VietNamNet Bridge - The Vietnamese online tourism market is predicted to increase from $2.2 billion in value in 2015 to $9 billion by 2025. However, it is unclear if Vietnamese firms can obtain a slice of the potentially lucrative pie. 

As one of the travel firms pioneering in selling tours online, Nguyen Duy Vi, marketing director of Tugo (tugo.com.vn), said the company ‘had to pay high tuition’ to learn lessons about online tourism.

The firm once had to sell 300 clients at a loss to other partners in December 2015 and had to mortgage assets and land to get money to maintain its operation.

“In the first year, we lost several billions of dong because the cost to obtain one client to book tours was high, at VND500,000-600,000 per traveler (the figure has been cut to VND300,000),” he said.

Meanwhile, his staff, used to traditional methods, could not adapt quickly to the new sale channel. As they could not process information quickly, clients kept away from Tugo because they had to wait too long for replies.

The Vietnamese online tourism market is predicted to increase from $2.2 billion in value in 2015 to $9 billion by 2025. However, it is unclear if Vietnamese firms can obtain a slice of the potentially lucrative pie.

Many Vietnamese travel firms have joined the online tourism market, including chudu24.com, ivivu.com, tripi.vn and vntrip.vn. However, they have been operating at a moderate level.

A report shows that more than 80 percent of the online hotel room booking market in Vietnam is held by foreign firms such as Agoda.com, Trivago.com and Booking.com. Agoda now has 7,600 partner hotels in Vietnam, while Booking has 6,000.

According to gotadi.com, in 2016, Agoda earned VND4 trillion from hotels in Vietnam alone.

Nguyen Minh Man, marketing director of TST Tourist, said Agoda applies the same principle: service providers must not offer any partner room rates better than those to Agoda.

“This makes it impossible for domestic firms to compete with Agoda in prices,” he explained.

Analysts commented that the abundant capital, high number of hotel rooms, many sale promotion programs and convenient payment methods all are great advantages which have helped foreign firms conquer travelers’ hearts. 

However, domestic travel firms argue that they are at a disadvantage because they have to obey the tax duty, while foreign firms cannot be forced to pay tax.

“Once travelers book a VND1 million hotel room on Agoda or Booking, VND700,000 will be paid to the hotel, while Agoda or Booking will pocket VND300,000. The amount of money will be remitted directly to its overseas account and the companies don’t have to pay tax to Vietnam,” said Ngo Minh Duc from the Vietnam Tourism Consultancy Council.

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