Hotels in Vietnam are raking in the dough by favoring individual bookings made on foreign travel websites that charge exorbitant rates, which is gouging local travel agencies seeking to secure reservations for larger tour groups
Foreign tourists stroll down a street in Ho Chi Minh City. Many hotels and resorts in Vietnam are prioritizing individual bookings made online over tour groups which go through local travel agencies to maximize profits. PHOTO: DIEP DUC MINH
Several Ho Chi Minh City tourism companies were recently unable to make reservations for a group of 50 tourists on Phu Quoc Island because they wanted to stay in the same hotel.
But it was not because the hotels did not have enough available rooms.
Minh Thanh, manager of a tourism company in HCMC said no resort on Phu Quoc agreed to book rooms for all 50 tourists.
"It's tourism high season and they want to save the rooms for individual tourists," she added.
Many hotels and resorts in Vietnam are prioritizing individual bookings made online over tour groups that book through local travel agencies, as it is more profitable. These hotels have colluded with foreign travel websites to keep room rates sky high, which is making Vietnam a less appealing tourist destination than other regional countries, experts say.
The director of a five-star hotel in HCMC wishing to remain anonymous said there are around ten foreign websites targeting both foreign and domestic tourists that offer hotel rooms in Vietnam.
"Thirty-five percent of our hotel's revenue came from guests booking through foreign travel websites and this proportion is expected to increase in the future," he said.
Most hotels pay foreign travel websites commissions of between 15-25 percent of room rates with both parties allegedly agreeing to charge inflated prices to maximize profits.
Director of a local booking website, who also wanted to remain anonymous, said he can make a profit selling rooms at lower rates, but was unable to do so because the hotels wanted to keep the room rates consistent for all travel websites.
"For example, we can charge VND1.5 million (US$71) for a room, while foreign websites offer it for VND2 million ($95)," he said.
Phan Dinh Hue, director of the Vong Tron Viet (Viet Circle) Tourism Company in HCMC, said room rates in Vietnam are 20-40 percent higher than those in Thailand.
"Many hotels now only receive guests who book overpriced rooms online and refuse bookings requested by travel agencies during tourism's high seasons.
"Many international tourists are afraid to come to Vietnam for fear of being ripped-off that way, while local tourists are shifting toward visiting other countries," he said. "Vietnam's tourism industry is becoming less competitive."
Thanh, the manager of a HCMC travel agency, admitted that her company often suggests that local tourists consider going abroad when she fails to find hotel rooms for them in Vietnam.
"Most customers agree to the idea because the price is the same," she said.
According to the Vietnam Tourism Association, around 3.5 million Vietnamese tourists spent over $3.5 billion on trips abroad in 2012.
Meanwhile, local travel agencies also have to deal with the increasingly harsh requirements being demanded by hotels in tourist hotspots like Da Nang, Mui Ne and Da Lat.
"Many hotels require full payment in advance from travel companies and keep most of it if companies cancel their booking," said Nguyen Van My, chairman of Lua Viet Tours.
"Meanwhile, the hotels do not compensate [travel firms] when they break the contract, such as when they provide rooms that differ in quality from those that had been booked," he said.
He said many companies have to make reservations before Tet (Lunar New Year) for summer rooms even though the hotels do not announce their room rates until much later.
"We lose our deposit if we can't get enough tourists to fill the rooms we've booked in advance; and we have to accept the room rates they set no matter how high," he said.
Pham Trung Luong, deputy director of the Institute for Tourism Development Research, said the hotels should be doing a better job to keep close ties with tourism companies, which supply the bulk of their customers.
While hotels have increased room rates to pay high commissions to foreign travel websites, they have also been criticized for failing to attract customers through their own websites.
Tim Russell, a Briton who worked in Vietnam's travel industry for 10 years before becoming sales and marketing director for the Remote Lands travel agency in Thailand, said online booking sites demand the same commissions of all hotels regardless of location.
"I suspect some Vietnamese hotels are using this as an excuse to be greedy and charge higher rates," he told Vietweek.
He said hotel booking sites demand commissions as high as 25-30 percent, but in return they offer more exposure and higher search engine rankings than most hotels could achieve on their own, while also being a useful tool to fill rooms during low season.
"At the same time, hotels should be making sure their own search engine optimization is up to scratch and doing their best to get direct bookings via their own websites, which of course aren't subject to 25-30 percent commissions.
"Sadly, it seems that the level of understanding of online booking in the Vietnamese hotel industry is no better now than when I was working in hospitality back in 2007."
He said it is wrong to blame online booking sites for damaging the country's tourism industry.
"Vietnamese tour operators, hoteliers and [some] government officials have done a perfectly good job of damaging it themselves."
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