CHAPTER II: ANALYSIS AND EVALUATION OF BUSINESS NVIRONMENT AND
2.3. Vietnam Trade Union Hotel Internal Assessment
As described earlier, after the expansion by managing other 3 hotels in Hai Phong, Ha Long and Hoa Binh, the functional departments of the Vietnam Trade Union Company like Administration and personnel, Sales and Marketing, Accounting are now covering other hotels. Vietnam Trade Union hotel in Hanoi now is one of the hotels under the coverage of theses departments and thus receive less focus and support from these department. The manager of the company is also the manager of the hotel. The manager has to take care of all the hotels in his command, the travel center, the project unit, the work in the Vietnam confederation of labor, the communist party. The hotels are in different locations which take long time to travel and thus the checking and supervising of the hotels and other work takes a lot of his time.
For that reason the Vietnam Trade Union Hotel in Hanoi is mostly self operates and roles of other functional departments of Administration and personnel, Sales and Marketing, Accounting to the hotel is not clear. In other words, Vietnam Trade Union Hotel in Hanoi is much like a hotel that does not have these departments.
2.3.2. Human Resources
The expansion of the Vietnam Trade Union Company brings some advantages to Vietnam Trade Union Hotel in Hanoi in terms of human resources.
Different hotels in different locations have the low season and high season that well complement each other. For example when the hotel in Do Son is in low season, the hotel in Hanoi is in high season and thus unused staff in Do Son can be transferred to Hanoi and vise versa. That helps reduce the impact of seasonality and help control the labor cost effectively.
However, that also brings a disadvantage. Most of staff in Hanoi are skillful and knowledgeable while it is not always the case for staff in other hotels in the
chain. This may affect standard of the hotel and pose a serious question for training.
Currently, the company is doing staff rotation for training. It is done by sending experienced staff to other new hotels in the chain to do the setup and training for local employees. The local employees are also sent to Vietnam Trade Union Hotel in Hanoi for working and on the job training. This way has helped improve the quality of staff working at the hotel a little bit.
Regarding the training at Vietnam Trade Union hotel in Hanoi, every year the hotel has a training plan in both management skills and technical skills for middle managers and for entry level staff. However, due to the lack of detail job description and the standard for each task in the job the training is not so effective.
In addition, the budget for training is done in the bottom-up method where the Administration and Personnel department develop a training plan for each year with the cost for training. There is nothing wrong with this method but the problem here is that the training is considered yearly activities that must be conducted by the department and if there are training activities it should be good. This method, in some extend, impacts the creativeness and initiation of new idea when doing the planning for training. Besides, due to the lack of standard it is very hard to do the training need assessment which makes it very hard to decide what training is needed.
On of the weaknesses in the staff of the hotel is the level of English. Only 20% of the staff at the hotel reach the intermediate level of English and can communicate fluently with the guests in English while more than 56% of guests are foreigners. The hotel had only one official TOEIC test in 2007 and only 10% of the staff taking part in the test met the required level for their position. After that a series of English training course has been taken and the level of English has improved but there has not been any other TOEIC test conducted since then.
Another problem that the hotel is now facing is that 89% of employees are in the age from 20 to 40 of which 56% of the employees at the hotel are female and.
44
Female workers in this age range are much likely to have leave for giving birth which may cause difficulty in planning the work and increase the cost in employee benefit as well as the labor cost in general due to training cost for replacement, working overtime cost…
However the young employees is also a strength as young people are more motivated, energetic and enthusiastic which are very necessary for hospitality industry.
In addition, most of the workforce at the hotel has a good knowledge background. There are 81 employees finish universities, 16 are college graduates, 104 are vocational school leavers. This fact shows a very high potential for further development of the quality of the workforce.
2.3.3. Marketing
Most of the facts on marketing are analyzed in the earlier part on competition. There is, however, one more point to be discussed here. It is about the image of the brand Trade Union Hotel. Traditionally, this name was developed by the Vietnam Confederation of Labor with series of hotels under this name to serve working people in state-owned companies, factories and government organization.
Most of the hotels are not in good quality in terms of facilities and services and are not well managed. Most of people in Vietnam now perceive the name Trade Union Hotel as not good quality and luxurious. Vietnam Trade Union Hotel in Hanoi is often called Trade Union Hotel in Hanoi and this creates a confused perception on the brand and for Vietnamese people who have never been to the hotel they may think the hotel is something like other Trade Union hotels. In the future when there are more Vietnamese coming to Hanoi as forecasted it would be a big disadvantage for the hotel.
2.3.4. Management
The management functions are performed rather well with planning, organizing, staffing, motivating, controlling.
Planning function is done well with yearly plan and the reporting of the implementation of the plan at the beginning of each new fiscal year. However, due to the weakness of the management of information system, which will be discussed later, objectives set for each year is more or less subjective. However, the current general manager of the company is very knowledgeable and always keeps himself updated with information necessary for the planning and thus he helps a lot with the modification of plan to make it suitable and feasible. This is an advantage but also a disadvantage as it creates the reliance on one person.
Regarding the organization, the only problem the hotel has is with the way to structure the hotel in particular and with the company in general as discussed above.
The hotel is doing very well with the motivation with every employee is taken care of. This is a strength that takes advantage of being an organization of the Trade Union. Though the salary is not high, just slightly over 3 million VND/month (about 150 usd) on average, the job is very secured and there are good employee benefits.
For controlling, besides the control by objectives and budget number which the hotel is performing well, there should be standard for each job to evaluate employee and do the training.
2.3.5. Financial and accounting
Being a unit belonging directly to Vietnam Confederation of Labor, it is easy for the hotel to acquire capital for development. This is and advantage that the hotel should use for its development.
The hotel is performing with rather good results. Revenue and income before tax of the hotel keep increasing over year.
46
Table 2.7. The increase in Revenue and Income before tax of Vietnam Trade Union Hotel in Hanoi (number in billion VND)
Year 2006 2007 2008 2009 1010
Total Revenue 33.15 42.43 50.31 60.223 82.45
Income before tax 0.37 0.51 0.87 1.2 1.92
Revenue increase rate 27.99% 18.57% 19.70% 36.91%
Income before tax increase rate 37.84% 70.59% 37.93% 60.00%
(Source: Vietnam Trade Union Hotel in Hanoi [2]) Beside, comparing with the industry average in terms of occupancy percentage and average daily rate the hotel is working with a very positive result.
The average daily rate increased from US$30.26 in 2006 to US$32.12 and US$35.75 then US$38.87 and finally US$55.89 in 2007, 2008, 2009 and 2010 respectively. In 2010 the average daily rate for 3-star hotel segment was US$38.55.
Also in that year the industry average for occupancy percentage in the 3-star hotel segment was 63.79% while 83.63% was the achievement by the hotel. In other words in both of the two major indicators for hotel industry, the hotel is operating above the industry average.
There are some short-comings with the financial function of the hotel. That is the function is under the accounting department of the company and this department is more on accounting than financing. There is the lack of financial indicator for analysis and managerial decision.
2.3.6. Research and Development
Research and development is properly the weakest point of the hotel like most of other independent 3-star hotels or even higher rating ones. This shows in both the perception and awareness about the importance of research and development and the organization for that.
Firstly, the R&D is not considered a function that needs to be developed and operated. Most of the ideas for new things, new products, new ways of business come from the General Manager of the hotel.
Secondly, there is no budget allocated for the R&D activities. This kind of budget is not even thought of or considered in any reports, statements or plans.
Thirdly, the hotel does not have an R & D department. All the activities related to research and development are carried out by the sales and marketing department which is very sales oriented. R&D is perceived as a part of the marketing activities like market research, customer research etc.
2.3.7. Information Technology and Information System
The application of Information Technology and Information System at the hotel is just at basis level. Though personal computers are used widely in the hotel with internet connection but all the computer are not inter-connect with a property management system to share and effective access data for effective operation and management. Currently the hotel is applying a property management system called FOLIO but it is mainly used in Front Office and Housekeeping to serve the check-in and check-out. In other words, this system has just been used for one part of operation not for management.
The management of information system is not applied. Information from outside is not collected, classified nor stored. Internal information is not classified on any purpose and shared effectively. Whenever, there is a need for internal information each department is called and prepared individual report to provide information. This often creates a chaos when information is needed to prepare report to higher level or present in end-of-year meetings let alone the information for daily and continuous analysis.
2.3.8. Evaluation of Strengths and Weaknesses
From the above analysis the following strengths and weaknesses are identified 2.3.8.1. Strengths
• Abundant of young labor force with good labor rotation system. This is considered very important and the rotation system is promoting this
48
strength and thus it is rated 4 and this is considered the core competence of the hotel.
• Labor has good knowledge background. This is considered important but there is a lack of good employee development plan to promote this strength and it is rated 2
• Newly renovated hotel with modern facilities. This is considered very important and the hotel is promoting this image so it is rated 3
• Large space and area. This is considered important as it provides chance for expansion of hotel by building more wings or buildings at current location while land in Hanoi is very expensive and other competitors do not have. However, the hotel does not have a plan for taking advantage of it. Therefore it is rated 1
• Positive business results. This is low level of importance and there is no plan to take advantage of this. The rating is 1
• Easy to acquire capital. This is important but as mentioned above there is no plan for expansion and thus it is rated 1
2.3.8.2. Weaknesses
• Poor organization structure. This is very important and the hotel is thinking of other structure and thus the rating is 3
• Lack of detail job description and performance standards. This is considered important. Now the hotel is paying attention to the Vietnam Tourism Occupational Skills standard issued by the Vietnam National Administration of Tourism. This is rated 2
• Low level of English and foreign language. It is very important. Now there are English training courses at the hotel but it should be more frequent and employee should be encouraged to learn English at their own
times not being dependent on the courses organized by the hotel. This is rated 3.
• Majority of employees are female in the age of giving birth. It is important but so far there has not been effective solution. It is rated 2
• Confused brand name. This is very important but the hotel is now well aware of that. It is rated 1
• No application of Yield (or Revenue) Management. This is important to increase and maximize the potential revenue of the hotel but still there is no response for that. It is rated 1
• No financial analysis for managerial decision. It is important for long- term development and not paid attention yet. It is rated 1
• Poor Research and development activities. It is of medium importance for the hotel decision. There is attention from the manager but not from other levels. It is rated 2
• Low-level application of Information Technology. It is of medium importance and not well aware of. This is rated 2
• Poor management of information system this is important but still does not receive good attention. This is rated 2
2.3.9. IFE Matrix
Basing on the above analysis the Internal Factor Evaluation Matrix for Vietnam Trade Union Hotel in Hanoi can be developed as in table 2.8:
50
Table 2.8. IFE Matrix for Vietnam Trade Union Hotel in Hanoi
Strengths Weight Rating Weighted
score Abundant of young labor with good labor rotation
system
0.10 4 0.40
Labor has good knowledge background 0.04 2 0.08
Newly renovated hotel with modern facilities 0.07 3 0.21
Large space and area 0.06 1 0.06
Easy to acquire capital 0.06 1 0.06
Positive business results 0.03 1 0.03
Weaknesses
Poor organization structure 0.10 3 0.30
Lack of detail job description and standards 0.07 2 0.14
Low level of English and foreign language 0.10 3 0.30
Majority of staff are female in the age of giving birth 0.07 2 0.14
Confused brand name 0.09 1 0.09
No application of Yield (or Revenue) Management 0.06 1 0.06 No financial analysis for managerial decision 0.06 1 0.06 Low-level application of Information Technology 0.04 2 0.08
Poor management of information system 0.05 2 0.10
Total 1.00 2.11
The IFE matrix shows that the hotel is a little bit weak internally.