Increase in tour prices cannot match the rise in input costs
A foreigner checks information with a sales agent at an international tourism exhibition in Ho Chi Minh City. Many local travel agents worry that higher tour costs may reduce their profit margins.
The recent dong devaluation and gasoline price hikes have travel agents worried that higher tour costs may reduce both profit margins as well as the number of customers using their services.
Duong Mai Lan, head of the marketing and planning division for travel agent Vietravel Hanoi, said: "The higher prices of electricity, energy, and the dollar will obviously raise tour prices."
She said many customers had booked tours several months in advance, when the dong traded at about 20,000 per dollar. But, when her firm pays its partners, such as hotels or restaurants for the tours, the dollar will exceed VND21,000. "With outbound tours, the losses will be remarkable."
The dong traded between 21,600 and 21,700 per dollar on Thursday at money changers in Ho Chi Minh City.
"In addition, the prices of services and products abroad have also increased, so an increase in outbound tour prices is also unavoidable. However, we will consider sharing difficulties with customers," Lan said.
After the dong devaluation and the increase in energy and fuel costs, hotels, restaurants and airlines will also raise their prices, making it harder for travel agents to do business in the coming months, she said. "Maybe the number of customers will not come down in the peak tourism season, which falls in June or July. However, we dare not expect higher profits than last year," she said.
Unable to forecast the increase in the cost of some services, Lan's firm has not yet fixed prices for some tours that start this summer, she said.
Nguyen Cong Hoan, deputy director of Hanoi Redtour, said the dollar hike has not only increased the cost of outbound tours, but also of domestic ones, as airfares and accommodation fees will rise. Airfare accounts for up to 50 percent of a tour's input costs. Meanwhile, all four- and five-star hotels are demanding dollar payments. Even some restaurants and souvenir shops are requiring dollar payments.
Many hotels have already announced a 10 percent increase in room rates and some airlines are planning to raise airfares by 20-30 percent after the latest electricity and gasoline price hikes, Hoan said.
Power prices were up 15.28 percent on March 1, while gasoline and diesel prices surged 24 percent late last month.
Given the inevitable rise in input costs of tours, his firm is considering raising outbound tour prices by 5-10 percent, and domestic tours by 20 percent at least, Hoan said.
"Despite higher prices, we still have to accept smaller profits. To lure customers, we cannot increase tour prices corresponding to the hikes in input costs," he said.
A travel agent representative in Hanoi said his firm was receiving fewer customers than a few months ago.
Trinh Bao Tram, who works for a communications firm in Hanoi, said her family had planned to book a tour to Hong Kong this summer, but might have to reconsider it now.
"Everything now is too expensive, so we have to consider a tour which suits our financial capacity. Maybe, we will book a tour to Nha Trang. It is also very beautiful. But, the most important thing is that the tour is cheaper," she said.
MARKED INCREASE IN FOREIGN ARRIVALS
Vietnam welcomed 625,800 foreign tourists in the first two months, an increase of 14.2 percent year-on-year, according to the latest report from the General Statistics Office.
The office said the number of foreigners coming to Vietnam for purposes other than tourism, like jobs and family visits, also increased during this period.
More than a million foreign arrivals were recorded in total, an increase of 19.5 percent over the same period last year.
The number of arrivals from countries like China, South Korea and the US increased significantly, by as much as 39 percent, the office said.
Vietnam hopes to receive some 5.3 million foreign and between 30-31 million domestic visitors this year for tourism revenues of VND110 trillion (US$5.29 billion).