A price spike in almost all services from hotels to transport and restaurants and a higher exchange rate at hotels than the official level have sent the cost of inbound tourism surging.
Bui Viet Thuy Tien, managing director of Asian Trails, said many hotels in HCMC, mainly luxurious ones, often set a higher exchange rate than officially quoted by banks.
While foreign partners make transfers in foreign currency, hotels fix the exchange rate at VND22,000 per dollar, instead of the VND21,000 quoted by banks, thus causing losses for tour operators who are partners of these hotels.
“With such a high exchange rate, we lose about 5% for each U.S. dollar and the loss will amount to hundreds of millions of Vietnam dong for total sales of US$100,000,” Tien added.
As per the Government’s Decree 95/2011/ND-CP on foreign exchange and gold trading management that took effect on October 20 last year, those quoting prices in foreign currency will be fined from VND300-500 million.
Under the new decree, tourism companies and hotels have found it hard to provide local currency prices to foreign clients, so they insist on the quotation in the dollar or euro.
To deal with the problem, domestic travel agencies plan to adjust their tour prices. “We are forced to adjust up prices given the rising tour package price, but we also have to manage to survive the current fierce competition,” said Hoang Huu Loc, chairman of Saigontourist Travel Service Company.
Similarly, local hotels have difficulty setting prices for service agreements under the present circumstance. They are concerned their competitiveness will be eroded when applying a high exchange rate but consider this solution the best way for helping them avoid risk of exchange rate volatility.
“We have had no choice but to charge a high exchange rate for a number of contracts,” said Nguyen Thi Xuan Hong, director of Vien Dong Hotel.
Like in previous years, the local tourism sector this year has failed to maintain inbound tourism prices. The package tour price in this segment has gone up by at least 5% to 15%. On the contrary, neighboring countries have kept prices unchanged in order to attract more customers in the face of the global economic downturn.
Tu Quy Thanh, director of Lien Bang Travelink, said prices of all services had surged, with the transport fee increase recorded as the highest level. He clarified that every service is part of the whole package tour, so it is impossible for tourism businesses to keep prices unchanged if the price of a service rises.