A tourism paradox: more visitors, less business

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Going by official accounts, Vietnam is welcoming more and more visitors every year, but businesses are struggling to survive

Visitors at the War Remnant Museum in Ho Chi Minh City. Travel agencies have blamed a slump in Vietnam's tourism on the world economic crisis and the country's poor competitiveness.

The national tourism administration cites "pleasant" figures for 2012, but most stakeholders travel firms, transportation companies and hotels are wearing glum countenances.

Latest statistics from the Vietnam National Administration of Tourism (VNAT) showed that around 4.17 million foreign tourists visited the country last year, up 14.2 percent from the year before, while local tourists increased 8.3 percent at 32.5 million.

Overall, tourism revenues rose 23 percent to reach VND160 trillion (US$7.59 billion), the agency said.

VNAT chief Nguyen Van Tuan was quoted by Van Hoa (Culture) Online the news website of the Ministry of Culture, Sports and Tourism as saying: "The figures that the national tourism industry achieved last year were pleasant, given that both the local and world economies faced many difficulties."

However, a Vietweek survey among some 20 travel companies, transport firms and hotels in Hanoi and Ho Chi Minh City found that most of them have been scaling down operations after sales dropped significantly.

In Hanoi, for example, Net Dep Dong Duong (Indochina beauty), an international travel company, has moved its headquarters from a three-storied building in the center of Ba Dinh District to a nearby office building since July.

A company representative said the move has helped them reduce one-third of their rental expense of VND40 million ($1,899) a month.

It has also sacked 30 percent of its employees and stopped participating in international festivals.

Explaining the adjustments, the representative told Vietweek that the number of its foreign customers decreased by 25 percent last year, as French and German tourists, who usually booked 12-14 day tours and stayed at three-four star hotels, went down "sharply."

The number was down 20 percent in 2011, the representative said.

In HCMC, Phan Dinh Hue, director of the Vong Tron Viet (Vietcircle) Tourism Company, said nearly 50 percent of its employees have been dismissed, also because the number of European and American tourists fell 30 percent, while there was a 40 percent drop in local tourists.

The company has not moved office from a five-storied building in District 1, but it has recently leased most of the building to save on expenses.

Meanwhile, Tran Van Long, director of Viet Media Travel Company, said "obviously" due to the financial crisis, foreign customers booking tours at his company reduced by at least 30 percent last year from the year before.

Domino effect

As travel companies saw their sales fall, other related businesses suffered as well.

Speaking to Vietweek, Nguyen Kien Cuong, director of the Tuan Minh Trade and Tourism Company, which specializes in taking European and Japanese tourists around Hanoi, said his company's sales had dipped sharply as well.

He said orders for tourist transportation between October last year and this April from the company's regular customers ten international travel companies decreased by more than 40 percent, even though it was prime time for European and American travelers.

It was the same for the Japanese market, as there was almost no order for transporting Japanese tourists last year, Cuong said. He expected no improvement during the first two months of this year, although Japanese usually visit northern Vietnam at this time.

Cuong's company moved its headquarters from the center of Hoan Kiem District last year to his house and paid no bonus to employees, following a drop of 30 percent in sales in 2011 compared to the previous year.

The director also said that he planned to sell several buses and cars, following other companies that have already sold up to half of their vehicles.

Tao Van Nghe, chairman of the Ho Chi Minh City Hotel Association, said many local hotels were only able to achieve 70-80 percent of their targeted sales last year, and so far the situation has "not improved."

While the slump in Vietnam's tourism is partly because of the world economic crisis, it is also because the country's competitiveness is very poor, Nghe said. 

Its tour prices are too high compared to other countries in the Southeast Asia, Nghe said, expressing concern that Vietnam will become a "much less attractive destination," with several price hikes planned for this year, including visa fees.

Under a decree issued by the Finance Ministry, the cost of all visas to Vietnam has gone up by $15 since January 1. The new visa prices range from $45 to $135.

Misleading figures

Many experts criticized VNAT for always putting in its reports the total number of international arrivals in a way that made it look as if it were the number of foreign tourists visiting the country.

Only later in the reports would the agency break the figure down, saying how many of the visitors were really tourists.

For instance, in reporting on the 2012 statistics VNAT released late last month, most local media newspapers headlined the foreign arrivals of 6.84 million.

In its report, the Vietnam News Agency quoted VNAT as saying that "despite a year full of economic troubles, Vietnam's tourism still achieved positive results with international visitors totaling more than 6.8 million in 2012, increasing by nearly 14 percent from 2011."

The agency even sets for every year the number of international visitors as a main target of the tourism industry.

At a press conference on January 5, VNAT Deputy Chief Hoang Thi Diep said Vietnamese tourism aims to welcome 7.2 million international visitors and achieve a turnover of some VND190 trillion ($9.09 billion) this year.

As VNAT also broke down the total number of international visitors into different markets, many travel companies have expressed skepticism over the figures.

Nguyen Van My, director of Lua Viet Tours, said he doubted 331,900 Cambodians visited Vietnam last year for tourism purposes. Not a single Khmer-speaking tour guide is licensed in Vietnam, he noted.

VNAT listed Japan as the third largest market for Vietnamese tourism with 576,000 visitors in 2012. But, at a HCMC international tourism festival, the representative of JTB Global Marketing & Travel Corporation, a leading Japanese travel company in Vietnam, said many Japanese would be quite surprised to know that so many of their countrymen visit Vietnam every year.

Vietnam is yet to become a well-known destination for Japanese tourists, so Vietnamese statistics must have included those who visit Vietnam for business purposes, the representative said.

Both Japan and Cambodia were named by VNAT as Vietnamese tourism's "largest markets" together with China, South Korea, Japan and Taiwan.

Hue of Vietcircle said he "did not dare" to use VNAT figures, "because they are of little use, and could even mislead businesses."

Pham Trung Luong, deputy chief of the Institute for Tourism Development Research, said he suspected the accuracy of tourism turnover as well.

He said VNAT comes up with the figures by multiplying the average expenditure of each foreign and local visitor with the total numbers of visitors, but this method is flawed.

Besides, many tourists to Vietnam last year had already cut down on their expenditure and shortened their tours, Luong said. 

Statistics, important as a base for making and adjusting policies, can lead to wrong policies and promotion plans, he said.

Nguyen Cong Hoan, deputy director of Hanoi Redtours, also said instead of "cheerful" figures that businesses "do not trust," VNAT needs to compile statistics on how many tourism companies are struggling.

He said the agency needs to calculate how much of the capacity of two-five star hotels have been used, the labor turnover rate and what support businesses expect from the government.

These are the figures that will truly reflect the health of the tourism market and are necessary for VNAT to make practical proposals to the government so that the tourism sector receives the help it needs, he added.

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