Costs of local tourism services Module three Topic five

Types of costs Types of costs associated with operation of vehiclesDirect CostIndirect Cost 2

Identify in the flashcards, which are the direct costs of travel services fuel Toll fee Parking fee Car washing and cleaning Overnight expenses for driver Others ??? Activity – Flashcards of costs of local transport services 3

Direct costs include: fuel Toll fee Parking fee Car washing and cleaning Overnight expenses for driver Others ??? Direct Costs of local transport services 4

Indirect costs include: Car checking/ registering Car repairing and maintenance Car depreciation Driver’s monthly salary Management fee Others ??? Indirect costs of local transport services 5

Considering the following factors: Type of vehicles used, Distance (per km), Routes inside/ outside cities, plain/ mountainous areas, Other costs? How is fuel consumption estimated? 6

Apply the formula: Mc = K1. L/100 + K2. P/ nK3 where: Mc: total estimated amount of fuel for a trip (liter) K1: technical standard (liter/ 100 km) K2: weighting supplement (liter) K3: loading/ unloading supplement (liter) L: total distance in equivalent to the Grade 1 road (km) P: total weight of passengers and luggage (passenger.km) n: number of stops (over 1 minute). How is fuel consumption estimated? 7

Activity – Group work on fuel consumption estimation Exercise: Work in groups on calculation of fuel consumption for different routes: Hoi An – HCM Trail (Nam Giang, Innova 7-seater car, 4 pax, 10 stops); Hoi An – My Son (Toyota Hiace seater car, 7 pax, 3 stops); Hoi An – Hue (Hundai County 24-seater car, 12 pax, 12 stops); Hoi An – Hue – Phong Nha (Hundai Space 45-seater car, 25 pax, 20 stops). 8

Toll fee and road user fee Type of vehicle used Type of passes/ tickets Contribution to national road user fund How are toll fee & road user fee estimated? 9

How much does car repair and maintenance cost? Car repairing and maintenance costs Car repairing price list (‘000 VND) Car maintenance price list (‘000 VND) Fixing and painting car frame: 500 – 700 Fixing and maintenancing A/C: 350 – 800 Regular maintenance after 5,000 – 10,000 km: Regular maintenance after 20,000 – 40,000 km: 800 – 1,700 Fixing minor electric problems: 150 Fixing breaks: Tire pressure: 20 Car washing: 50 10

How much does car repair and maintenance cost? Staffing Drivers Office staffs Marketing Ads Call center Sale promotions Office Office rent Equipments Profit Overhead Profit margin What does the management fee cover? 11

Pricing strategies Negotiation pricing Meter based pricing One-price policy How is price set? 80?! ?

Starting price Following km onwards After the km 31st Meter based pricing Waiting charge Discounted fare on returned trip 13

Price the trip based on prior agreement with the customer: Charge per route Time based charge (with limited km) Negotiation pricing 80?! This route costs ? hour round trip. 90!! 14

One-price policy

Activity Case study: costing a trip Prepare a quote for a rental vehicle with driver for a group of tourists: 1.Group 1: taxi drivers – 2 pax visiting Hoi An City in 1 day, making 5 stops 2.Group 2: xe om drivers – 1 pax visiting Hoi An City in 1 day 3.Group 3: tourist car drivers (7 seater car) – 2 pax visiting Hoi An – HCM Trail (Nam Giang) in 3 days 2 nights, making 15 stops 4.Group 4: tourist bus drivers (45 seater car) – 20 pax visiting Hoi An – Da Nang – Hue in 3 days, making 15 stops 16

Thanks for your attention! The HITT Programme and its Contributors This series of materials has been produced in collaboration between the High Impact Tourism Training for Jobs and Income Programme (HITT) funded by the European Union and the International Labour Organisation (ILO) in Vietnam. These programmes and organisations contributed to the development and printing of this material and will be using these training materials to deliver High Impact Tourism Training to their respective target beneficiaries. The programme supports informal workers and potential workers from the tourism sector of Vietnam to enhance their productivity and professionalism, and to increase their employability and income opportunities. The HITT programme is implemented by the Netherlands Development Organisation (SNV) through the financial assistance of the European Commission (EC) Investing in People programme. This publication has been produced with the financial assistance of the European Union. The contents of the publication are the sole responsibility of the HITT Programme and can in no way be taken to reflect the views of the European Union. For more information on Europe Aid, please visit