Domestic tourism rises but no match for loss in foreign visitors

While domestic travel is on the rise following government efforts to reduce the impact of the Covid-19 pandemic on tourism-related businesses, the upturn is unlikely to offset the complete absence of foreign tourists.
President of the Lao National Chamber of Commerce and Industry, Mr Oudeth Souvannavong, told Vientiane Times on Monday the slump in tourism was not only affecting businesses but was having a huge effect on the income earned by local people.
“Many people are cautious about spending because of the prevailing uncertainty,” Mr Oudeth said, adding that only a small percentage of the population could be categorised as rich and middle-class so overall spending was not doing much to boost tourism.
The sharp drop in travel has resulted in job losses in tourism-related businesses such as hotels and restaurants, which account for 11 percent of all jobs and 22 percent of jobs in urban areas. 

Mr Oudeth said many people had taken trips with their children during the school holidays but only a few places such as Vangvieng and other popular places close to the capital had benefitted.
And with the start of the new academic year on September 1, domestic tourism is certain to see a downturn.
According to a recent World Bank report, hotels and other places of accommodation, restaurants, tour companies and transport operators have been the hardest hit. Some small concerns are reportedly going out of business, while many expect recovery to take up to one year.
“If the local and global virus outbreak continues over the second half of the year, the loss in tourism revenue could be more than US$500 million, or 2.7 percent of GDP,” the World Bank report stated.
Tourism-related businesses in Vangvieng and Luang Prabang, particularly providers of transport, food and accommodation, as well as retailers have been hard hit by the absence of international visitors. 
Fewer tourists from neighbouring countries including China in the first quarter of 2020 worsened the situation because of travel restrictions adopted in other countries and the continued closure of Lao borders.
Over the first six months of 2020, international visitor arrivals shrank by 60 percent compared to the same period last year, according to the National Economic Research Institute.
Most tourism-related businesses are categorised as Small and Medium-sized Enterprises (SMEs). These generate a large number of jobs but are particularly vulnerable in the current global economic crisis. The slow growth of SMEs has affected household incomes, and people are struggling to survive in times of hardship.
However, the government’s promotion of domestic tourism has enabled the private sector to improve services and develop more tourism products in order to be better prepared for a post-Covid 19 crisis.
The situation has meant that the public and private sectors have pooled their ideas and discussed ways to work together to weather the challenges to their plans.
In 2019, Laos welcomed 4.58 million international visitors, an increase of 9 percent compared to the figure reported in 2018.
The number of Chinese tourists alone surged by 27 percent while the number coming from the USA and the UK rose by 22 percent.

By Somsack Pongkhao
(Latest Update September 2, 2020)