Price increases burden Vietnam travel firms
12/03/08 (GMT+7)
A month ago, travel firms were complaining that the airfare increase resulted in them incurring losses; now, due to the petrol price rise, they are looking at even tougher, more expensive times ahead.
The cost of doing business
As airlines have decided to raise ceiling airfare from VND1.5mil to VND1.7mil, Vietnam travel firms have been forced to increase their tour fares, even for contracts signed before the price increases.
Nguyen Van My, Director of Lua Viet Travel Firm, said his company had to raise their fees by 15-20% after Tet. However, after the petroleum price increase, Lua Viet may have to again raise fees by another 15%.
My said the petroleum price hike has led to food and hotel room rate increases. He also said Electricity of Vietnam is threatening to raise their prices, and if so, there will be even more pressure on the tourism industry. Tour firms will have no other choice but to raise fees or incur losses.
Currently, the number of tourists keeps increasing, despite the price storm. But according to My, tourists will choose different Vietnam tours based on just a few dollars. He is worried that if Vietnam’s tour fee keeps increasing, foreigners will choose other countries as the destination instead of Vietnam.
Some travel firms have not increased their prices, but admit they will not be able to hold out forever
Vo Anh Tai, Travel Services Director under Saigon Tourist, said Saigon Tourist is negotiating with partners to reach agreements on tour fee increases.
According to Tai, tour fees were already increasing because of the VND revaluation, but after the gas price rise and talk of a possible electricity price increase, the situation is sure to worsen. Tai said tour fee increases are inevitable, as tourism, like other services, is affected by input prices.
Tai also said that the petroleum price increase will badly affect all branches of the national economy, not just tourism.
Enduring loss
As commodity and service prices are increasing everyday, many Vietnam travel firms have been forced to accept some loss because they are stuck under previously signed contracts.
Dang Trung Nghia, Deputy General Director of Fiditour, said that he heard about the petroleum price increase before Tet, however, as he was not sure about the timing, he still signed contracts at previous fee levels. Clients who travel in March, but signed contracts in January and February, will still enjoy lower tour fees.
“We have to endure the loss to retain our prestige,” Nghia said.
However, he said that Fiditour has raised tour fees in contracts signed in March, and the increase is ‘less than 10%’.
Representative from Lua Viet said that the company has been forced to cut expenses, so they can offer acceptable tour fee increases.
However,Vietnam travel firms all complain that they are facing a lot of difficulties in doing business, and that though their turnover increases, the profit does not
La Quoc Khanh, Deputy Director of Ho Chi Minh City Tourism Department: the price storm has slowed tourism down
A hard pressure has been put on tourism industry. The number of tourists to Vietnam still rose by 17.5% in the first two months of the year. However, I have to say that the Japanese market has shown negative signals on the tour fee increases.
Until now, low tour fee has been the attractiveness of Vietnam’s tourism. But now the tour fee increases, hotel rooms are lacking, which both have been slowing the tourism industry down.
Travel firms have every reason to raise tour fees. I think that we should specifically call for investments in hotels in order to reduce hotel room rates in order to help develop Vietnam’s tourism.
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(Source: PL TP HCM)
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