Travel firms battle surging costs

May 08, 2024 | 12:41
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Despite the fact the travel industry is forecast a strong rebound this year, businesses in the sector are cautious about reaching their full-year projections amid rising cost pressures.

Le Cong Nang, CEO of outbound travel firm WonderTour, said, "By the end of April, our revenue for the year was equal to 30 per cent of the whole of 2023, even before the peak summer season, and autumn is also predicted to be strong this year. We have also received requests to open several student camp programmes at home and abroad."

Travel firms battle surging costs

With travel restrictions normalised post-COVID, a more open visa policy, an economic rebound, and China's reopening, the Vietnamese tourism industry is pinning its hopes on a robust rebound in the number of international visitors this year.

The Vietnam National Administration of Tourism has set a target of welcoming 17-18 million foreign visitors in 2024 compared to 12.6 million last year, along with 110 million local tourists, which would represent a complete rebound to pre-COVID times from 2025.

Notwithstanding, many businesses in the sector are prudent in setting business targets this year.

Vietravel is targeting a little over $288 million in revenue and $2.8 million in post-tax profit for 2024, up 16 per cent in revenue, yet down 15 per cent in profit, on-year.

Similarly, BenThanh Tourist Service Corporation is eyeing a modest $43 million in revenue and more than $1.3 million in post-tax profit, up 10 per cent and 5 per cent, respectively.

A company source revealed that the company’s business would depend heavily on the government’s policies, solutions, and how the market reacts with them, so that business solutions need to be flexible.

At BenThanh Tourist's AGM in late April, shareholder approval was sought for the board of directors to be able to revise the business plan when necessary, as well as restructure investment ventures outside of Ho Chi Minh City to boost efficiency.

In Q1 of this year, Ben Thanh Tourist raked in $7.3 million in revenue and $275,000 in post-tax profit, up 16.8 per cent and 13.7 per cent, respectively. With such results, the company has fulfilled 17 per cent of full-year revenue and 20.7 per cent of full-year profit targets.

At Thanh Cong Tourism JSC, the company’s 2024 AGM in late April just approved its business plans for this year, with $5.8 million in revenue and $225,000 in profit, down 41 per cent and 70 per cent respectively compared to 2023’s implemented figures.

At Cao Bang Bang Giang Travel and Trading JSC (Vimico), the company aims to post $666,670 in revenue and $50,000 in post-tax profit in 2024, a slight improvement compared to 2023.

However, a Vimico source shares that the company’s business is less optimistic in the year to date.

In Q1 of this year, the company saw a dip in the number of visitors who booked their rooms, meanwhile Q2 is often a rainy season, which might affect the quality of their services due to still modest investment in accommodation improvements.

In addition, new offerings of businesses in the sector have been increasingly diversified, which is also a factor challenging the company’s operation.

Ben Thanh Tourist said that besides upbeat signals about the rebound of the tourism industry as well as the global economy, global geopolitical uncertainties are a cause of concern.

In addition, the price competition in the sector will become stiffer, with surging expenses on discounts and promotions to entice customers, all leading to shrinking profit margins.

A spike in ticket prices on local routes also casts a big impact on the travel industry. The Civil Aviation Authority of Vietnam forecasts a drop of 10.5 per cent on-year in the number of local passengers at Vietnamese airports in 2024.

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By Yen Thuy

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