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Travel agents struggle as inflation bites
A number of travel agents are struggling to stay profitable because of the high inflation rate in Laos, according to an industry representative.
“Inflation has had a negative impact on travel agents because of rising fuel prices, which affects the cost of their products,” Lao Association of Travel Agents President Mr Bouakhao Phomsouvanh told Vientiane Times yesterday.
He made the comment after a report from the government showed Laos is experiencing unexpectedly high inflation, which in April hit 9.24 percent - greater than the increase in GDP. In response, the government has held an urgent meeting to address the issue.
The main forces driving inflation are the cost of fuel, food and construction materials such as cement.
“Travel agents in Laos have been affected by the high price of fuel over the past few months, but despite the increase in costs they are not able to increase tour prices. This is because the tours we are delivering today were sold a year ago and there are contractual agreements with customers,” Mr Bouakhao said.
“The price of fuel has risen by about 20 percent compared to last year and resulted in higher transport costs, which now represents nearly half of the cost of tour services.”
In addition, travel agents are reluctant to raise their prices because it could make Lao tour products uncompetitive in the marketplace.
“The government knows that our tours are more expensive than those offered by neighbouring countries and if we increase prices we may lose customers. Many travel agents have asked customers to pay more because of the increase in fuel prices and, while some agreed, most of them said no,” Mr Bouakhao said.
The increasing inflation in Laos has eaten into companies' profits. Some operators are not making a profit at all because they haven't put up their prices, he added.
Travel agents have been trying to adjust tour prices to offset the effects of inflation and rising petrol costs.
To save money, some firms have reduced the number of tour guides that accompany a tour group while others are trying to reduce administration costs by, for example, using less electricity and water, Mr Bouakhao said.
vientiane times
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