Struggling travel agents: more tourists but not profit

Destination Editor
11:00:22 - July 14, 2020

Domestic tourism is at peak season but travel agents hesitate to accept customers because the service providers suddenly break their commitments.

In order to stimulate tourism market after COVID-19, service providers reduced the price as much as they can; therefore, the tour prices are also very low compared to the same time in previous years. Even to keep customers, many travel agents accept to sell tours with low profit or no profit at all.

“After more than a month of implementing the stimulus program, the number of tourists is increasing. In July alone, the number of visitors increased by about 150% compared to the total of the last two months,” said Mr. Tran Trung Kien from Vietrantour travel agent.

The increase in the number of visitors leads to the increase in tourism revenue; however, most tours are discounted to stimulate demand. Even many travel agents only open tours to keep their customers so they cannot optimize profits. “The number of tourists increases but the profit margin decreases. The highest profit among tours is only about 2-5%. With some tours, we even accept losses just to keep customers ” Mr. Kien said.

Mr. Ho Duc Phu, director of Hanoitourist in Ho Chi Minh city, also said that after a long “hibernation”, this time is the peak season for domestic tourism. “Compared to last July, this year the number of tourists buying tours increased by about 20%. However, the profit of the tour did not increase commensurately with the increase of visitors,” Mr. Phu said. The reason is because the travel agents are reducing prices to stimulate demand, which makes each tour become cheaper than usual; and also because now the company can only exploit the domestic market.

Similarly, Mr. Nguyen Cong Hoan, Deputy General Director of Flamingo Redtours affirmed that although the number of domestic tourists in July and August increased by 150% compared to the same period last year, the total revenue and profit decreased with only about 30-40% over the same period last year.

According to Mr. Hoan, many supply partners have broken the initial commitment, pricing up their services instead of lowering them. “When there is a lack of customers, we all agree to join hands for stimulus programs. However, when the demand increased, the service providers suddenly stop providing stimulus packages or did not follow the original plan. These sudden changes have left the travel agents with no time to adjust,” Hoan said.

In addition, many accommodations also coordinate with airlines to launch their own promotion packages to customers, making it more difficult for travel agents.

According to experts, currently, hotels offer promotions on weekdays only and airlines can offer low-cost tickets only on newly opened routes or the routes they usually do not have many passengers. Besides, the suppliers did not give specific time in the stimulus program, so when the demand increases again, they change the prices. The majority of visitors also choose short-term tours with departures on weekends, increasing the pressure on travel agents.

The tour operators can not be proactive in their service prices because they usually set the prices after knowing the prices from their service providers. Therefore, when the price of services in the tour increases, the profit margin on the tour decreases.

Currently, most tourism companies operate with the purpose of creating, reducing unemployment in order to keep the brand name and be ready for the international market once Vietnam reopens for international tourism.

Struggling travel agents: more tourists but not profit
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