Hanoi is pedestrian-friendly. Numerous parks and lakes, wide, uncluttered sidewalks in the French Quarter, and narrow twisting alleys of the Old Quarter beg for a stroll. We get out every chance we get!
For longer distances, or for those in a hurry, Xe Om or Honda Om (literally "Honda Hug") are convenient. Drivers on virtually every street corner will ask, "where you want to go?". While lacking the charm of a cyclo, it's an inexpensive and fast way to get from point A to point B. Don't worry about finding a Honda Om, they'll find you and it would be an adventure & fund trip but you should ask the cost in advance.
Metered taxis are another option. You should have no problem hailing one unless it's raining. Different companies charge different rates. Rule of thumb is the smaller the car, the cheaper the rate! Tipping cab drivers is not customary or expected; however, these guys never seem to have any change.
The most romantic way to get around town, and certainly the most nostalgic, is by cyclo, the Vietnamese version of a pedicab. Particularly for short distances, cyclos are an inexpensive and pleasant means of transportation. Most one-way fares within downtown can be negotiated for 30,000 VND or less. A typical hourly rate is US$2-3.
As in Saigon, many tourists, and even expats have reported difficulties with cyclo drivers. The most common problem is that you will agree on a price, or a driver will tell you to pay what you want, then upon arrival at your destination, he will insist the fare is two, three or even 10 times that amount. These guys are well-practiced at this. They will not accept the dollar or two you hold out and will become belligerent, frequently attracting a crowd. To add to the problem, fewer cyclo drivers in Hanoi speak some English.
The fact is that the vast majority of cyclo drivers are honest and hard-working men who can be a great source of information and even serve as impromptu interpreters. In fact, the drivers themselves are the ones who tell us all the tricks and scam their fellow drivers pull and how to avoid them. If you find a good driver, don't let him go. He will be delighted to meet you at an agreed-upon time later that day or even the next day.
To avoid the problem, always agree on your destination and price in advance. If hiring a driver for several hours, agree on a start and end time as well as the total price. Especially when your driver does not speak English, write down the destination on a piece of paper and ask him to write the amount. The honest ones will be impressed (it's their idea!), the less honest ones will grudgingly agree; if not, find another driver. Either way, you'll avoid a scene and a lot of hard feelings.
Bicycle is also an excellent way to get around town. A good place to find a bike is on Cau Go Street. Typical price is US$3/day. You can also rent a motorcycle (Honda Bonus 125 CC or Dream II) for US$7-$10/day. Steep discounts can often be negotiated for weekly or monthly rentals. All you need is cash and a copy of your passport, but remember tho Pottery Barn rule: you break it, you own it. While you are technically required to have an international driver's license with a motorcycle endorsement to operate a bike over 50cc, nobody will ask you for it until you are involved in an accident or pulled over.
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