Tracing Toll of Covid-19 Pandemic on Tourism Industry in Laos

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Tracing the Toll of Covid-19 on Laos' Tourism
Tourism in Luang Prabang Province, Laos. (Photo: Nu)

A new report by the World Bank indicates the impact on the tourism industry in Laos of the Covid-19 pandemic.

Data from the World Bank report showed a steady rise in domestic and international travel from 2016-2020, before coming to a sudden halt as an effect of the pandemic.

Before the strict domestic and international travel restrictions in 2020, Laos’ tourism market was steadily rising from inbound travelers hailing from neighboring nations such as Thailand and Vietnam.

The domestic tourism industry in the country saw a rise from nearly 2 million people in 2016 to just under 3 million by 2018. However, by 2020, the number of domestic tourists had dropped to 1.5 million, a near 50 percent decrease.

Whereas international tourism saw an even more prevalent drop. In 2019, international tourism peaked when Laos welcomed well over 3 million tourists. In contrast, the following year saw around 500,000 tourists enter the country, an approximately 83 percent drop.

Impact of the Pandemic on Laos’ Tourism Industry

The series of nationwide lockdowns initiated in 2020 saw many businesses temporarily cease operations. The effect of which saw many remain closed after restrictions were lifted and a sudden jump into widespread unemployment.

According to the Lao Tourism Covid-19 Recovery Roadmap 2021-2025 report, 65 percent of businesses in Vientiane Capital reduced their employees. But the impact of Covid-19 was seen most heavily in Luang Prabang and Vang Vieng, where more than 80 percent of the enterprises cut over half of their employees as tourism businesses drove the local economy.

Women were the most heavily affected during this time, as the impact laid heavy on tourism, wholesale, and retail trades, along with other tourism-related service industries.

Before the pandemic, skills development in the Lao tourism workforce was growing. Data from the Ministry of Education and Sports in Laos indicated that over half of the tourism-related workforce held a formal qualification in 2020, and the tourism and hospitality-specific qualifications doubled to 6.7 percent in 2021.

The skilled workforce in the tourism sector experienced growth; however, the pandemic and its repercussions prompted individuals to seek higher-paying employment opportunities, particularly in Thailand, where the monthly wage was three times higher than in Laos.

The transportation sector, as related to tourism, also took a hit during the pandemic. As a result of canceled or reduced flight routes, Lao Airlines recorded a loss of more than 50 percent in revenue and passengers from January to June 2020.

In 2019, before the pandemic, tourism stood as one of Laos’ primary generators of foreign exchange earnings. Surpassed only by the mining and electricity sectors, the tourism industry played a crucial role in fueling economic growth.

Positive Trends and Recovery Post-Pandemic 

One of the main factors contributing to the tourism recovery is the availability of international mobility and travel. As it continues on its path to recovery, Laos is now witnessing an encouraging trend. Foreign airlines and partner countries are beginning to establish direct routes.

Lao Airlines and Vietjet, Vietnam’s leading low-cost airline, recently formalized a collaboration that will see a direct flight route between Vientiane Capital, Laos, and Ho Chi Minh City, Vietnam, by February 2024.

Thai Airways and Ural Airlines, a Russian based airline, have also recently resumed direct flights to Laos’ capital between Bangkok and Vladivostok, respectively.

With a similar objective in mind, the Lao government is also actively pushing for improvements in hotel accommodations, tourism resources, products, transportation, and medical facilities, prioritizing quality, safety, and visitor satisfaction.

In the first half of 2023, the country welcomed 1.6 million visitors, an indication that the country is becoming more attractive to both foreign and domestic tourists. The government has further set ambitious goals in the tourism sector with the launch of the “Visit Laos 2024” campaign.

Anticipated as a trigger for economic growth, the campaign aims to attract 2.4 million foreign visitors and generate USD 401 million in revenue.