Travel firms say weaker dong poses uncertainties

Several travel firms in the country say a central bank decision last week to weaken Vietnam dong by up to 9.3% against the greenback will stir up uncertainties although the inbound will stand to benefit in the short term.
The State Bank of Vietnam last Friday made a long-anticipated move to revised the official inter-bank rate to VND20,693 to the dollar from the previous VND19,500, helping almost eradicate the double-rate situation in the economy.
While several industries will enjoy advantage owing to a weaker dong, tour operators say they have many things to do to cope with the change.
Feedbacks from local travel firms show that the inbound sector will reap profit from the wide difference between the old rate and the new one, but the inbound sector may find themselves under tenterhooks.
Some companies selling tours to international travelers to visit the country said that they would earn more from old deals. Normally, agreements with overseas partners are signed some months or even one year in advance.
“We will earn more from such deals because we’ve inked contracts on the forex rate of VND19,500 to the dollar,” Bui Viet Thuy Tien, managing director of Asian Trails Co., Ltd., told the Daily last Friday.
This view is supported by Vo Anh Tai, director of Saigontourist Travel Service Co., who said that the higher price of the dollar would bring more profit for the inbound sector. But he stressed the outbound sector will suffer.
“It’s probable that local people will think twice when buying outbound tours because they must spend more to buy the tours compared to the past. We are now looking at the market,” he told the Daily.
Tai and other tour operators show the same worries that tourism services such as hotels and airlines will go up in line with the high rate of the dollar because many tourism service providers like hoteliers are quoting their price in the dollar.
“It (the higher forex rate) makes entrepreneurs think more on business because a company may earn more from the inbound activity but the expenditure also go up. The company can even see profit shrink if services like hotels and airlines to soar,” Tai said.
Tran Vinh Loc, director of Lac Hong Voyages, said that he had just asked all departments in the company to check services prices to update the new tour prices to overseas partners after the new change from the State Bank.
“We can lose more with deals whose settlements are made by partners after the tours are finished because prices of related services will increase more after the decision. The higher income (in terms of Vietnam dong) cannot make up for the higher price of services,” he said.
Vietnam last year received around 5.05 million foreigners, up from 3.78 million in 2009. The number of local people to make outbound trip was estimated at over two million.