Travel firms warned overly high tour fees will keep foreign travelers away

Travel firms are planning to raise inbound tour fees since the fees of all other services have increased. However, they well understand that overly high tour fees will make it impossible to attract foreign travelers.
Managers of travel firms are very busy these days attending constant meetings to discuss the tour fee policies. The transport fee has increased by 50 percent, while hotels have quoted new hotel room rates that are 30 percent higher, which has forced travel firm managers to think about raising tour fees.
However, the biggest worry for them is that if they raise tour fees too sharply, they will lose clients. According to Nguyen Minh Thu, Deputy Director of Mekong Travel Firm, with the 50 percent transport fee increase and hotel room rate increase of 30 percent, the tour fees should be raised by 30 percent in order to help travel firms cover expenses. However, Thu admitted that travel firms would not be able to raise the tour fee by 30 percent. “A 10 percent tour fee increase would be acceptable by foreign travelers, but they will flee if they hear about higher fee increases,” Thu said.
She added that at this moment, the 10 biggest travel firms are sitting down with transport firms to discuss the transport fees.
Sharing the same view, a representative from Hanoitourist, said that it will be very difficult to raise fees for inbound tours because contracts were signed many months ago when the petroleum prices were still lower than the current levels. Therefore, the travel firm only plans to raise the fees of domestic tours and outbound tours.
Vu The Binh, Chair of the Vietnam Travel Association, also said that travel firms will not adjust the inbound tours. Regarding domestic and outbound tours, the tour fees will certainly increase by 10-15 percent in a matter of days. “How high the tour fees will be and when the tour fees will increase are issues to be decided by travel firms depending on their strategies and flexibility,” he said.
“Most travel firms are reconsidering prices in order to draw up the solutions to overcome difficulties. The association will organize a workshop in March to discuss the issue,” he said.
Thu from Mekong Travel Firm said that it now a “sensitive moment”, because the high season of receiving Chinese tourists will come in one month. Therefore, if Vietnamese travel firms raise tour fees at this moment, when the tour fees in other countries stay unchanged, this will negatively affect Vietnam’s tourism market.
“We now have the East-West Economic Corridor which creates best conditions for tourists to easily travel between Vietnam, Thailand and Cambodia. This is the opportunity for us to attract travelers. However, this would be also a risk, because if the tour fees are overly high, travelers will not go to Vietnam in their itinerary ,” Thu said, adding that she fears the tour fee increases will make the turnover of travel firms decrease in 2011.
Thu stressed that travel firms have accepted lowering profits to retain markets and travelers, and she has advised hotels and transport firms to raise service fees at reasonable levels, or the number of foreign travelers will decrease. In this case, none will get benefits.
Replying to Thu, Duong Thanh Huu, Head of the Business Division of Gold Coast Hotel in Da Nang, said that the hotel will only increase the hotel room rates by 20 percent in May, June and July. Meanwhile, it will not raise fees in the next months, because this will be the low season of Da Nang’s tourism.
“Gold Coast is sending letters to clients, asking to negotiate prices. We will not raise the rates on the clients who booked rooms before,” he said.
The overall tourism development strategy forecasted that by 2010, Vietnam would welcome 8.7 million foreign tourists and 25 million domestic travelers, while the income from the industry would reach $16.3 billion and the GDP in tourism would be 12 billion dollar.
In 2010 alone, the number of foreign tourists visiting Vietnam reached five million. The average growth rate of foreign tourists to Vietnam in 2005-2010 was 9.2 percent.
By November 2010, Vietnam had licensed 625 projects in the tourism sector with a total registered capital of 12.285 billion dollars.