Michael Piro, CEO of Wink Hotels, discusses Vietnam’s post-COVID-19 recovery strategy. As a country, Vietnam has managed to get through the crisis with incredibly low infection rates, and this week has seen lockdown measures starting to relax. Michael acknowledges the country’s reliance on overseas source markets including China and Korea, but he’s optimistic about the 20% annual growth domestic tourism has posted over the past five years.
He also notes that Vietnam’s young population (two-thirds are under 35 years old) are keen to start travelling again, with 70% of respondents to a recent social media questionnaire saying the first thing they want to do post-lockdown is head to the beach.
David Keen 0:10
Hi, this is David Keen. At QUO, we’ve worked for the last 20 years with many of the world’s best-known travel brands. During this unprecedented global crisis, our world of travel has changed, possibly irreversibly. This series will see us speak with many global leaders to understand how they see the future of travel.
David Keen 0:45
Michael Piro, Chief Executive Officer of Wink Hotels, with the soon-to-launch super brand out of Saigon, and welcome to The Future of Travel, Mike.
Michael Piro 0:58
Morning, David. Thanks for having me.
David Keen 1:00
Michael, it’s fantastic to have you on the show, particularly because I wanted to talk and I want to focus on Vietnam. There has been an enormous amount of press over the last week, 10-12 days, where Vietnam is being positioned as coming out of the crisis with an exceptional record in terms of cases, in terms of tragic deaths, and of controlling a situation with an incredibly dense population in a very large country. How, first of all Mike, has Vietnam managed—the Vietnamese government managed—to control the situations in such an amazing way?
Michael Piro 1:51
Well, I think that, you know, first thing is that Vietnam, you know, if you look through history, Vietnam is no stranger to crisis. So that was the first kind of thing I felt when the situation started to erupt. You know, you could really feel the authority, the leadership and the control of the Vietnamese government throughout the entire process.
Michael Piro 2:17
I would also like to commend the citizens of Vietnam, also, were very serious right from the first news of the outbreak. The local citizens were also very quick to respond. I remember, kind of, in the first week of the COVID-19 virus being announced in Vietnam in my apartment building in Hanoi. I went into an elevator. And, you know this was very early on and I haven’t quite gotten into the habit of wearing a surgical mask every time I leave the house. And I stepped into an elevator with a few ladies that lived in my building. And, you know, I would, they were very serious from the very early stages in terms of, you know, informing me that as a responsible member of society I had an obligation to put on a mask and this was before the government made it illegal in Vietnam to go into a public place without a mask. The people were already right behind the initiative.
Michael Piro 3:14
So I think from the top down, from the leadership level right down to every citizen level, everyone took it very, very seriously. The Vietnamese were very quick to respond. I think this is a case where a more authoritative government actually wielded its power in the correct way to get the best results for the country and I think we’re starting to see this come into fruition now. As recently as last night, Vietnam lifted the social distancing procedures in Vietnam, so now we’re actually—restaurants are actually going to start to reopen, etc., kind of leading the way definitely in Asia, if not the world.
David Keen 3:51
And in terms of social distancing as a culture that the Vietnamese in a similar way, I’d like to say, to the Thais and to other—Indochina, to Laos, Cambodia, the Burmese—there’s a natural social distancing. Is that true?
Michael Piro 4:09
Um, you know, I think—I don’t think that that’s entirely true for Vietnam. If you look at it, you know, the country, as you mentioned in your opening remarks—given the density of the country—you know, population of 100 million. Actually if you look at, you know, the street culture in Vietnam. You know you’re starting to see evidence now that there’s, you know, hundreds of people along the street sitting on plastic stools crammed beside each other—enjoying beer, tea, cigarettes. You know, just in traffic, you know, driving to work on a motorbike, you’re closer than 1.5 meters to, you know, 10 people at any given time, given the traffic level.
Michael Piro 4:52
So I think the Vietnamese are actually used to being very close to each other, and actually used to being very social. They’re very used to being very community-oriented. So while it was very hard for Vietnam to adapt to this kind of more insulated lifestyle, the people did it because they recognise the importance and you know. Again the government was quite thorough throughout the whole process. From every phone call you make, there’s a recording from the government telling you to stay inside, so you have to hear that before every single telephone. They use TV, public media, every channel possible to get the message of COVID out. So those are very impressive kind of […] by the government and by the people, and you know I really like to see how Vietnam kind of plays out throughout the end of the year. \
David Keen 5:44
That was obviously my next question. The discipline—the innate discipline of the Vietnamese people, the discipline of the […], the discipline expounded by the government, and by society. I’m fascinated by the—within a week, you’re coming to the people you met in the elevator, and they told you to wear a mask. I don’t—I think that’s endemic to society and endemic to the reasons why Vietnam has come out so successfully, so quickly. But, we’ve got to figure that the discipline will remain, but how quickly do you feel— and obviously this is the $64,000 question—how quickly do you see a return to normality, or do you see a return to normal life in the foreseeable future?
Michael Piro 6:44
Um, you know, I think what we were—how we refer to normal life—there’s gonna be pre-corona/post-corona. I don’t think normal as we knew it yesterday will be the normal of tomorrow. So I think everyone—I think a generation is going to be changed through this crisis. And I think that now I really believe that, you know, that the people are changing. The way people are going to shop, the way people are going to travel, the way people are going to interact is all going to change. And so I think, you know, returning to normal—I’m not sure there is going to be a normal—but I think in terms of getting back to something that resembles normal in Vietnam, I would say, in the next three months domestically, I could see things picking up. But until we get the full… you know, Vietnam is between its trade, between the tourism, between its interconnectivity with global markets, is very important. So until the world really gets better, Vietnam isn’t going to get recovered to its full potential. So I think for us, you know, between now and the end of the year, I could see things resuming something that resembles normality. On a very insulated basis—no one coming in, no one going out. But, until things fully resume and Vietnam relies on a lot of, you know, we had, you know, we were on track to close to 15 million international arrivals. That’s a big deal. Hosting conferences, hosting events, driving the international community here, focusing on trade—those things are all critical for Vietnam, and those of all at a kind of halt, put on them.
Michael Piro 8:34
So you know a lot of economists now are looking at the, you know, situation and where Vietnam normally would have been an easy, six-and-a-half/seven/seven-and-a-half per cent growth rate, you know, looking at 2020 and at least it’s looking to fall probably closer to one-and-a-half percent. You know, still being positive, which is big for this part of the world, but you know that’s a significant, significant drop, and everyone is going to feel that in every walk of life in the initial period.
David Keen 9:03
In the American press particularly, but also the European press, people are talking about the Vietnamese picking up the slack and some of the opportunity from the Chinese market. Obviously, from a manufacturing and from a production point of view, and for a GDP point of view, that’s a positive thing. How would that affect the opportunity if you start to think about travel—Chinese travelers—coming back to Vietnam.
Michael Piro 9:38
Well, I think that, you know, definitely Vietnam—we’ve already been seeing that for the last several years, kind of, as we see some of the, you know, world, kind of political and corporate world kind of decoupling itself from the Chinese economy and making that shift to Vietnam. So I think from an economic standpoint that’s obviously gonna bode well for Vietnam. But, you know, getting to the point where, you know, Vietnam’s market, obviously, international tourism market is almost, you know, Chinese arrivals were representing close to 40%.
Michael Piro 10:18
So we need that market to rebound. So to your point, when will they start coming back? That’s gonna be very, very hard to say. And you know again it’s going to be the question of when is Vietnam going to feel comfortable opening up, to the rest of the world to come in. And then also, again, I think the Chinese government is also going to be making things a little bit tighter for Chinese citizens to travel in mass market over the short to medium term. So on the demand side that’s going to affect things as well. You know, for me it’s hard to say kind of when the Chinese market is going to come back. But what I can say for sure is that Vietnam’s tourism market relies on that market rebounding. Again they make up 30-40% of the international market, followed by Korean at around 15%. So between the Koreans and the Chinese, they make up the lion’s share of the entire bid in these travel markets. So until that gets going, I think we’re going to see, you know, a very difficult times ahead for Vietnam.
Michael Piro 11:32
The good news is, in this, which is you know kind of a silver lining for our new brand Wink is that it was designed really for the Vietnamese traveler. And so in recent years, while you’re looking at, you know, international travel reaching 12/13/14 million arrivals a year. Domestic tourism has been growing by, you know, 20%, almost consistently for the past five years. So you’re seeing 70/80 million Vietnamese travelers annually. And so for us that’s really going to be the big market, and we don’t see that market and being affected too much by the current situation.
David Keen 12:07
When you say that—and let’s start to focus on that—when you say that you don’t think of it being too much affected, do you feel that they’ll be, once the flights start going properly again, you feel that that will be both business and leisure domestic travel—significant domestic travel—in the near to medium term?
Michael Piro 12:35
I do believe though so i think you know I don’t think the psychological effects of corona are going to be that long lasting here. Like I genuinely believe that people will get up and start traveling as soon as the flights and everything opens up. On the demand side, looking into it further and just in terms of, I do think there’ll be a bit of a slowdown this year, given the fact that, you know, generally most companies in Vietnam as a result of COVID have cut salaries quite significantly. People are watching their portfolio fall apart. Many of the kind of middle-class Vietnamese are exposed to entrepreneurial-type businesses focusing on retail F&B, etc. Obviously, those sectors have been hit extremely hard. But i think you know when you’re seeing the economy go from 7% growth down to 1.5% growth. There’s a lot of people who are affected—you know their pockets are effective.
Michael Piro 13:33
So I would expect to see over the short term, you know, the numbers not come roaring back because people are also, you know, I think everyone is, you know, their pockets are a bit tighter right now. And that everyone’s income has been affected, but psychologically, I think the Vietnamese are going to be comfortable to get back on planes—at least domestically—very quickly. In the short term, I think they’re going to see things rebound relatively fast, relative to the rest of the world
David Keen 14:03
We’re hearing, and obviously through this podcast series in different countries around the world, this needs this kind of pent-up psychological need for people to get out and start traveling again. You’re seeing the same same thing right?
Michael Piro 14:21
Yeah. Yeah, that’s something really, really interesting that you mentioned. Because we did a little bit of a survey—like an informal survey, where we just put it up on our social media—like, “What are you doing when quarantine ends?” And, you know, and 70% of the responses were, “I’m going to the beach.”
Michael Piro 14:42
So you know, I think, you know, Vietnam has this young population, two-thirds of the population under the age of 35. They’ve got a kind of frenetic energy. They’re excited. They’re used to, you know, constant mobility, and they’re keen to get back out there. So my sense is that, again, that you know as soon as things, you know, flights resume normal schedules, hotels reopen, that the Vietnamese market is going to be out there pretty quick to capitalize on this pent-up tourism demand that’s been building as a result of the virus.
David Keen 15:20
And that’s fascinating. And I think that’s a real note of positivity. I’m really glad to hear that. So, as much leisure as business, impossible to predict right now?
Michael Piro 15:35
Hard to predict right now. I think, you know, at least in the short term, that people are going to be more necessity focus. You know, so, in one sense, I would agree that business travel would kind of rebound first. I know for myself like I’ve got a series of critical meetings that have been stacking up for the last two months that I’m, you know, I need to get on the plane as soon as I can and deal with that. But on the other side, I also think that corona has provided companies with an opportunity to realise how powerful technology really is.
Michael Piro 16:11
I mean I know that’s happening in our company in the sense of, like—well before, we thought it would be impossible to run our business without flying to Saigon every week. But guess what? We just found out over a month and a half that we can get a lot done on Zoom, and I think that’s also going to affect the way business is done in the future as people, I think, became top-level executives that wouldn’t touch this level of technology are now, you know, Zoom experts and Microsoft team experts. And everyone I think is more comfortable now with these type of platforms. That could also have an effect on the demand side for business travel, but overall my thought is that, you know, initially you’ll see people returning for necessity travel. There’ll be a bit of a testing period, people wait and see, watch, make sure nothing happens to anyone else. And then once they see that it’s clear, you’ll see Vietnam just come roaring back really fast.
David Keen 17:07
Within Vietnamese culture, and particularly with Vietnamese business culture, there’s obviously a huge social—there’s also a huge social element. An eating element, a dining element, a lunching element, whatever it is. And obviously technology—you know you can’t really do that over a digital meeting. How—and we are hearing it again all over the world—technology has solved the problem during the crisis. But it doesn’t replace the face-to-face. It doesn’t replace that trust. Do you think it can? Do you think, I mean, if we dig a bit deeper into that do you think… Out of necessity? Yes. But when it comes down to it, and in a year’s time when things really have settled down, will the face-to-face still be more important?
Michael Piro 17:59
Yeah. Yes, absolutely. I think relationships are still so critical. And what I found is, you know, I don’t, I’m speaking from my own experience is that, you know, kind of critical deal-related relationship during tasks that I’m working on. I’m only—online, I can only take it to like 85%. So I have a bunch of things that are sitting at 85%, that I can’t get finished until I can get my face in front, you know, face-to-face with the respective stakeholders, counterparts, government officials, banks suppliers, etc.
Michael Piro 18:34
So I do fully agree with you that nothing is ever going to replace the need for that face-to-face meeting. But do we, are we seeing that, you know, could we reduce travel by 10 or 15% and rely more on technology? Absolutely.
David Keen 18:50
Yeah, I think that makes a lot of sense. Mike, just switching to hotels and again, focusing exclusively on the Vietnamese market, what is this new generation of traveller looking for? And where—broadly—will the brands be delivering that. I mean, I know you’re developing your own Wink brand, which is a super exciting new concept. So, what is the traveller really, in the new post-virus traveler, what are they going to be looking for?
Michael Piro 19:25
Well, I think the you know what we’re seeing is that the customer is obviously becoming more experience-driven, right? And the Vietnamese customer is no different. And when I say experience-driven, I mean that they want to really absorb the locations they’re in. Ten years ago, when I looked in to travel here, just sitting in a nice hotel—to make it there to arrive at a really high-end hotel was enough. And it was much more, kind of, prestige-driven and, you know, kind of keeping up with the Joneses. I stayed here, you stayed there. Where are you going to stay?
Michael Piro 20:09
But I think now what we’re seeing is that, you know, the consumers are becoming more sophisticated. They will, they’re driven for more experiences. The hardware isn’t as important as the software. It’s not, “Where am I going to stay when I get there?, but “What am I going to do?”. And the Vietnamese customer, you know, the Vietnamese traveler is all about that. They want wet markets. They want to pick through—they want flower markets; they want nightlife; they want to go out and experience the location. Experience the location that they’re visiting.
Michael Piro 20:47
So I think new hotels, really, with a focus of “What are you going to do there?”, “How do you connect with the guests?”, you know we have, again, I mentioned this young population that’s totally social-media driven. So creating those experiences, those Instagrammable moments, those opportunities to connect with your customers. And so I think, you know, looking at hotels with—that drive experiences, that are more efficient, that, and I think economical. I think the new traveler is going to be looking for more value. You know I think they’re going to be… You know, the Millennials have lived with a lot of, kind of, infinite optimism about the future and everything. And this was kind of the first big hit, the first crisis they’ve had to deal with. And my sense is everyone’s going to be a little bit more — a little bit more cautious moving forward. A little bit more prudent with their spending. A little bit more.
Michael Piro 21:46
And then a little bit more looking at, “What do I need?”, not “What do I want?”. I think that’s something that corona has taught us all, is to get back to basics, to focus on the things that matter. I think hotel products that focus on efficiency, focusing on delivering people what do they need in that situation, to focus on delivering great value and that can help people really understand the locations at an intimate level, that can help carry those experiences. I think those are the kind of hotels that are going to do well in a post-corona world.
Michael Piro 22:17
I think the traditional kind of hotels of the world are really going to need to give themselves a real close look, and look at their model, because I do think that we’re going to, you know, going to see a bit of a shift in the tastes and preferences of the market.
David Keen 22:35
I think you said, I think you—I actually think you’ve really hit it—I think particularly in the Vietnamese market, which obviously I also know very well, historically or pre-virus, almost every, certainly, mid to upper-end product was being created for this, the so-called, the foreign traveler. Part of the 15 million incoming. Everything was being done in a traditional analog form for the foreign, for an overseas traveller. And the brands were created—the international brands that are in Vietnam—are being created for the foreign traveler. Yet what’s going to happen now, and it’s not just with Wink, but other brands, SOJO, there are other brands that are coming out, that are being created exclusively, or more or less exclusively, for the Vietnamese traveler. And what we will find, and I’m guessing what we’ll see, is that the foreign traveler—when they do come back—will be more attracted to these brands than perhaps to the traditional plays that had attracted them in the past.
Michael Piro 23:44
Absolutely. I think that’s a very good, a good remark and, you know, we believe that fully. We believe that, while we are developing a product that’s uh, you know—which obviously you’re very familiar with—that was designed for the Vietnamese market. And it really celebrates the sensibilities of Vietnamese culture, but we believe that the foreign market is actually going to find it equally, if not even more impressive, and more refreshing and more authentic, as they approach their Vietnam travel experience. And I think that’s really what we’re aiming to achieve.
David Keen 24:27
Yeah, I totally agree. We’re almost out of time, Mike, but I just want to—it would be remiss of me not to talk about new destinations. Obviously Cam Ranh comes to mind. Phu Quoc is, I guess, on everyone’s mind. The development of Danang. I don’t want you to… We don’t really have time to go through a detailed assessment of each destination, but will these destinations—given the fact that it’s going to be more domestic travelers—will these destinations, are they going to proliferate? Are they going to do well? Are they going to succeed in a domestic—in a market that is driven by domestic travel?
Michael Piro 25:11
No, absolutely. I think they’ll do well. My concern for both markets are, you know, Nha Trang has been kind of a beach hotspot in Vietnam for the past 20 years, so it’s kind of reaching its maturity level. The density of the build-out in those locations is growing quite significantly. Sometimes, the sustainability is questionable, but you know, overall, those are kind of household resort destinations in Vietnam right now. But the one I’m going to, you know, kind of let you in on my, kind of, number-one pick right now that I—you know—we’ve made some investments and we will continue to. If you look in the kind of Quy Nhon/Phu Yen region in Central Vietnam. That is, you know, remarkable geography and area. Dazzling beaches. You know, still relatively ripe for development, and to me that’s—after kind of being part of and witnessing the development of, you know, both Danang and Phu Quoc quite intimately, seeing what, you know, Phu Yen/Quy Nhon area has to offer is really going to be—in my mind—the next kind of great beach destination of Vietnam. And you’re seeing that, you know, the big brands of the world are already—you know, what, the Anantaras, the Alilas, the… you know, and some of the other super luxury brands in the world are already taking positions there. So it’s, you know, it’s a very exciting time to be watching that area.
David Keen 26:48
Yeah I read that actually, to Quy Nhon five or six years, ago. Absolutely stunning. Michael Piro, Chief Executive Officer of Wink Hotels, thank you so much for being on The Future of Travel.
Michael Piro 27:02
David, Thank you very much.