The novel coronavirus (nCoV) outbreak in China has already been causing large shocks to global travel and tourism and Vietnam is no exception as the Southeast Asian country has already been experiencing the negative consequences caused by the global pandemic.

Foreign tourists arrive at Cam Ranh International Airport in Khanh Hoa province.

Director of Savills Hotels Asia Pacific Mauro Gasparotti has made the comment regarding the impacts of nCoV outbreak to Vietnam’s tourism sector. He added that hotels have started to receive a handful of cancellation requests over the last few weeks by not only group and MICE guests but also independent travellers.

The expert noted that the emergence of coronavirus has caused three key impacts on Vietnam tourism, all of which would possibly hurt Vietnam hospitality this year. The first and most obvious impact would be the expected drop in Chinese travellers who made up the largest proportion of foreign tourists to Vietnam in 2019, accounting for over 30 percent.

Coastal destinations would face the same issue with Khanh Hoa province expected to be particularly affected as China was the biggest source of arrivals accounting for more than 70 percent of foreign visitors to this destination, the provincial Khanh Hoa Department of Tourism.

Major cities like Hanoi and Ho Chi Minh City would also be negatively affected by the slowdown of MICE and corporate travellers as a series of meetings, conferences and oversea trips have been postponed or cancelled due to the ongoing spread of coronavirus.

The second impact of coronavirus to Vietnam is the significant expected decline in global demand to Asian countries which will likely be perceived to be at higher risks of coronavirus compared to other destinations. After a few years of significant growth in international arrivals to South - East Asia regions (more than 138 million international tourist arrivals in 2019 with an impressive Compounded Annual Growth Rate (CAGR) of 7.8 percent in the past nine years), a steep slowdown would be observed in the upcoming time.

Hence, Southeast Asian countries like Thailand, Indonesia and Vietnam would be expecting a temporary slowdown in travellers from Europe, Australia, the US, and others where leisure groups are more likely to cancel or postpone their trips due to the fear of outbreaks.

Based on a survey conducted by the global premium data STR during the period of SARS infection (2002 - 2003), all hotels located in Asia witnessed a large decline in Revenue Per Available Room (RevPAR) of over 4.5 percent.

As recently reported by Thailand Ministry of Tourism, the large drop in Chinese travellers caused by coronavirus outbreak could lead to a loss of more than US$1.5 billion in tourism revenue this year. The third impact would be on local demand as people are now more hesitant from traveling to crowded places like airports, train and bus stations and even restaurants and entertainment places to avoid contagious infections.

At the other end, local demand would largely depend on the ability of the Vietnamese government to contain the spread of virus within the country. If the virus could be well contained, local travellers would be less impacted.

“If the outbreak will be proven to be contained both in Vietnam abut also globally, we are positive into a steady recover in the second half of the year and tourism industry will be once again a strong growing industry for Vietnam,” Gasparotti predicted.

For hotel and resorts, especially the properties serving large number of clients originated from affected areas, the strict implementation of safety procedures to protect the safety and health of both customers and staff must be continued, he further said. 

In deed, the global tourism industry has always been notoriously vulnerable to negative events, for example natural disasters (bushfires in Australia 2019, volcano eruptions in Philippines 2020, and others) or political instability (Brexit and US - China trade war) have been proven to cause significant impacts to tourism in each specific destination.

Global pandemic has much larger impact to overall global demand as well as tremendous influences on specific destinations in both short and medium term. At the time, several airlines around the world have reduced or cancelled flights to and from China, including Air Canada, American Airlines, British Airlines, Cathay Pacific, and others.

Vietnam has also started to respond by suspending all flights to and from coronavirus-hit areas in China. On the other hand, also outbound restrictions have been placed on Chinese tourists by the Chinese government to contain the spread of virus, causing a severe loss in several countries due to China’s status as the world's largest outbound tourism market.

The virus outbreak has resulted in a wave of tour and rooms cancellations not only by Chinese tourists but also global travellers who had travel plans to Asia.