Some travel companies in HCM City have already opened branches in Hanoi for a few years. Yet the investment wave to develop the market in Hanoi and the North has just risen strongly in recent years. Nonetheless, it is not easy to exploit this market.

A number of tourism operators say business results in their Hanoi branches have been remarkable, with double-digit growth rate annually, which promises the market will become the second-biggest after HCM City. Years have passed since market infiltration, and solutions to administrative problems, product development and marketing that would be appropriate for an entirely different market from the South, are still sought by businesses.

Staff headaches

In 2008, a private company in HCM City opened its branch at a grand building in the ancient quarter of Hanoi, a prominent business location with promises of extending the firm’s operation in domestic and international tourism, airline ticketing and other services. After three years, the company had to make do with a smaller office at a less-central location.

When opening the branch, this company took the approach of using local people in order to maximize awareness of the market, which facilitates management. However, similar to other southern-based tourism companies expanding northbound, this business had to face the fact that brand quality could not be guaranteed due to discrepancies in tourism methods and viewpoints in different localities.

Dang Trung Nghia, deputy general director of Fiditourist, who is in charge of the company’s Hanoi branch, says while in HCM City, staff are aware that service means serving customers’ needs, it is extremely hard to require such an attitude from those in the North. Most employees still have the beg-to-receive thinking, which means having money does not necessarily mean being served; being friendly and helpful towards customers is still an alien concept. As a result, service provisions, approaches and consulting styles do not bring high satisfaction to clients as they do in HCM City.

Currently, the attitude of drivers and guides is still a predicament. Drivers usually put on cold faces and in many circumstances, even argue with customers. Meanwhile, tour guides are not that enthusiastic towards those who pay to hire them.

“To date, we still have to transfer guides from the South to serve in crucial tours. Regarding tours for foreigners in the North, 70% of customers’ complaints are related to guides. Thus, the most important thing is to change the tourism business thinking,” Nghia says.

Fiditourist opened the Hanoi branch seven years ago but has only boosted its operation over the past four years. Nghia has had two years of experience from traveling back and forth between HCM City and Hanoi each month to monitor the branch. If good progress is made, it will take another year before Nghia can feel assured about leaving the work to his employees.

Similar to Nghia, Vu Duy Vu, branch manager of Saigontourist Travel Service Co., also has to travel between the two cities to supervise operations. In his opinion, in order to improve the working attitude of staff, the manager also has to constantly remind employees and enforce clear rules for them to follow apart from simply giving them training.

“It does not take just a couple of days to change their thinking and working style. Therefore, besides trying to attain the standard of service, the management also needs to be patient,” he says.

Different working approaches between the two regions not only generate problems in human resources administration, but also make dealing with partners and drawing up services troublesome.

According to businesses, because many northern-based service providers are not aware of the importance of long-term business partnership, prices are not stable and service is not guaranteed.

“It may be due to the fact that the tourist season here is not as long as in the South, with the best time for business being summer. Thus, service providers opt for immediate, short-term profits, and are ready to rip off clients whenever possible. This irritates customers and tourism companies also find it hard to manage,” a director of a southern-based firm says.

Experience from tourism companies operating in this new market shows that businesses have to be prepared for reaction. Service providers do not have the habit of announcing prices or service changes in a timely manner, leading to passive product preparation and service planning for customers.

Different markets

The tourism services market in Hanoi and the North has stark differences from that in HCM City. First is the seasonality. While in HCM City, the tourist season is spread evenly across the year and there is usually not a huge discrepancy in product planning, the picture is different in Hanoi.

Here, the main tourist season is summer. This is when most companies operate to their full capacity to serve customers. When the market cools down in the winter, businesses have to be cautious when introducing new tours and services to increase sale feasibility.

“Introducing Europe tours in the winter to guests in Hanoi is a sure defeat, since the winter here is already too cold, and people only want to travel to warmer places,” Vu says.

Apart from seasonal differences, demands in using services and trip planning habits are not similar either. Excluding a small minority of customers frequently using high-class services, on the whole, tourists from Hanoi and the North have a lower demand for quality and more of a demand for lower prices. They are very concerned about costs and usually bargain before deciding on buying a tour. If a tour is designed as a four-star service for customers in HCM City, it can be changed to a three-star one in Hanoi. Foreign service operators also pay attention to this difference and often set a lower price band for the northern market.

Nghia of Fiditourist says customers from the North do not have the habit of pre-planning for a trip, but decide close to departure dates. For instance, in March, the company organized a tour to Singapore for 300 people, but the customers only gave one week’s notice. Only one day before departure, the tour operator officially signed the contract.

“We have to gradually persuade customers, to show them that good preparations and early reservations will yield more offers, more control and the trip service quality will also be better. In fact, some people have changed that habit recently,” Nghia says.

Tourism companies say that profits from selling tours and services to the Hanoi market are usually lower than in HCM City. The reason is many guests use services of lower standards and businesses have to pay extra commissions to partners. In HCM City, based on the terms and conditions of tour provision bidding, some big companies even demand tourism operators not to pay staff commissions. This is a difficult thing to ask from the northern market.

“When first arriving here, I even suspected my employees when they requested the commission for partners accounting for 50% of profits. And if sales representatives have good relations, there will be many big tourist groups, resulting in more profits. A manager has to understand the market’s characteristics to be flexible in decisions. Although difficult, the northern market is growing fast, which is really worth investment,” Nghia says.

Since this is a promising market, many other companies do not want to miss out. As in the case of the aforementioned private firm, even though its branch’s operations were scaled down, hopes for this market have not diminished.

Source: SGT