Hotels spoil plan on low-cost tourism

      The bottom threatens to fall out of the Viet Nam National Administration of Tourism (VNAT)’s strategy to create low-cost tours amid the economic downturn as hotels fail to honour their commitments to reduce prices.
The VNAT announced the strategy after foreign tourist numbers plunged 12 per cent in January to 370,000 and analysts predicted things to get worse. It announced a national campaign to last until the end of September under which tour package prices are to be cut by 30 to 50 per cent to attract foreign tourists to the country.
It sought a commitment from travel agencies and hotels to cut room charges by up to 50 per cent and persuaded Vietnamese airlines to join.
Seventeen hotels and 14 travel firms in HCM City signed up, promising to offer discounts of 30 to 50 per cent.
But only a handful have so far honoured their commitments, though with much lower discounts than promised.
The Bong Sen-Sai Gon Hotel was one of the earliest to reduce room charges, offering thus far 10 to 25 per cent discount to 50 groups of foreign travellers coming through travel firms.
Tao Van Nghe, general manager of the five-star Majestic Hotel in HCMC, said his hotel too had reduced tariffs but he was worried about the programme’s efficiency.
The HCM City Tourism Association said the discounts of 10 to 30 per cent did not make a "strong impression" on tourists when many countries in the region were offering up to 80 per cent rate cuts.
Defending high rates
The hotels that have failed to honour their commitments justify their action.
Some said they did not honour their commitment because they were still waiting for the Government’s incentives for those involved in the campaign, mainly related to taxes and electricity and water prices.
Dietmar Kielnhofer, general manager of Sheraton Sai Gon - which is not part of the campaign - told Viet Nam News that since all businesses and market segments were affected by their own set of market conditions, rather than participating in an overall rate reduction strategy, the hotels chose to support the initiative by individual case-by-case discussions.
"We are meeting with our stakeholders and customers to access each and every one of their business and market situations, to work out how we can best partner them at this time. This is a very detailed approach, but one we feel ensures what we do at this time is relevant and appropriate for each and every one of our partners," he said.
"For this type of protracted economic crisis, there is no one-size-fits-all solution."
Nguyen Duc Quynh, deputy executive director of the Furama Resort Da Nang, said Furama had not participated in the campaign because its room prices were already reasonable.
"To ensure the hotel’s profit and staff’s income, we have maintained the current rates but sometimes we make some reductions for group tourists," Quynh said.
Some hotels did not want to reduce their prices because it could affect their prestige, while others were afraid that if they cut tariffs now, they would be unable to raise them in the future, he said.
Globally, tourism was hit badly last year and analysts forecast a zero or negative growth rate in the first haft of 2009, adding Viet Nam would be similarly affected.
"It is fair to say that business is not as strong as last year for the entire hotel market," Keilnhofer said.
"I do feel Viet Nam is in a more sheltered position and so the market here may not feel the severe affects that some other Asian centers may feel, however there is certainly a reality to the conditions."
To stimulate growth, the Government needs to be more proactive in marketing Viet Nam overseas and drive the tourism sector more aggressively forward, he said.
It is imperative that the tourism ministry, in conjunction with the private sector, pulls out all stops to generate a positive, tourist friendly image of Viet Nam, he added.