Dong Devaluation: Not Much of a Paradise for Travelers

Will the new dong value benefit or harm tourists in Vietnam? That is the question looming in the country today as the devaluation of the currency comes at a time when Vietnam is planning to boost its tourism image.

In a short span of just two years, Vietnam has been forced to devaluate its currency three times already. On February 11, the dong went through its latest and biggest drop so far experienced by any local currency in more than ten years. Today, one U.S. dollar is set against the Vietnamese dong at 20,693, 8.5% lower than the previous rate prevailing until Friday, which is VND18,932. This is perhaps triggered by the fact that Vietnam is in the process of an economic upturn right now with an average growth rate of 7% every year, causing inflation and a deficit in trade. According to official records, Vietnam hit an inflation rate of 12% last year while the trade deficit soared to U.S.$12.4 billion.

The question of whether the new dong rate brings good news to travelers visiting Vietnam is a no. It may be beneficial to some degree but only to a limited scope. This is because most businesses, especially the hotel and tourist services, are already quoted in U.S. dollars. Some companies have probably already planned this increases way ahead. Vietnam Airlines, for one, will most likely ask for a fare hike since its fixed costs will increase in dollars. Transportation is one area that is automatically affected by almost any increase in economic costs because petroleum will be even more expensive. Imported products especially served in hotels or tourists will most probably rise in prices too unless travelers learn or prefer to cater to local products, giving them the dual benefit of saving money and truly appreciating the beauty of the country.

“Vietnam, a different Orient.” This is the country’s slogan to be used until 2015. The Vietnam National Tourism Administration (VNAT) is in the process of re-launching its tourism image to bring in even more visitors to its place. VNAT is eyeing an Australian-based Cowan Design Company to be in charge of reshaping and rebuilding Vietnam’s tourism to become an even more attractive and stronger tourist destination. For the record, this is the first time that VNAT tapped a foreign company to plan its tourism development. This is such a big and critical move for the country. Past tourism marketing strategies didn’t reap expected results so hopefully, this Australian company will be able to hit the mark. In 2010, foreign tourists in Vietnam were recorded at 5.03 million, while local visitors increased from 28 million to 30 million. This year, Vietnam aims to attract even more people to travel to the paradise country and hit a record of 5.3-5.5 million foreign tourists.