Vietnam discount drive in trouble-26 March, 2009

HANOI –Vietnam National Administration of Tourism (VNAT)’s strategy to create low-cost tours amid the economic downturn is in danger of disintegrating as hotels refuse to reduce prices.

The VNAT announced the strategy after foreign tourist numbers plunged 12 percent in January to 370,000 and analysts predicted things to get worse.

It announced a national campaign to last until the end of September under which tour package prices are to be cut by 30 to 50 percent to attract foreign tourists to the country.

It sought a commitment from travel agencies and hotels to cut room charges by up to 50 per cent and persuaded Vietnamese airlines to join the campaign.

Seventeen hotels and 14 travel firms in HCM City signed up, promising to offer discounts of 30 to 50 per cent.

But only a handful have so far honoured their commitments, though with much lower discounts than promised.

The hotels said they were still waiting for the Government’s incentives for those involved in the campaign, mainly related to taxes and electricity and water prices.

Dietmar Kielnhofer, general manager of Sheraton Saigon - which is not part of the campaign - told Vietnam News that since all businesses and market segments were affected by their own set of market conditions, rather than participating in an overall rate reduction strategy, the hotels chose to support the initiative by individual case-by-case discussions.

"For this type of protracted economic crisis, there is no one-size-fits-all solution," he said.

Nguyen Duc Quynh, deputy executive director of the Furama Resort Danang, said Furama had not participated in the campaign because its room prices were already reasonable.

"To ensure the hotel’s profit and staff’s income, we have maintained the current rates but sometimes we make some reductions for group tourists," Quynh said.

Some hotels did not want to reduce their prices because it could affect their prestige, while others were afraid that if they cut tariffs now, they would be unable to raise them in the future, he said.