Facing big difficulties, travel firms asking for tax reductions

The HCM City Tourism Association has said it will propose that the government slash VAT, corporate income tax, and allow delays for tax payments of two quarters in order to help travel firms to survive their current difficulties.
Nguyen Thi Khanh, Deputy Chair of the HCM City Tourism Association said the association proposes the 50 percent VAT reduction and 30 percent corporate income tax reduction – the same reductions applied in 2009, when the national economy was dwindling due to the global financial crisis which dealt a strong blow to the tourism industry.
All travel firms have voiced the same worries about their business performance in 2011. Depending on tour routes, meal prices have increased 20-30 percent, the hotel room rate has increased 15 percent, and transportation fees have increased by 40-60 percent.
The food price and service fee increases have led to sharp increases of 15-20 percent in tour fees for domestic tours, while the tour fee applied to foreigners in Vietnam has increased by five percent.
As planned, the cooperation program between airlines and travel firms which aimed to slash tour fee and attract more travelers will finish after two years of implementation. Travel firms are anticipating the big difficulties when the program ends. They have been trying to cut down expenses and accept lower profits. However, the moves are still not enough to help them overcome difficulties.
“The reductions in the number of tourists from Egypt or Japan are the typical examples. Meanwhile, the demand of domestic travelers has also decreased since people are being more frugal because of high inflation,” Khanh said.
She went on to say that travel firms hope the number of tourists will be higher on the April 30 holiday, but they anticipate that the number of tourists on the holiday will be lower than last year.
Travel firms had an unlucky start in 2011 when they had to cancel a lot of tours to Egypt, Dubai in February due to political turmoil. The bad news and uncertainties continued with the earthquake and tsunami in Japan.
Samurai travel firm said that it plans to serve three groups of travelers who will leave for Tokyo and Osaka to in the cherry season in April, but a lot of travelers have canceled tours. The travel firm is trying to persuade clients to continue their plans, while considering organize tour for a small group of 7-8 clients.
Thoi Bao Kinh Te Saigon has quoted Nguyen The Khai, Director of Hoan My travel firm as saying that the firm plans to organize a tour to Japan for 70 clients slated for the end of March. However, to date, 16 clients have canceled tours.
“The clients do not fear the tsunami and earthquake, because these are not the destinations. They fear radioactive waves,” Khai said. “We have contacted the Japanese partners, but they simply advise us to keep calm”.
The period at the end of March and the beginning of April is the highest business season for the travel firms which specialize in organizing tours to Japan, because it is the cheery blossom season in Japan. Therefore, the catastrophe in Japan has caused headaches for travel firms.
When asked to comment on the proposal by the tourism association, La Quoc Khanh, Deputy Director of the HCM City Culture, Sports and Tourism Department said the department agrees with travel firms. “We know that travel firms are facing difficulties, and we are trying to find ways to help them overcome their difficulties and stimulate demand,” Khanh said.
He added that the department has discussed with the national flag air carrier Vietnam Airlines on a cooperation plan between the two sides for the upcoming summer.
“Vietnam Airlines has said it will put forward a program as soon as possible. We hope we can launch a promotion program in order to stimulate demand,” he said.