The Covid-19 has dealt a unprecedented bad blow to the travel and hospitality business in the world as well as in Vietnam. With fabulous vaccination by the government, the Vietnamese economy is recovering quickly.
And the domestic travel and tourism sector has made a comeback that could not have been foreseen in the most positive imagination a few months ago! The Vietnamese tourists are making family trips, group tours and corporate tours as if there were not a pandemic at all! But Vietnam local tour operators, travel agencies, airlines, transport operators… are facing huge difficulties!!! This is all attributed to spiraling increases in fuel prices, and fuel-price-adjusted service costs in most economic sectors in Vietnam!
In the world markets, crude oil prices have been above USD100/barrel which looks quite sustainable in a foreseeable future. In Vietnam, gasoline prices have been above VND30,000 (currently about VND33,000/litter) which is unprecedented.
A manager working at a local airline requesting anonymous was quoted as saying: “Gasoline accounts for 30-50% of the total operation cost of the firm and airfares (in Q3/2022) have increased by 49% versus those in Q1/2022.”
Prices for car/bus transport have been adjusted upward several times since the beginning of 2022 with increase from 10% to 30%. And vehicles are often not available during weekends. The increase does not include extra road tolls for new highways in operations. Vietnam is experience miraculous growth and new highways in operations are seen everyday from the North to the South: Hanoi – Halong Bay, Hanoi – Lao Cai, Hanoi – Ninh Binh, Hanoi – Hoa Binh, Saigon (Ho Chi Minh City) – Dau Giay, Cho Moi – Bac Kan… to name a few. Tolls for these routes are anything from USD5 to above USD30 for one way depending on the vehicle size.
Food prices in Vietnam have been very stable until just recently. Now prices for food start spiralling upwards and the increase does not seem to have limits. The sector is mostly unregulated and restaurant owners charge hefty high prices when it is overcrowded. Even contractual prices for travel agencies and tour operators have increased approximately 30%.
It is a habit in Vietnam that most people travel simultaneously due to school holidays and high summer temperatures. Most places are booked out, be it flights, restaurants,… Tourist attractions are jam-packed at weekends.
Facing the difficulties, local tour operators and travel agencies in Vietnam could adjust the tour prices upwards risking losing clients. Some tour companies choose to absorb the increased costs to maintain their clientele. Some would try to rely to bulk purchases of travel services… to help them weather the high prices.
But that is not all! Huge difficulties have been foreseen coming from employees in the travel and hospitality business. Several thousands have quit their jobs for something more stable to support their families. Some return when conditions get better, but most would not, given the unstable nature of the travel and tourism sector. Increasing wages is not a sustainable option. New training takes time. And in the near future, the prospects do not look too promising especially for tour operators and travel agencies in Vietnam, given the huge number of tourists making trips daily.
