My hotel, Le Trung, is a congenial, family-run place with a dozen or so rooms and a dramatic hoist, operated by remote control, for lifting luggage from the lobby up to the sixth floor. Guests, however, can avail themselves of no such assistance and must use the stairs, adding good exercise to the reasonable price of the rooms.

The general ambience is that of a 1950s provincial Spanish hostelry - marble steps, a banister of polished wood, quiet rooms, some of them looking out onto a garden from which a caged bird sings. From the window, it's possible to see a rooftop shrine to the Virgin Mary, potted chrysanthemums and some clothing hanging out to dry on a balcony. It's a picture of placid contentment, added to by the mild and dry weather southern Vietnam routinely enjoys at this time of year.

Coming down the hotel stairs just after 6pm, the lobby has been transformed. Tables are set and an abundance of food and drink is being given the finishing touches. 'There's a party at seven,' says one of the brothers who helps run the place. 'Please come.' He is already dressed in his best.

The party attracts quite a crowd: there's a United States Air Force major on a trip from South Korea, who keeps repeating stories, adding embellishments at a rate proportionate to the number of drinks he has consumed; there are two young Swedes, freshly arrived from Cambodia, who aren't hotel guests but are made welcome nonetheless; and there are several locals, possibly friends of the family, who refuse all alcohol, talk a lot among themselves, burst into occasional gales of laughter and eat a good deal.

After about an hour of socialising - both in the lobby, which is open to the warm night air, and on the pavement, cleared for once of its parked scooters - Santa Claus arrives. He emerges from the kitchen and is greeted by an enormous shout of disbelieving hilarity from the Vietnamese. It is the hotel's owner, with rouge on his cheeks, a white wig and a false nose.

When the commotion dies down we are assigned numbers and, as these are called out, we approach Santa to receive our presents. Mine is a Vietnamese orange and a small box of chocolates; others receive miniature bottles of Baileys; one lucky guest gets a bottle of champagne.

I leave shortly after nine and summon a motorbike taxi. Known locally as 'hug the driver' transport, the taxis are quick and cheap. These machines usually being their only economic asset, the drivers go slowly, especially with a foreigner riding pillion.

As we approach the city centre, we encounter scooters in enormous numbers. Some appear to be carrying entire families - with the children wearing Santa hats and waving balloons - some even family pets. There are few traffic lights in the city and drivers simply negotiate intersections in a melee of exhaust fumes and exchanged greetings.

We inch past the Rex Hotel, on the roof of which US army officers once discussed the progress of their war against north Vietnam. We pass the attractively small-scale Opera House and the adjacent Caravelle and Park Hyatt hotels, both the height of elegance and refinement.

Eventually we approach the cathedral. Here, the two-wheeled traffic is even thicker, but the virtual impasse appears to raise no tempers. Instead, it is taken as a welcome sign that holiday times have arrived. Even so, with time pressing, I decide to walk.

The pedestrians are as closely packed as the motorcyclists. Moreover, the main sport of the evening seems to be throwing plastic snow onto all and sundry, and especially onto any foreigner in sight, then spraying them with a foamy white concoction for good measure.

At 10pm the cathedral bells start ringing and a huge cheer rises from the crowd - they clearly know what's coming. The metal gates are melodramatically thrown open and the crowd surges into the building.

There are no vacant seats, of course, but the young snow-showered enthusiasts, many in red and white Santa hats and waving balloons, pour down the side aisles. Miraculously, the central aisle remains clear. Some revellers even climb onto the altar railings of the side chapels for a better view. They all seem to be there for a taste of the spirit of Christmas, whatever that might be.

The Vietnamese have seen various manifestations of the festive season from around the world on television and are notably eager to take their place as modern world citizens. But as good Buddhists, most of the crowd haven't, I suspect, a clue what it is all about. This is a chance for them to find out and join in whatever fun might be on offer.

A priest delivers a sermon in Vietnamese while, outside in the square, the raucous celebrations continue. The congregation fan themselves with hymn sheets, the priest drones on; in a side chapel, a blue neon star with a crimson centre marks the site of Jesus' crib.

Then something astonishing happens: at the end of the sermon, everybody claps. Applause again erupts when the celebrant speaks in English and wishes the foreigners present a happy Christmas and New Year. At the conclusion of proceedings, the choir sings, in English, We Wish You a Merry Christmas and the congregation claps in rhythm, erupting into joyous applause at the last note. As a finale, the Hallelujah Chorus is belted out on the organ and the old brick building seems to rock with the sound. It all ends at 11.10pm.

Not everyone wants to leave, however. Those less familiar with the rituals are clearly interested in having a further look around. They wander here and there, peering into the transepts and at the statues of saints until officials bang long poles on the ground and announce loudly and - inexplicably - in English: 'The mass is finished.'

Afterwards, I sit on the terrace of the nearby Cafe Paris and watch everyone going home. Many have been sitting in circles in the cathedral square cooking noodles. The atmosphere is unmistakably one of an occasion, even if it's not fully understood.

All things must come to end, unfortunately. After all, in Saigon Christmas Day is a work day.