CHINA TENSIONS CHOKE OFF TOURISM TO VIETNAM

[Although at least four Chinese workers died in the riots, order was restored quickly. But China and other countries issued advisories citing potential risks to public safety in Vietnam. Tourism specialists said the Chinese advisory led thousands of people to cancel trips, in part because it invalidated some travel insurance policies.]

By Mike Ives

Aaron Joel Santos for The New York Times

DA NANG, Vietnam — The year began well for Mai Thanh Trung, newly employed at a travel company here that caters to Chinese tour groups. Mr. Trung said he regularly greeted charter flights from the Chinese mainland and pocketed an average monthly commission of about $600.

But then came May, when a state-owned Chinese company parked an oil rig near Vietnam’s central coast in a part of the South China Sea that both countries claim. Two days of anti-Chinese riots followed in southern and central Vietnam. And, according to hospitality professionals in this central coast city of nearly one million, the inbound Chinese tourism market crashed.

Mr. Trung, 24, said the flights that once brought his Chinese clients stopped in late May, leaving him and his 50 colleagues temporarily unemployed. He sat idle for weeks in his home village, 25 miles south of Da Nang, watching the World Cup on television.

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The rig began moving north, toward Hainan Island in China, on July 15. Mr. Trung said that seemed to have prompted a trickle of Chinese tourists to return, and that he expected to make at least $200 this month in commissions. But the unrest over the rig and continuing tense relations have rattled his sense of job security.

“Right now it’s going back to Hainan Island, but we don’t know when it will come back,” he said of the rig.

Although at least four Chinese workers died in the riots, order was restored quickly. But China and other countries issued advisories citing potential risks to public safety in Vietnam. Tourism specialists said the Chinese advisory led thousands of people to cancel trips, in part because it invalidated some travel insurance policies.

Chinese accounted for about a quarter of the nearly 4.3 million foreign visitors to Vietnam in the first six months of 2014. But in June, arrivals from the Chinese mainland fell about 30 percent and those from Hong Kong fell 72 percent, compared with May.

“They became a little bit afraid,” said Matthias Wiesmann, general manager at the Furama Resort Danang, one of the city’s many beachfront properties. The hotel lost 10 percent to 15 percent of its business, or about 2,800 room nights, in May and June, he said.

Nguyen Xuan Binh, director of the government’s Da Nang Center for Tourism Promotion, said the average occupancy rate at the city’s beachfront hotels was 60 percent to 70 percent in late June, compared with the usual 80 percent to 90 percent. But Ken Atkinson, chairman of the tourism working group at the Vietnam Business Forum, a public-private consortium, suggested that rate was probably not higher than 30 percent or 40 percent.

Mr. Binh says Da Nang is as safe as ever. He predicted that Chinese tourists would return but said that he did not know when.

“They’ll come to Da Nang and see the reality,” he said.

Chinese tourists spent $102 billion on 83 million international trips in 2012, lifting their country above Germany as the world’s top source of international tourism, according to the United Nations World Tourism Organization.

But tourists from China are often acutely sensitive to the way they and their government are perceived abroad, while Chinese officials view tourism as closely linked to larger diplomatic strategies, tourism specialists said in interviews.

In Japan, Chinese arrivals plunged in late 2012 and much of 2013, according to Japan National Tourism Organization figures provided by the China Outbound Tourism Research Institute in Heide, Germany. The slump appeared to mirror a period of rising tensions between China and Japan over disputed islands in the East China Sea, said the institute’s director, Wolfgang Georg Arlt.

And in Malaysia, 19.5 percent fewer Chinese tourists arrived in April than in April 2013, according to government data. By contrast, the number fell 0.10 percent in March and 3.6 percent in February and increased nearly 25 percent in January from a year earlier.

Brian King, a professor of tourism at Hong Kong Polytechnic University, said several Chinese airlines had scaled back flights to Malaysia after the disappearance of Malaysia Airlines Flight 370 on March 8, two-thirds of whose passengers were Chinese. Also, a Chinese tourist was abducted from a resort in Malaysia in April.

“Malaysia’s plans for growing China tourism are well off course at the moment,” Mr. King said. “Until there’s more information about the flight, then that probably will continue to be the case.”

He added that the Malaysia Airlines flight shot down over Ukraine would probably have a “very minor” effect on tourism in Asia and that the disaster could actually increase Malaysia’s inbound Chinese tourism if the airline continued to cut fares to attract customers.

Mr. Binh, the Da Nang tourism official, said growth in the city’s inbound Chinese tourism market before May was mainly related to a sharp rise since 2012 in charter flights operated by Vietnam Airlines, China Eastern Airlines and China Southern Airlines. He said Dragonair, a sister airline of Cathay Pacific, had also opened non-charter flights between Hong Kong and Da Nang.

A spokeswoman for the state-owned Vietnam Airlines declined to comment on the Chinese tourism slump, saying in an email that the company was still “collecting and evaluating” related information. China Eastern Airlines and China Southern Airlines did not respond to email seeking comment.

Cathay Pacific and Dragonair canceled a total of 23 return flights between Hong Kong and three regular Vietnam destinations — Da Nang, Hanoi and Ho Chi Minh City — between late May and the end of June, said Erica Peng, Cathay Pacific’s Vietnam country manager. She added that the airlines normally operated 33 weekly flights from Hong Kong to those cities, including seven Dragonair flights to Da Nang.

Mr. Binh, the tourism official, said the “main driver” behind the Da Nang charter flights from China was the Crowne Plaza Danang, a large hotel on the city’s beachfront. Four hospitality executives on the central coast echoed his analysis, saying the Crowne Plaza caters almost exclusively to Chinese tour groups.

On a recent summer afternoon, Zhang Lei, a Chinese businessman from Henan Province, stood beside the pool in the Crowne Plaza’s deserted beachside courtyard. He said that aside from the friends he was traveling with, he had not met any other Chinese-speaking guests during his stay and that many Chinese were not traveling to Vietnam because of the South China Sea dispute and the factory riots in May.

“China has helped Vietnam so much over the years, but the Vietnamese have turned against us,” Mr. Zhang said while sipping from a coconut.

A Crowne Plaza employee, who declined to give his name because he was not authorized to speak with the news media, said Chinese typically were 70 percent to 80 percent of the hotel’s clientele. Emma Corcoran, a spokeswoman for the hotel’s parent company, InterContinental Hotels Group, declined a request for an interview with the hotel’s general manager.

Clarence Tan, the company’s chief operating officer for Southeast Asia and resorts, said in an emailed statement that China’s recent tourism advisory from the Chinese government, coupled with the reduction in direct chartered flights into Da Nang, had contributed to a decline in Chinese arrivals at the company’s Da Nang properties.

Despite the drop in Chinese arrivals, Vietnam still expects to welcome 8.2 million international tourists this year, Nguyen Manh Cuong, vice chairman of the national tourism agency, told reporters on July 9, days before the Chinese oil rig left the disputed area of the South China Sea. The total for last year was nearly 7.6 million, official figures show.

The rig’s departure appears to have increased overall tourist confidence in Vietnam, said Mr. Wiesmann, of the Furama Resort Danang. He added that business at the beachfront property had nearly returned to normal by late July, because of upticks in Australian, Japanese, South Korean and Vietnamese guests.

Mr. Wiesmann said inbound Chinese tourism, though still sluggish, was improving “little by little,” though it remained unclear when, or whether, the market would recover fully.

“It’s a little bit difficult to predict,” he said.

@ The New York Times