Vietnam Outbound tour operators

Outbound tour operators reel on stronger dollar

The rise of the U.S. dollar against the local currency, coupled with the scarcity of this greenback, has thrown many outbound tour operators into a spin.

Tour operators reached by the Daily say they have incurred losses and at the same time have had a headache due to great difficulty in buying the dollar to settle payments for overseas partners.

Almost all of them have a tradition of using the dollar to give tour price quotations, so they are now feeling the impact of the volatile dong/dollar exchange rate.

The central bank sets the daily dong/dollar exchange rate and based on this rate, the dong is officially traded within a 1% band. However, this rate is lower than that on the black market.

There have been commercial banks imposing a surcharge or a fee on dollar buyers, thus effectively sending the rate rising to the black market level. Some banks even decline to sell dollars.

"We signed contracts when the rate was VND16,200 per dollar. Today, the rate quoted by banks is VND16,550 but these banks have refused to sell the dollar. This has forced us to buy it on the unofficial market for VND19,400 per dollar to pay for partners," Tran Xuan Hung, director of Viking Travel and Media Company, said last Thursday.

Hung said his company has incurred a big loss of VND90 million in a US$30,000 contract to arrange a three-day Cambodia tour for 100 tourists.

Nguyen The Khai, executive director of Perfect Tour Travel Co., said his head is reeling over how to make payments for foreign partners in five signed contracts. The company sells expensive outbound tours to America, Japan and South Korea.

Payments for the first four contracts in which the rate was set at VND16,100 per dollar are 80% complete. For the last contract, his company has finished payments by half only while the value of this deal is VND1 billion and the exchange rate was only VND17,100 per dollar upon the signing of the contract.

"We are operating at a loss but the big problem is that we cannot buy dollars for settling payments," he said last Friday.

The price of the dollar is much higher than what is quoted by the bank but enterprises could not buy it at the quoted price unless they agreed to pay a fee.

Luu Dinh Phuc, director of Viettours, said last Friday that around US$150 is lost for every US$1,000 bought. Thereby, the official exchange rate is almost the same as the unofficial one.

"I can buy the dollar from the bank if I pay a surcharge of VND2,900 for each U.S. dollar bought," he said.

The company serves 1,000 to 1,500 outbound guests a month.

Several months before, the local currency strengthened against the dollar, making life difficult for the inbound sector. But now travel firms active in this market segment are benefiting from the stronger dollar.

These companies can use earnings from the inbound sector to offset the losses incurred by the outbound sector.

In addition to lost revenue, the relationship between local, travel firms and their customers has turned sour in some cases.

Khai from Perfect Tour said his company had failed to reach common ground with some customers over the foreign exchange rate. Guests have insisted on the official rate without any surcharge.

"It is very difficult to reach new deals. We have around three outstanding contracts," he said.

As a result, some companies have switched to selling tours in dollar though this practice violates a rule that bans price quotations in dollar.

"We've started selling tours by dollar, and there have been few guests," Hung of Viking said.

In the meantime, a number of companies like Saigontourist Travel Service Co. and Vietravel still stick to the official foreign exchange rate for outbound tours to maintain their credibility.

"It is very hard to cope with the situation but we still have dollar funds in our account so we can use them for payment in the short term," said Tran Doan The Duy, head of Vietravel's outbound department.

Phuc of Viettours proposed the bank officially publicize the exchange rate and all fees and surcharges so that his company could negotiate with guests. "We want everything to be clear because we cannot give an explanation to our customers if the actual price of the dollar is higher than what is quoted by the bank," he said.

(Source: SGT)

Tag: Japan , Saigon , Tour , Tourist , Travel

Outbound tour operators reel on stronger dollar

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