Outbound tour operators lose out on dollar rise

The devaluation of the Vietnam dong against the U.S. dollar has cost outbound tour operators who had signed big contracts before the dong dropped last week.
Sales of outbound tours have not suffered yet, but tour operators have already lost money in their already-signed tour deals and they are concerned by the rising price of the dollar on the unofficial market.
Luu Dinh Phuc of Viettours said local people were still purchasing outbound tours as normal but the company, which specializes in arranging group tours for companies, would need more time to evaluate the impact of the high rate.
In the short term, the company has incurred a big loss from its contracts signed before August 18 when the central bank let the dong fall against the greenback.
He said big groups normally paid 45-60 days after the invoice was issued so the dong devaluation from VND19,400 to VND19,154 per dollar meant losses especially for contracts worth hundreds of thousands of dollars.
Operators were also worried about the high price of the dollar on the black market as commercial banks often refuse to sell dollars when the currency is in short supply, forcing outbound tour operators to buy dollars on the underground market.
“The price on the unofficial market is higher than the price at the banks but we need to buy dollars for overseas payments. Its going to cost us more,” said Dinh Kim Phuong, director of Carnival Tours.
Travel companies use one of two ways to set the price of the U.S. dollar – either the commercial bank price or the agreed price as the average of the bank and unofficial market prices.
Companies that get paid in U.S. dollar from inbound tourists and those selling tours for companies use the first way. The agreed price is used by companies selling individual outbound tours.
The company still uses the official price for big contracts but is considering resorting to the agreed price for group company tours and may ask individual travelers to pay by U.S dollars if the price on the black market keeps going up, Phuong of Carnival Tour said.
“Some big customers agree to pay by the agreed price but we will deal with them if the price of the dollar on the black market rises. Costumers will have to think harder when they sign the contract.”