Vietnam travel firms feel threatened by potential foreign investors ahead of TPP

A tourism exhibition in Ho Chi Minh City. Photo: N.Tran Tam

Many travel companies have been seeking to increase market share in anticipation of a Pacific Rim trade pact that will allow investors from 11 foreign countries to provide tour operator services in Vietnam for the first time.

Big agencies such as Vietravel and Fiditour have made the move, expecting the evasion of foreign competitors when Vietnam permits “foreign investment to provide inbound services and domestic travel for inbound tourists” under the Trans-Pacific Partnership (TPP).

The country will only reserve the right to “adopt or maintain any measure with respect to tourist guides services.”

Foreign companies currently are not allowed to operate inbound tours, and have to partner with local businesses instead.

Once the restriction is removed, Vietnamese businesses will face “a huge challenge,” considering that most of local tour operators are small and medium.

Travel agencies from other TPP countries such as Australia, Japan and the US are big, according to local businesses and analysts.

Nguyen Quoc Ky, CEO of Vietravel, expressed his concern that Vietnamese companies will have to compete with many big rivals when TPP takes effect, possibly in 2018.

“Their presence will create a lot of difficulties to local businesses,” he said.

The Ho Chi Minh City-based travel firm recently organized its own exhibition to promote its tours, instead of waiting to take part in promotional events organized by tourism agencies, Ky said.

Fiditour, on the other hand, has shifted its focus to online sales, because it is not only convenient to clients, but costs the company less, allowing it to offer more discounts, representative Tran Bao Thu said.

She said it forecasts that foreign companies will tap the market through online services, given their long experiences in the business.

However, Phan Xuan Anh, chairman of Viet Excursions, a known contract operator for cruise lines, said local travel businesses need to focus on improving their services’ quality and innovating their products, instead.

He warned that even though they are not officially present in Vietnam, many multinationals have been attempting to build up their customer bases through their joint-ventures with local partners and offering competitive prices.

Huynh Van Son, a tourism management lecturer, said businesses need the government’s support to expand their operation not only domestically, but in other TPP participants’ markets so that they can capitalize on overseas markets.

Vietnam reported more than 6.3 million international arrivals in the first 10 months, down 4.1 percent year on year, according to the latest figures released by the Vietnam National Administration of Tourism (VNAT).

Vietnam travel firms feel threatened by potential foreign investors ahead of TPP

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