Rising gasoline prices put Vietnam's tourism industry in a difficult position.

Detailed statistics on the components of tour prices show that everything has increased: from airfare and road transport to the supply chain of services, all have risen sharply. This has left the tourism industry in a dire situation.

The more customers, the more losses.

Entering the peak of the 2022 summer tourist season from April 30th to the present, many localities have recorded impressive numbers of domestic and international tourists. Summer accounts for up to 70% of the revenue of the tourism industry in general and travel companies in particular. However, before they could even celebrate the surge in tourists after two years of stagnation due to COVID-19, travel businesses are facing many difficulties in maintaining operations.

Mr. Vu Van Tuyen, Director of Travelogy Vietnam, said that since the beginning of 2022, gasoline prices have been adjusted 17 times, but 13 of those adjustments have resulted in price increases. The increase in gasoline prices immediately affects the price of tourist transportation. Accordingly, tourist transportation prices have increased by 15-25%. “Tourist transportation prices increase weekly, not just after each gasoline price increase, leaving travel businesses at a loss. The reason is that after the COVID-19 pandemic, many transportation companies could not survive financially and dissolved. In addition, there is a shortage of drivers because drivers are no longer enthusiastic about the profession,” Mr. Tuyen said.

Mr. Tuyen gave an example: a 45-seat bus from Hanoi to Got Ferry Terminal on the way to Cat Ba costs 8-8.5 million VND per round trip. After COVID, the price increased to 9-9.5 million VND per round trip. Currently, it's up to 10.5-11 million VND per round trip. Thus, tourism transportation alone has increased by 30-35%.

According to Mr. Tuyen, not only have transportation costs increased, but the price of meals for tourists has also risen. Specifically, previously, a budget-friendly meal for tourists cost 150,000-170,000 VND per person, including a full meal with delicious dishes. But now, each meal has increased to a new price of 200,000-220,000 VND.

Furthermore, a major burden on travel businesses is the increase in airfare. According to surveys, domestic flight prices have increased by 2.5-4 million VND/round trip, not including peak days. A series of other accommodation services such as laundry have increased by 20-25%, toothpaste, shower gel, etc., have increased by 10%, leading to a rise in hotel prices.

"Previously, travel agencies signed hotel contracts on an annual basis, but now hotels only dare to sign monthly contracts because they don't know if prices will increase further," Mr. Tuyen said.

A travel agency director sadly shared: "Previously, a 3-night, 4-day tour to Phu Quoc cost only about 6-7 million VND per person, but now it has increased to 9-10 million VND per person. Similarly, a tour to Cat Ba has increased from 2.5 million VND to 3.5 million VND, not including the increased entrance fees… Despite raising tour prices like this, businesses are not making a profit due to many other unforeseen expenses."

This person added that currently, to compete with domestic tourists, travel businesses only make a profit of about 5-7% instead of 10% as before. "For a group of 50 tourists going to Cat Ba, a business only makes a few million dong in profit if everything goes smoothly. Even though it's a loss, they still do it because they have to retain customers," this person said.

How are businesses coping?

According to data from the Vietnam National Administration of Tourism, in May and June 2022, the number of domestic tourists reached 12 million and 12.2 million respectively. This is the highest number of domestic tourists in a single month in Vietnam in recent years. As a result, the number of domestic tourists in the first six months of 2022 reached 60.8 million (almost 1.4 times higher than the same period in 2019), including approximately 8.3 million overnight stays. Total revenue from tourism is estimated at VND 265,000 billion.

Mr. Vu Tuyen, Vice President of the Vietnam Community Tourism Association, said that after the full reopening of tourism activities on March 15th, tourism businesses have all developed their own strategies and product lines to attract customers. With Industry 4.0 technology, businesses can reach customers more easily. In addition, businesses need the cooperation of management agencies, especially the Departments of Tourism Management, to eliminate dishonest practices and businesses and agencies operating illegally.

To attract tourists to Da Nang, Ms. Tran Nguyen, Head of Business at Sun World Group, said that the company is making efforts to invest in new products that will be brought to Da Nang in the near future, so that the city will be "even more beautiful and more worth visiting with many unique experiences."

Anh Thi