Tour discounting plan may fail to reach its goal

The National Administration of Tourism (VNAT) has launched a new tourism promotion program, “Vietnam: Your Destination.” Though VNAT has called on tour operators to cut prices, it isn’t giving them substantial support.
The new program aims to attract 4.2 million foreign visitors and 27-28 million domestic travelers in 2010. VNAT has joined forces with the Vietnam Trade Promotion Agency (Vietrade) to launch the sale of discounted services in low season (August and September) in Hanoi, Da Nang and HCM City. It’s encouraging travel firms, hotels, restaurants and service providers to slash their fees by ten to thirty percent. They have also called on Vietnam Airlines to discount airfares by half for some travel firms.
Incentives have ‘disappeared’
The new “Vietnam: Your Destination” program has encouraged many travel firms. It’s the result of discussions among participants in VNAT’s domestic travel promotion team, which includes some travel firms. However, some observers doubt that the tourism promotion programme will reach its high goal because, unlike last year, the Government is not providing incentives for travel firms to reduce their fees.
A director of a travel firm in HCM City said that to induce travel firms to slash tour prices by up to forty percent in 2009 (the ‘Impressive Vietnam’ program), the Government agreed to reduce the value added tax on tourism services by 50 percent VAT reduction and exempted participants from corporate income tax for nine months. These preferences will not be extended in 2010.
Though the “Vietnam: Your Destination” program will continue until the end of 2010, VNAT is only urging sellers to slash prices in the August-September low season. Also, though Vietnam Airlines has committed to slash airfares by 50 percent, this reduction will apply only to some seats on some routes. In HCM City, only ten travel firms have reported that they have been able to purchase low cost air tickets.
Nguyen Ngoc An, a senior executive of Fiditour, said that under such conditions, travel firms will not be able to slash tour fees by 35 to 40 percent like they could in 2009.
Tran The Dung of The He Tre Travel guessed that if hotels, airlines and other service providers do not slash prices as requested, travel firms will only be able to discount by 25-27 percent. Overland tours will see lesser discounts in the 10 to 12 percent range.
The situation seems to be most serious for tour operators that cannot purchase low cost air tickets. Luong The Vy, Deputy Director of V-Travel, said the removal of the preferences travel firms enjoyed in 2009 will increase costs by five percent. Costs will rise even more if travel firms cannot purchase low cost air tickets, and the result will be that Vietnamese tourists will again turn their eyes to tours to Cambodia, Thailand or Singapore instead of travelling within Vietnam.
Who will benefit from this promotion program?
“The State should not just call on us to reduce charges; it needs to share expenses and difficulties with firms,” said the director of a tourism firm in HCM City. Moreover, the promotion program looks unstable: if air carriers, restaurants and hotels end promotion campaigns, the tour fee will rise again immediately.
Meanwhile, travel firms only promise to discount fees, not to improve service quality or introduce new products. That explains why many clients complain that low cost tours mean low quality
Clients who travel under the promotion program will have to accept strict conditions. They have to book tickets 15 days in advance and put down fifty percent of the cost after the confirmation. If clients cancel tours, they will still be liable for airfare and some other penalties.