Laos’ Rocky Road to Recovery

by

 

Op-Ed: Bernie Rosenbloom

 

Like many, I wake up and read the travel trade papers. When and how destinations will reopen dominate the headlines. And there is no lack of experts willing to share their wisdom.

Covid Recovery plan strategy LaosPhoto by ProjectsPlus

What new twist will we face today? What sage advice is coming from the UNWTO, PATA, IATA, WTTC? What’s ASEAN doing? Northeast Asia, the EU, UK, Australia? My favourite is Thailand. You can quarantine at a marina or a golf course. Sneak across the Mekong for a nose job. Show a lot of cash.

Who’s Steering the Lao Comeback Boat?

While countries’ Covid-19 reopening plans may vary and conflict, one constant remains… you’ll do time in solitary confinement, and jump through loads of hoops.

What is the strategy for Laos kick-starting tourism besides a “No one in; no one out” border lockdown? Clearly, this is not sustainable. Still, the Lao government is doing their job: keeping its population safe (41 cases, 0 deaths). It’s a plan.

But, the private sector seems to be silent. No national tourism association is stepping up. The Lao National Chamber of Commerce and Industry remains relatively mute on tourism. The Lao Association of Travel Agents appears dormant. The Lao Hotel and Restaurant Association is a Facebook page with 169 likes.

Provincial level tourism and hospitality groups appear more active, but any unified national voice is a peep. They’ve embraced the Lao Thiao Lao domestic tourism campaign and launched the 12 Days of Luang Prabang Tourism, but they need foreign arrivals spending cash.

Ideas to reopen often come from tourism stakeholders chatting at functions or over a Beer Lao. They understand the local travel trade, and how Laos cannot follow some cookie-cutter plan from another country. They’re in the trenches. Shouldn’t they have more than barroom-talk as a voice?      

This kept gnawing at me. Their voice needed an audience. On 17 December, I interviewed private sector tourism leaders. When and how would the borders open for tourists, and what could hinder this?

The very next day, the “Tourism Professionals in Laos” Facebook Group released “The Lao PDR Tourism Recovery Roadmap, December 2020”. It was prepared for UNDP Laos by Synergy Insights Consulting. Nice timing. The private sector meets the academics.

The Lao Private Sector Speaks

When will Laos open for tourists? RDK Senior Partner Jason Rolan said, “I would wager mid-year 2021, at the most optimistic, but this is contingent on so many moving parts.” His cogwheels include a vaccine, travel bubbles, more Covid outbreaks, and viable policies and procedures for entry.   

Damian Killer, the general manager of The Belle Rive Hotel, Luang Prabang chimed in. He said Laos likes to wait for Thailand to move. “Realistically, this might happen in spring sometime.” He agreed that global visits probably depend on the vaccine.

These “moving parts” also play into the prediction from Co-Founder and Partner of EXO Travel Laos Duangmala Phommavong. “Ideally Q4 of 2021, would be good to reopen the country and step by step.”  

Stanislas Frandelizi follows suit. The Inthira Group Managing Director said, “To re-open Laos means that border countries such as Thailand and Vietnam must also be reopen… We are hoping for borders to open by April, and international travel (will come) back by the beginning of the 2021 high season in October.”

It boils down to a roll of the dice and balance, according to Crowne Plaza Vientiane General Manager Patria Puyat. In September, the hotel was eyeing the first quarter of 2021. November brought more Covid cases, and the lockdown tightened. Time for a rethink.

“The question is how we protect the country and still have a semblance of a tourism industry. What is that balance? How do we get there and when? My guess would be the 2nd quarter of 2021. Again, with emphasis on the word, ‘GUESS’.”

Pullman Luang Prabang General Manager Denis Dupart sees border openings in the third quarter of 2021. “The Inter-Asia market will only reflect smaller demand bubbles towards the end of Q4, mostly for leisure destinations.”

Cooperation

Inter-Asian cooperation is key for a private sector comeback. According to Mr Rolan, “Initial phases will have to create agreements with neighboring countries as well as safety conditions that will allow for quarantine-free travel. These will probably begin with group tours, which can be more easily monitored.”

Mr Dupart also sees small groups and FITs from neighbouring countries as the first step. “Major focus (should) be on setting up strong relations with contracted partners to get both (FITs) and groups to start capturing the Asian market, once the international flights resume.”

Flights are critical, as Ms Puyat points out. “Most of our flight connections are reliant on our neighbours, so this is something that we have to deal with, and work in partnership with them.”

Marketing

Cooperation carries over into marketing. “All stakeholders – public and private – need to work together on the marketing and promotion strategy for Laos tourism,” said Ms Phommavong. “For marketing to be effective, the country must prepare all product and services in tourism’s industry, and ensure they are ready regarding quality, diversity, and safety before reopening.”

Mr Rolan agrees that a marketing plan needs careful thought to “entice travelers to come, whether it be a visa-free scheme or some other special offers that will create buzz and get people interested in traveling to Laos…The Covid situation is a real tragedy…and Laos is lucky to be relatively spared.

“This restart gives us an incredible opportunity to reinvent ourselves in the global travel arena. As we are in a New Normal situation, what we do in the future will need to focus on creativity and flexibility and not falling back on business-as-usual practices.”

Mr Frandelizi thinks along similar lines. “The complete shutdown of outside visitors has given Laos a chance to re-evaluate its tourism, and to give the country the opportunity to re-adjust to a more mid-range & higher-end eco-friendly tourism destination.”

And, communication comes into play. “We still face the issue of trust, for international travellers to believe the fantastic numbers in Laos with zero fatalities is another issue, as it is ‘too good to be true’.”

However he warns, “Re-opening too soon will mean free entrance into Laos for the virus that will be followed by another complete shutdown and home confinement for the population.”

Bottom line: there is no in-place, detailed marketing strategy, though the “Laos Tourism Recovery Roadmap” may add to the brainstorm.

Enter the Ivory Tower

Academics always have a strategic role in tourism. They often reveal insight many never considered. However, sometimes their work lacks tangible results and private sector input. Still, there are many walkaways from the Roadmap draft.

The Truth Can Hurt

“Laos has the lowest tourism promotion budget per visitor, the lowest average daily revenue per visitor and the lowest length of stay” in the region in 2019, the Roadmap states. In 2016, M&C Saatchi’s Creative Chairman Ben Welsh said destinations should shoot for spending USD 1.27 on marketing per visitor.

The UNDP exposes some startling numbers. Thailand spends USD 1.77 per visitor (USD 69 million in total) and pulls in USD 156 per visitor per day. Laos spends USD 200,000 (USD 0.04 per visitor) for a daily haul of USD 56. Other Mekong countries don’t spend much more, but their daily revenue per person tends to be higher.

The UNDP tells us that that the Covid impact on tourism revenue is beyond dismal. Almost every category shows a y-o-y drop of 66%-81%, except domestic accommodation and tourism (through March 2020).

Domestic Tourism Campaign: a Financial Loser?

The Roadmap draft states, “(Lao) Tourism businesses don’t see domestic tourism as a viable recovery strategy in the short to mid-term, due to the low population, low buying capacity, and no typical tourism behaviours amongst the domestic population.

“One business commented that the promotion efforts to the domestic tourism market are more a professional development opportunity…and a means to keep good quality staff, rather than a revenue raising opportunity.

“From a financial perspective it is not good return on investment – the revenue won’t keep the company going in this time of crisis; it is costing the company.”

The Roadmap discovered domestic tourism a niche market. “When there are 500,000 domestic travellers and only 1,000 buy a package, it demonstrates that spending on tourism products by the Lao population is very limited. Hotels and restaurants heavily discount their packages for domestic tourism, however this is not sustainable, even in the short term, as cash flow is needed to pay the bills.”

The Roadmap concluded, “In light of these findings and studies done, it is unrealistic to assume that domestic tourism, in the short term, will provide the cash flow to tourism businesses in Lao PDR to survive the immediate crisis.”

The Roadmap also noted that the private sector “wants to collaborate with the government for recovery, if this can be done in a true partnership where tasks are divided and each party is listened to and considered. The activation of a Tourism Board is desperately needed at this time of crisis.”

In 2011, the idea was floated for a Lao Tourism Marketing Board, The main goal was to collect a dollar or two at the border to be used to market Laos. Now we’re talking seven figures rather than six. Unfortunately, the initiative got bogged down in bureaucracy.

Good Suggestions: Will they Work?

Much of the Roadmap relies on case studies from other countries. Laos is not like other countries. Each country has its own situation. As such, though many suggestions have merit, they should be taken with a grain of salt.

Here are some takeaways:

  • As a result of COVID-19, up to 65% of tourism businesses have reported a high risk of needing to terminate at least part of their operations (UN 2020b, September 2020).
  • (Tourism) businesses report challenges in keeping their doors open, and most firms in Laos (60% to nearly 90%) did not think government tax measures have meaningfully helped.
  • The UN recommends a stronger focus on sustainable tourism, investments in the green economy and ensuring there is fair distribution of tourism’s benefits.
  • It is imperative that bubble negotiations are given the highest priority.
  • Nature-based tourism is likely to become more popular as it is seen as lowering the risk of contracting COVID.

The Roadmap’s Strategic Priorities also deserve consideration:

  • Intensify the collaboration between the private sector and the government.
  • Provide businesses with liquidity to avoid mass closures, and deploy tourism loan packages.
  • Support tourism SME marketing campaigns.
  • Facilitate infrastructure investments to attract investors to specific tourism products.
  • Strengthen brand and boost marketing to reignite travel.

The Roadmap’s timeline is similar to that of the private sector.

Phase 1, deliver immediate needs from January 2021 to June 2021.

Phase 2, deliver mid-term from July 2021 to June 2022.

Phase 3, deliver on the long-term from July 2022 to December 2023.

Show Me the Money

Much of the Roadmap requires money, something of which Laos has precious little….cash for marketing…and Strategic Priority 8 calls for big bucks:

8.1 Mobilise a marketing budget for greening of tourism and nature-based tourism

8.2 Promotion campaign to promote Lao products and nature-based tourism

8.3 Develop marketing campaign for secondary source market

8.4 Launch marketing campaign in secondary source markets

There is a long list of turning wheel to successfully reopen Laos. Those that stand out are money, safety, marketing, inter-Asia cooperation, and…listen to the private sector.

 

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