hoping to reopen tourist hotspots like Bali and restart business travel to China and elsewhere.

In Hanoi’s usually bustling Old Quarter, hotels are scrambling to welcome domestic visitors, and beach-goers are sporadically returning to resort towns like Danang. That comes as Vietnam’s tourism revenue plunged by nearly half from January to May, compared to the year-earlier period.

As many as 8 million foreign tourists could still come this year if the government opens borders early in the third quarter, but for now Vietnam is counting on an estimated 65 million domestic tourists to carry the industry this year.

Do Tran Phuong, operating manager of Hanoi-based Mytravel Vietnam Co., says it costs as little as 2.7 million dong ($116) for local tourists to snag air tickets and two nights’ beachside hotel stay with the sort of deals airlines and hotels are offering. That’s a saving of more than 70% from before the pandemic.

“That will give almost no profit, but just to prompt people to travel and resume their traveling sense again,” he said. “The population of over 90 million people is actually a very big potential market for us, especially when the virus epidemic is still going on in other countries.”

Missing Boom

The virus, and the restrictions imposed to contain it, have been destabilizing for Southeast Asia, whose rosy economic outlook before Covid-19 was premised in large part on booming international travel.

The situation is perhaps most dire in Thailand, where travel and tourism makes up about one-fifth of the economy in more normal times and employs about 8 million people. For 2020, the government expects the number of international visitors to plummet 68% from last year to 12.7 million. The industry will probably contract about 70%, according to Somprawin Manprasert, chief economist at Bank of Ayudhya Pcl.

With international arrivals suspended until at least July 1, Thai tourism authorities are helping resorts throw open their doors to domestic visitors. There’s a sense of optimism in the industry that there’s enough pent-up demand to help start them on the path to recovery until international leisure travel resumes.

“Right now hotel owners and operators on the ground just need to get back on their feet,” said Bill Barnett, managing director of Phuket-based consultancy C9 Hotelworks Ltd. “People want cash flow. They’re anxiously waiting to get back to business.”

High Rollers

One market segment Thailand sees as an opportunity when borders reopen is the high-income leisure traveler, who is being targeted with “high-roller” packages.

The Tourism Authority of Thailand is working with the Ministry of Tourism and Sports on a program to attract wealthier visitors to two regions, Phuket and Samui & Phangan, for stays of at least a month, after they’ve passed health screenings at home and upon arrival in Thailand. Billionaire Dhanin Chearavanont, senior chairman of Thailand’s Charoen Pokphand Group, is among the plan’s backers, urging the government to relax lockdown restrictions and focus on high-end travelers.

Across Southeast Asia, travel and tourism contributed about 12.1% of the region’s GDP last year and 13.3% of employment, according to World Travel & Tourism Council figures released in April — second only to the Caribbean on both counts, but earning more than six times the receipts. The tourism industry’s 4.6% growth in Southeast Asia last year outpaced the global average of 3.5%.

In Indonesia, the prime tourist destination of Bali managed to avoid a severe hit from the virus, even as the country has suffered Asia’s highest death toll after India and China. The tourism sector will reopen for locals next month, with foreign tourists potentially able to return from September.

In Vietnam, the government started sending daily mobile phone messages in early May imploring residents to boost the economy. It launched a promotion called “Vietnamese travel in Vietnam,” offering discounts for locals and free entry to tourist spots, and drawing together airlines, travel agents, hotels and other businesses to coordinate holiday packages.

“Given the current context, the domestic market is considered a fulcrum for Vietnam’s tourism industry to gradually regain growth momentum,” said Bui Thi Thanh Huong, vice chairwoman and chief executive officer of Sun Group, a property developer that’s offering discounts of as much as 60% at some resorts and theme parks. “It’s very difficult to predict the timing of a full recovery for the industry.”

Already, there are hopeful signs of people on the move in Vietnam, according to analysis of Apple Inc. data that aggregate requests for driving directions.

Regaining Mobility

Vietnam “is a clear stand-out,” with Ho Chi Minh residents now moving about as much as they did in early March, Wellian Wiranto, an economist with Oversea-Chinese Banking Corp Ltd., said in a May 27 note to clients. As of June 2, Vietnam had just 328 confirmed virus cases and no fatalities.

Nguyen Thu Hang, manager of a 3-star hotel in Hanoi whose business typically relies largely on foreign tourists, is shifting focus to domestic travelers for now, with another eye on the core customers.

“We must rely on local tourists now, and hope that things will get better toward the end of the year when people feel more comfortable to travel,” Hang said. “We’re also taking this time to upgrade our facilities a bit to get ready for more guests later, when Vietnam reopens for international visitors.”

Domestic travelers will serve as a test case for how post-Covid travel will look once international tourists can return. Digital transactions and temperature checks are likely to proliferate. Hotel grounds could be arranged differently, with socially distanced fitness equipment and buffet lines. Large sporting events, concerts and big conventions remain far off on the horizon.

Even so, businesses face a long road of recovery — setting up a test of resilience, especially for the region’s small and medium-sized enterprises.

Angkana, of Phuket’s local business association, expects that only about 10% of visitors could return in the first few months after the lockdown is lifted, most of them domestic tourists. International visitors won’t return until winter, she said.-Bloomberg