The costs of domestic tourism rose dramatically last year, causing more Vietnamese to book tours in neighbouring countries and having an impact on inbound arrivals, according to the HCM City Department of Culture, Sports and Tourism.

The rising costs of fuel pushed up the costs of air fares and other tourism services in 2011, the department said, with air fares rising by 35-40 per cent over the previous year. Food services also rose by 40 per cent.

Local travel costs rose by 20-30 per cent during the year, with the price of an average Ha Long Bay tour also increasing by about 40 per cent. Travel to neighbouring countries like Thailand, China, Cambodia and Singapore became more popular, with some tours to these nations 20 per cent cheaper than a trip from HCM City to Ha Noi.

About 3 million Vietnamese went abroad through Tan Son Nhat Airport in HCM City in 2011, doubling the number of outbound passengers in 2010.

Analysts warned that high costs could make the local tourism industry less competitive than regional destinations.

HCM City People's Committee Vice Chairwoman Nguyen Thi Hong said that tourism companies should strive to reduce the prices as well as improve service quality.

Saigontourist Travel Service Co director Vo Tai Anh countered that up to 90 per cent of their costs were out of their hands, dependent on other service suppliers such as airlines, restaurants, hotels, transportation companies and others. With such dependence on other suppliers, it would be difficult to cut prices by even 5 per cent.

It would require close co-ordination between carriers, hotels, restaurants, tour operators, localities and other service suppliers to cut prices and sharpen the competitive edge of the industry.

Air fares constituted a large proportion of the total costs of tourism, and the success of the domestic tourism promotion programme in 2008-09 could be attributed to air fare reductions during that period, noted HCM City Tourism Association vice chairwoman Nguyen Thi Khanh.

The nation welcomed over 6 million international visitors last year, 3.5 million of whom arrived through HCM City, and tourism generated revenues of VND130 trillion (US$6.25 billion), an increase of 30 per cent over the previous year.