Low demand, high rents take toll on travel agencies in Hanoi's old quarter

Hang Bong Street has around 20 travel agencies selling combination tours, exchanging currency and offering hotel reservation services.

Other streets in its vicinity such as Lan Ong, Hang Bo and Luong Van Can are dotted with dozens of similar offices, and most of their staff sit idle all day due to a lack of customers.

Some of the agencies said rent for their 30-square-meter premises cost VND30 million (US$1,233) a month.

Minh An, owner of a travel agency in the Hang Ngang-Hang Dao area, said she began renting an office early this year for VND15 million a month but her business was dull.

"In my old office on Luong Van Can Street, I sometimes earned a profit of VND20 million a month."

In the six months since moving to the new place she has been losing VND7 million a month.

She said in the early 2010s there was not much tourism information online, and foreign visitors would walk around the old quarter and seek out travel agencies to buy tours.

By 2019 the number of customers started falling though "travel agencies were still profitable," but after the pandemic they have little business, she said.

Now foreign tourists usually book tours online before coming to Vietnam or book them at their hotel, she said.

Since mid-year her office rent has increased to VND17 million a month, and would increase further next year, she said, adding her business is unlikely to survive and she would soon find another job.

Nguyen Thi Tra Giang, director of Ha Long - Sa Pa Travel Company on Hang Bo Street, said she has just reopened her office after closing during Covid. She did not disclose the rent she pays, but said it was "very stressful" because there were no customers.

Realizing people are booking online, she made a digital transformation but has not yet seen positive results.

She said it is very difficult for small travel agencies to break into the digital market, especially considering the large investment required. Like many other travel agency owners, Giang is also considered closing down.

Nguyen Tien Dat, vice president of the Hanoi Tourism Club, said the business model of tourism offices in the old quarter is "old fashioned" and most mainly offer two-day tours to Sa Pa and Ha Long.

"If they don't change soon, they will be eliminated."

In the first 10 months of this year Vietnam received 10 million foreign visitors.

Before the pandemic, it had received 18 million in 2019 and 15.5 million in 2018.

Many travel companies also said tourists’ spending has decreased due to the economic situation.

A report by travel company Outbox Consulting earlier this year had said foreign businesses dominated online travel services in Vietnam.

Dat said investing in the online market involves large amounts of money and a long time for investment. Digital transformation is not simply setting up a website or selling products, and travel companies need deep pockets to launch promotions, he explained.

In the past Vietnamese travel agencies used to rent large offices in prime locations to impress customers. But after the pandemic many moved away from downtown areas and focused on doing online business.