The VNAT has launched a stimulus campaign starting in January until September next year.

Accommodation and transportation, which make up the bulk of tour prices, have risen by 30–50 per cent since last year, even 100 per cent in some of the more upmarket hotels, diverting tourists to nearby countries.

Meanwhile, some three and four-star hotels have not backtracked with their rates for 2009, which are marked up by 15 to 20 per cent.

Viet Nam has seen a steady decrease in the number of foreign tourists since the beginning of 2008, and will very likely fail to meet its target of receiving 5 million guests this year, according to the Viet Nam National Administration of Tourism (VNAT).

Big tour operators like Exotissimo, Diethelm and Apexa are worried about the constant drop in bookings by 10-30 per cent, notably from the Northeast Asian and American markets.

The national tourism agency predicts a gloomy year for the industry in 2009 with cancellation rates reaching 50 per cent and advance booking volumes slumping by 20 per cent compared to 2008.

Worse still, a large number of small travel agents have attempted to lower services in order to survive, undermining the image of the nation’s tourism sector.

Co-ordinated price cut

Vu The Binh, a senior official of the VNAT, has singled out price cuts as being vital to boost the industry’s prospects immediately, given that improving the quality of products and services needs more time.

Vo Anh Tai, managing director of the biggest State-owned tour operator, the Saigontourist, also deems price incentives the most effective bailout for the industry, saying that the currently shrinking demand will bounce back with price cuts.

Tai cited the example of certain European groups reversing their decision to bypass Viet Nam in their plans to escape winter, following the Saigontourist’s move to slash its rates.

However, he added that the Government should offer tax relief to the hospitality industry, including reduction in VAT and deferment of income tax, for any significant drop in prices to materialise.

Nguyen Quoc Ky, managing director of Viettravel, said he believed in shopping incentives via gift coupons or discounts for big tourist groups.

"It’s better for us to discount 20 per cent for a room and reach capacity of 80 per cent rather than run it at 50 per cent capacity at the full price," said the sales director of a hotel in HCM City.

The ploy to price goods and services in Vietnamese dong instead of the US dollar, which is currently preferred by travel agents, is said to counter the effect of the euro’s slide against the dollar, making the tours more expensive for European travellers.

Nevertheless, the price cuts must be a co-ordinated effort that brings together hotels, restaurants, transportation companies, guides, and shopping centres, experts have said.

Hoang Tuan Anh, Minister of Culture, Sports and Tourism, recently asked travel agents to work out reasonable rate cuts in their package offers with other service providers.

Time running out

Viet Nam is well behind its regional competitors in stimulating the tourism sector, experts say, given that Thailand, Malaysia and Singapore have already announced multi-million dollar plans to rescue their hospitality industries.

Nguyen Quoc Ky noted that the industry, which contributes US$3.5-4 billion to the country’s GDP, needed a stimulus package of around $40 million.

The VNAT has launched a stimulus campaign starting in January until September next year. Details will be elaborated soon.

The campaign will see a rate cut of 30-50 per cent in hotels and airlines for both domestic and international routes, as well as in admission fees for major tourist attractions.

Many other service providers, including restaurants, car rental companies, firms providing tour guides and shopping centres have also committed to reduce their prices.

(Source: Viet Nam News)