Tourism-related firms face bankruptcy due to pandemic

Hanoi (VNS/VNA) - Many tourism-related firms that have borrowed from banks are facing foreclosure due to the latest outbreak of COVID-19 infections.

According to the firms, they are on the verge of closing their businesses because there are no customers due to the pandemic. With no revenue, they are afraid of losing their restaurants and hotels because they have taken out loans from banks and are now struggling to pay the debts.

Mauro Gasparotti, Director of Savills Hotels Asia Pacific, told Tien phong (Vanguard) newspaper that the accommodation service industry continued to be severely affected by the pandemic. Hotels and resorts all had received many requests to cancel or change the date of stay.

In addition, Mauro said, MICE (meetings, incentives, conventions and exhibitions) and event business segments of hotels in HCM City and Hanoi have been also affected as conferences were forced to be postponed or cancelled by the local authority due to the pandemic. 

This is really a blow to hotels as from April onwards, the market will be in the peak season for events and conferences. Most hotels have high expectations for this business segment to partially compensate for losses from room revenue, according to Mauro.

Savills' survey also noted that the business activities of resorts had suffered the same difficulties as more than 50 percent of the number of bookings cancelled, mainly from groups of tourists and corporate customers.

A hotel firm in the central coastal city of Nha Trang has recently petitioned to the Prime Minister because the firm has to burden loans and is now no longer able to pay the debts so the firm’s owner fears foreclosure.

The company director said in 2017 they borrowed 250 billion VND from a bank to build a hotel. The hotel was completed and put into operation from January 31, 2019. In January 2020, COVID-19 caused the tourism industry to fall into crisis. Currently, the pandemic is still complicated and the hotel business has remained pessimistic as foreign guests have not been allowed to be entered while domestic guests are very modest.

In April 2021, the firm had to pay both principal and interest of 5.5 billion VND to banks and it now has no capital left. In early May, the firm was fined due to overdue debts. Now they have petitioned the Prime Minister to ask for support from the bank to extend the debt and restructure the repayment period of the loan principal and interest, the firm’s owner said.

According to accommodation firms, in 2020, banks restructured loans for some of them, but the extension of the debts was only between three and six months. Now the deadline is approaching and they still have no capital to repay the debts.

Hoang Van Vinh, Chairman of the Khanh Hoa Tourism Association, said throughout this year, the tourism industry was heavily affected by the pandemic. The association forecast the difficulties will last at least until the end of this year.

According to the Vietnam Tourism Association, urgent solutions are needed to help companies maintain operations and recover soon.

The General Statistics Office reported that due to the impact of COVID-19, tourism revenue in the first quarter of this year was estimated at 3.1 trillion VND, down 60.1 percent over the same period last year, while the industry’s revenue in Q1 2020 also declined 24.8 per cent against Q1 2019./.