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[DRAFT:] 01/09/2014
NARUMON SRIRATANAVIRIYAKUL, MATHEWS NKHOMA, HUNG XUAN VO
NINH VAN BAY HOLIDAY CLUB: A TIMESHARE BUSINESS IN VIETNAM1
As an initiator to a totally new venture, Ninh Van Bay Holiday
Club was opened to potential advantages to exploit the market.
However, success did not come without any obstacles.
Being an initiator in timeshare business in Vietnam, Ninh Van
Bay Holiday Club was established in 2010 by Ninh Van Bay Travel
Real Estate Joint Stock Company as its subsidiary with the core
business of managing its four luxury resorts in Vietnam and selling
vacation ownership packages to customers who wanted to experience
first-class vacation services. In order to start successfully a
totally new business venture in Vietnamese market, Ninh Van Bay
collaborated with many professional tourism services providers such
as Six Senses and took advantage of their experiences and
reputations to attract new customers and increase the awareness
about Ninh Van Bay brand. Therefore, despite unfavorable economic
conditions in recent years, Ninh Van Bay Holiday Club grew
impressively with considerable increase in its customer base. The
goal of the company was to develop a chain of luxury resorts and
become the leading company in the high-end tourism segment. In the
near future, Ninh Van Bay was going to introduce more resorts in
tourist attractive destinations in Vietnam such as Nha Trang, Hoi
An, Ho Chi Minh City and Phu Quoc.
In spite of its significant growth, current customer base of
around 2,000 members was still far from the expectation of the
management team and they sought for more serious growth in the
sales of membership packages so that adequate funds could be raised
for the development of new projects. However, according to Hoang Le
Viet General Director of Ninh Van Bay Holiday Club, the company was
facing many problems regarding creating the demand for their
products, low rate of occupancy and ineffective management of
customer behaviors. Recently, Hoang and the companys Sales Manager
Hang Minh Tan, came up with the idea to establish a portal for
their company so that members information and bookings could be
conducted and managed online. This portal was expected to improve
the management effectiveness, provide members some degrees of
control over their booking activities and increase the interaction
between them and the company. However, they were still at the
process of choosing an appropriate method of implementing the
portal.
1 Copyright 2012, Informing Science Institute. This case was
prepared for the purpose of class discussion, and not
to illustrate the effective or ineffective handling of an
administrative situation. Names and some information have been
disguised. Permission is granted to copy and distribute this case
for non-commercial purposes, in both printed and electronic
formats.
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Tourism Industry Soaring to become one of the fastest growing
economic sectors globally in recent decades, tourism has developed
and diversified continually with the emergence of number of new
destinations. The contribution of tourism industry to the world
economy had been so essential that it became a key driver for
socio-economic progress and surpassed many major industries such as
oil exports, food products and automobiles in term of business
volume (see Exhibit 1). Moreover, according to Blanke, Chiesa and
Crotti (2013), Travel and Tourism not only took a significant share
of world employment, which was greater than the combination of the
shares of both automotive manufacturing and chemicals manufacturing
industries, but was also estimated to have more positive prospect
in job growth than the forecast for total global jobs. On the
national scale, tourism industry represented one of the main income
sources for many developing countries and therefore, drew intensive
attention from policymakers.
In recent years, despite of the gloomy global economic
conditions, Travel and Tourism industry in overall was not so
affected with the growth of international tourist arrivals of 4
percent for the period from January to August 2012 (World Tourism
Organization - UNWTO). Total expenditure on tourism also increased
with major contributions from not only travelers from developing
countries such as Brazil, China and Indonesia but those from
advanced economies whose economic prospects in recent years were
unfavorable. However, there is a change in the structure of
travelling where international trips, which kept increasing in term
of amount, turned out to be shorter in frequency, distance and
length.
In its development course, tourism industry was affected by many
factors and in recent years, the competition between countries for
international visitors became more rigorous. Many countries with
developed tourism industries suffered from economic shocks,
political instability and natural disasters; which inversely
impacted their tourism industries. In addition, global tourism
landscape also faced long-term change factors in tourism demand,
travel distribution and demographic drifts. In order to evaluate
the competitiveness of the tourism industry of each country, the
Travel & Tourism Competitiveness Index (TTCI) was introduced
under the context of the World Economic Forums Industry Partnership
Programme for the Aviation, Travel & Tourism sector (see
Exhibit 2). The derivation of the TTCI took into account three
sub-indexes: the Travel & Tourism regulatory framework; the
Travel & Tourism business environment and infrastructure; and
the Travel & Tourism human, cultural and natural resources.
Each of these sub-indexes was in turn calculated based on many
factors, which include (Blanke, Chiesa, & Crotti, 2013):
Policy rules and regulations Environmental sustainability Safety
and security Health and hygiene Prioritization of Travel &
Tourism Air transport infrastructure Ground transport
infrastructure Tourism infrastructure ICT infrastructure Price
competitiveness in the Travel & Tourism industry Human
Resources Affinity for Travel & Tourism
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Natural resources Cultural resources
Global Tourism Industry In 2012, the Travel & Tourism
industry showed better performance than the global economy with
faster growth than manufacturing, retail, financial services and
communications sectors. According to the World Travel & Tourism
Council (WTTC), the contribution of Travel & Tourism industry
(taking into account all of its direct, indirect and induced
impacts) was US$ 6.6 trillion in GDP, US$ 765 billion in investment
and US$ 1.2 trillion in exports (2012 prices). In addition, 260
million new jobs (10% growth) were offered by Travel & Tourism
industry in 2012 and for the first time, one out of each eleven
jobs in the world was contributed by tourism industry.
Both tourism receipts and international tourist arrivals, which
were two key indicators of international tourism, experienced
relatively same growth rates in 2013 indicating a strong
correlation between these indicators. The 2013 global tourism
receipts; which are the earnings made by destination countries from
the expenditures on food and drinks, accommodation, local
transport, entertainment, shopping and other goods and services of
travelers; increased by 5.3 percent in real term from US$ 1,078
billion in 2012 to US$ 1,159 billion. The growth in tourism
receipts in developed economy destinations, which was 6 percent,
was 2 percent higher than that in developing economy destinations.
Tourism receipts were taken into account as export expenditures for
the receiving country. Meanwhile, international tourist arrivals
rose by 5 percent in 2013 to reach 1,087 million worldwide. In
overall, these growth rates were higher than the long-term average
and the fastest since 2010 (see Exhibit 3).
Accounted for 42 percent of all international tourism receipts,
Europe experienced highest growth among all regions in absolute
term with an increase by US$ 35 billion to reach US$ 489 billion in
2013. Asia and the Pacific, with the tourism receipts increasing by
US$ 30 billion to be valued at US$ 359 billion, took up the second
largest share of 31 percent. In the Americas, the receipts rose by
US$ 16 billion to amount at US$ 229 billion and contributed 20
percent to the global total value. The shares of Middle East and
Africa of international tourism receipts were respectively 4
percent and 3 percent (see Exhibit 4).
On the national scale, in term of international arrivals, France
was ranked first with 83 million arrivals in 2012, followed by the
US and Spain with 70 million and 61 million arrivals respectively.
Among the top-ten list, the most significant change was the taking
over of Thailand of the 10th position, which was brought about by
the growth of 23 percent to reach 27 million arrivals. In term of
tourism receipts, the United States was still heading with US$ 140
billion, followed by Spain with US$ 60 billion. Regarding tourism
expenditure, China, Russia and Brazil together accounted for half
of the increase in global tourism expenditure with US$ 40 billion
while major developed countries such as France, the United States,
Germany, the United Kingdom and Canada only experienced steady
growth in tourism expenditures at the rates between 2 percent and 4
percent.
International tourist arrivals in the first two months of 2014
were estimated to be 5 percent growth in comparison to the same
period figure in the previous year. Regionally, with a rise of 7
percent, Asia and the Pacific showed the strongest growth, followed
by the Americas and Europe with 6 percent in early 2014 (World
Tourism Organization, 2014).
Vietnams Tourism Industry Located on the eastern Indochina
Peninsula of South East Asia, one of the fastest growing regions in
the
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world and with a coastline of 3,444 kilometers long, Vietnam had
great potential to develop its tourism industry. Despite being a
young sector, Vietnamese tourism experienced considerable growth
and thrived to become one of the main contributors to the countrys
GDP thanks to its various tourism destinations ranging from rural
eco and wildlife parks, metropolitan cities, historical tourism
attractions, beautiful beaches to number of UNESCO World Heritage
sites (see Exhibit 5).
In recognizing the importance of tourism industry, Vietnamese
government paid special attention and put great efforts in
stimulating the industry in recent years. In the period 2001 2010,
VND 5,606 billion (US$ 267 million) of national investments was
spent on tourism industry, mostly for making accessibility
available to tourism resorts and attractions. In addition, creating
promising and stable environment for private and foreign
investments in the tourism industry was another focus of the
government. According to HITT (2010), about 625 foreign invested
projects with a total registered capital of US$ 12.258 billion were
being carried out in Vietnam. Until June 2013, around 1,200
licensed tour operators were allowed to deal with international
travels and 14,000 tourist accommodation facilities for a total of
290,000 rooms were in place. Among of these included 61 five-star
hotels with 14,600 rooms, 154 four-star hotels with 19,300 rooms
and 365 three-star hotels with more than 25,500 rooms (Vietnam
Briefing, 2013).
In 2013, the tourism industry provided a total of about
1,480,000 jobs. Among of these are 480,000 direct jobs, 43 percent
of which are trained or educated in tourism. However, only 3.1
percent of the total workforce were at the university or higher
education levels of tourism. In 2013, Vietnams tourism industry
welcomed 34 million domestic visitors and 7.5 million foreigners,
which generated a total of VND 195 trillion (or US$ 9.17 billion)
in term of revenue (NhandanOnline, 2014). In the first five months
of 2014, the number of international arrivals in Vietnam rose by
26.07 percent compared to the same period in the previous year to
reach 3,748,109. China was the country which contributed largest
number of visitors with 998,152, followed by South Korea with
354,984 and Japan with 273,198 (see Exhibit 6).
According to High Impact Tourism Training (HITT) Initiatives
(2010), tourism in Vietnam could be divided into sub-segments based
on the purpose for tourists to travel such as: mass tourism/class
tour, beach/resorts holidays, MICE, short break, religious tourism,
corridor and cross border, international backpackers and Vietnamese
backpacker (or Phuot). In these categories, beach/resorts holidays
have drawn much attention as well as investments from foreign
investors.
In the Strategy on Vietnams tourism development until 2012,
vision 2030 approved by Prime Minister Nguyen Tan Dung, tourism was
planned to become a key economic sector by 2020 and by 2030,
Vietnam should have a developed tourism sector. Specifically, the
growth rate of the tourism industry from 2011-2020 was expected to
be 11.5 12 percent per year. By 2015, the number of international
tourist arrivals should be from 7 to 7.5 million and domestic
tourists should be 36-37 million. The expected figures for 2020
were from 10 to 10.5 million international visitors and 47 to 48
million domestic tourists (Government Portal, 2011).
http://www.chinhphu.vn/portal/page/portal/English/strategies/strategiesdetails?categoryId=30&articleId=10051267
Timeshare Business Timeshare referred to a kind of tourism that
involved the vacationers owning or having the right to use a
property which was typically in the form of resort condominium
units. The right to use the property was shared between multiple
parties called the sharers, who were allocated a certain period of
time in a year to
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use the property for a fixed number of years (or can be
perpetual). Timeshare model arose based on the idea that it would
be much less costly for a frequent vacationer, who wanted to buy a
vacation home that would be used for only a few weeks during a
year, to share the ownership, and in turn the purchase as well as
maintenance costs, of the property with other vacationers than for
himself to be the sole owner of the property. This concept was also
known as intervals, fractional or vacation ownership.
Emerging almost at the same time in various parts of the world,
timeshare became a very popular and significant part of the tourism
industry. In the early 1960's, vacation home sharing first appeared
in Great Britain when a vacation cottage was bought jointly by four
families, each of which held an exclusive right to use the property
for one of the four seasons interchangeably each year. At the same
period, two companies in France and Switzerland simultaneously
began their timeshare businesses. While The Societe des Grands
Travaux de Marseille, a French development company, sold their ski
resort SuperDevoluy in the French Alp with the first ever timeshare
slogan 'No need to rent the room; buy the hotel, its cheaper!'; a
company named Hapimag in Baar, Switzerland headed the service
allowing its members to choose among various resort properties in
Italy, Spain and Switzerland. In America, timeshare business
started in 1965 with the Hilton Hale Kaanapali hotel on the island
of Maui, Hawaii and until 1969, Kaua'i Kailani, the first non-hotel
timeshare in the US, became the first to introduce leasehold
timeshare basis as well as point system to diversify the choices of
timeshare owners. In 2014, there were around 5,400 resorts in over
100 countries operating in vacation ownership industry and nearly
5,000,000 timeshare owners globally. Timeshare has become a
multi-billion dollar industry (Canadian Resort Development
Association).
Timeshare could be divided into two major categories based on
the types of ownership, including deeded property ownership and the
right of use. Known as fee simple, deeded property ownership was
similar to a normal home ownership in that a vacation owner of a
week in a particular property would hold a title to that week and
his ownership was registered with the land court or relevant
authorities, which allowed the buyer a perpetual right to sell,
assign, exchange or rent the unit. On the other hand, the right of
use ownership contained an expiration period within which the
buyers had the right to use the property (or a unit in a property)
and a renewal option. There were two main options a purchaser of
the right to use contract can choose from:
Point credit or point: property developers set a unit system
based on weekly basis or point with equivalent value and would sell
these units to vacationers. The vacationers then could use the
points to exchange for a particular property under the possession
of the developer, with the amount of points required for each
property depending on the size of the property and the length of
stay. In addition, these points could also be used for booking air
flights and hotel accommodation, or other activities.
Another option for right to use contract buyers was to lease,
license or acquire membership in a resort chain, which allowed the
purchasers to occupy a unit in any hotel or condominium property of
the chain for a specific period over a determined number of years
without having to actually own the real estate. However, the
vacation owners were still payable for the annual maintenance
fees.
Besides these two major options, there were also variants of
timeshare business such as fixed or floating time, biennial
ownership, banked usage, lock off or lockout, fractional
ownership/private residence clubs and destination clubs/points
which would be discussed below.
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Fixed or floating time: the difference between fixed and
floating time lied in the flexibility of the vacation owner in
choosing certain week of the year to utilize a certain property or
unit. While fixed time option only allowed the vacation owner to
occupy a property for a designated week every year, floating time
option gave the owner the ability to choose a week from any time of
the year to use the same property.
Biennial ownership: an option that helped reduce the purchase
price as well as maintenance fees payable by the vacation owner by
offering the right to use the unit or any unit of similar size for
a week every other year.
Banked usage: an option allowing the owner to postpone his
vacation week to the following year and have a longer vacation.
However, this option was usually limited to only three years.
Lock off or lockout: with this option, the vacation owner would
have more choices to adjust the vacation up to his needs. For
example, if an owner who had bought a two-bedroom suite did not
need to use it in full; he could offer one bedroom for rent or
exchange and got to use the single bedroom for two weeks instead of
one week with the two bedrooms.
Fractional ownership/private residence clubs: designed to serve
the high-income customers who demanded more luxurious facilities
and services and long vacation time, these types of timeshares
usually offered three to five bedrooms and provided the owner the
ability to choose from any time during the year. In addition, the
purchased time could be exchanged for a stay at different resorts
or for points that allow the owner to trade for custom-made
vacations.
Destination clubs/points: with this option, the vacation owners
were offered a variety of luxurious properties owned or managed by
the Club Company and of the network in which the club was a
member.
One of the most interesting and attractive features of timeshare
business was that it provided an opportunity for a vacation owner
to enjoy his vacation in resorts or properties in the possession of
other owners through the exchange programmes. In these programmes,
an exchange company would function as a broker to facilitate the
arrangement between vacation owners and charge membership fees for
their services. Moreover, most well-known timeshare developers had
built up connection with major exchange companies such as the
Resort Condominiums International (RCI) and Interval International
(II) to provide the memberships for their customers immediately
after the contracts are formed. Another noticeable feature of
timeshare business was that secondary market for deeded property
arrangement had also arisen giving the timeshare owners the ability
to list their properties with a resale agency and resell them
(Powanga & Powanga, 2008).
Ninh Van Bay Travel Real Estate Joint Stock Company Specializing
in developing and managing high quality travel real estate resorts
in Vietnam and the region, Ninh Van Bay Travel Real Estate Joint
Stock Company (or Ninh Van Bay JSC) positioned itself in
international standard luxury hospitality products with unique
Vietnamese style by inheriting and enhancing Vietnamese various
regional cultures and nature. Ninh Van Bay SJC was benefitted from
its Board of Management, the members of which possessed more than
20 years of experience in real estate development sector and more
than 14 years of experience in luxury tourism and vacation
properties, to develop a well-known brand as well as highly
appreciated real-estate products in upscale segment of
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hospitality services.
The first and also the most successful portfolio of the company,
The Six Senses Ninh Van Bay which had been the destination of more
than 150,000 vacationers, was awarded 14 prizes from the World's
best travel organizations, World Travel Award, the Guide Magazine,
Conde' Nast Traveler and tourism journals such as Tatler. Besides
this portfolio, Ninh Van Bay JSC also owned and managed three other
resorts and hotels namely Evason Ana Mandara Nha Trang, Emeralda
Ninh Binh Resort & Spa and Ana Mandara Villas DaLat Resort
& Spa, which were all very popular to Vietnamese and foreign
travelers (see Exhibit). In the medium to long term strategy, the
company was planning to develop and brought into use a chain of
luxury and upscale resorts in Hoi An with Emeralda Hoi An, Nha
Trang with Lac Viet Marina, Ho Chi Minh City with Six Senses Saigon
River and Phu Quoc with Six Senses Phu Quoc. For the efficient and
effective management and operation of these resorts, Ninh Van Bay
JSC currently owned four subsidiaries including Ninh Van Bay
Holiday Club, Tan Phu Tourism JSC, Hong Hai Tourism JSC and Hai
Dung Co. Ltd as well as had invested in various associate companies
such as Con Bap Ecological Tourism Co. Ltd, Danh Viet Trading &
Service JSC and Hotel Collection Indochina to get access to other
potential projects (See Exhibit 7 for Company Structure). Apart
from that, the company also developed strategic relationships with
domestic and international famous brands, which are Six Senses,
Khanh Hoa Trading and Investment Company, Savills Vietnam Ltd and
Resort Condominium International (RCI) Group, to take advantage of
their reputations, experiences and connections in the tourism
industry. With these advantages, Ninh Van Bay JSC was able to offer
various hospitality related products and services ranging from
vacation ownership, community resorts to property management
training and consulting services.
With its successful steps in the past years, Ninh Van Bay was
aiming to become a leading travel real estate company in Vietnam
and the region with international standard resorts with designs
inspired by Vietnamese cultural values. Specifically, the company
was projected to occupy the largest market share in Vietnamese
luxury and upscale travel and tourism segment with 200,000 guests
by 2015. Financially, Ninh Van Bay JSC planned to become a public
company with total market capitalization of more than 2,000 billion
VND by the end of 2015.
Ninh Van Bay Holiday Club Established in 2010 by Ninh Van Bay
JSC for the purpose of a way to obtain funds for future projects,
Ninh Van Bay Holiday Club One Member Company Ltd was the managing
company of Ninh Van Bay Holiday Club, which was the pioneer in
offering vacation ownership program in Vietnam. At the beginning,
the company used to apply the traditional timeshare business which
divided the ownership into weekly units, where customers would buy
a certain week in a year for some fixed number of years to stay at
a resort of Ninh Van Bay JSC. However, because this type of unit
division was only suitable for customers with very high-income
level and also because of the need of expanding its business to
wider range of customers, Ninh Van Bay Holiday Club decided to
change its unit division into point and charge fee based on these
points. Thanks to this change, the company experienced significant
growth with the number of members increasing from 200 in 2011 to
approximately 1,100 in 2014 and the company employed around 60
employees.
At the present, Ninh Van Bay Holiday Club was offering four
types of membership cards with the price ranging from USD 4,000 and
USD 15,000 equivalent to four different time periods:
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Silver Card: purchasers of this type of card will be granted a
membership of five years for a total of 3,000 points, which means
600 points for each year. One limitation of this type of card,
however, is that its holder cannot buy points in advance like
higher-levels card holders.
Gold Card: this type of card offers ten-year membership with 600
points each year (6,000 points in total). Holder of this card will
have two chances of purchasing points in advance.
Titanium Card: fifteen-year membership with a total of 9,000
points (600 points per year) is provided to holder of this card,
who is also allowed four advance point purchases.
Diamond Card: being the most prestigious card level, diamond
card is offered to vacationers with twenty-year membership and 800
points each year for a total of 16,000 points. Holder of this card
is also granted six advance point purchases and many other
exclusive rights and incentives.
With the implementation of point system, holders of Ninh Van Bay
membership cards were not only able to choose resorts owned by Ninh
Van Bay JSC but were provided with much larger options from Ninh
Van Bay's partner resorts. Each resort had its own point allocation
for its rooms and members of Ninh Van Bay Holiday Club would use
the points to pay for fees such as accommodation, meals and airport
shuttle service. The price of accommodation and services varied
from resort to resort depending on the type of unit a member chose
to stay in (see Exhibit 8 for details). Apart from the fixed points
allocated to each type of membership cards, holders of them could
also buy more points (but less than 10 percent of the initial total
points) in case they wanted to have more or longer vacations. If a
member did not use all the points allocated for one year, he could
accumulate those points for usage in the following year.
Regarding the costs, members of Ninh Van Bay Holiday Club were
also charged annual fee, which is fixed for each five-year period,
besides the fees when purchasing their cards. However, Ninh Van Bay
Holiday Club committed the annual fee be adjusted for no more than
10 percent every five-year. Besides vacation holidays, Ninh Van Bay
Vacation Club also offered its customers with other services such
as setting up conferences or any special events required by the
customers and guaranteed the best prices to customers. However,
these types of services depended on the room availability in each
season. In case there were inadequate rooms in peak season, the
company could still help out by contacting its partner resorts to
arrange these special events with competitive prices. Additionally,
the company held many events every year such as family day and
member care program to increase the interaction between the company
and its customers.
Target Customers With a chain of luxurious resorts in Vietnam,
the target customers of Ninh Van Bay Holiday Club were individuals
and families with monthly income of 3,000 USD and above, those who
loved travelling and sought for new experiences in natural friendly
and deluxe resorts. In early 2014, according to Hoang - General
Director of Ninh Van Bay Holiday Club, the club had approximately
2,000 members and he expected this number would increase to 3,000
at the year end.
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In recent years, despite the economic downturn and decreased
customers demand, especially for luxurious products and services,
Ninh Van Bay Holiday Club were still able to experience impressive
growth of 240 percent and 200 percent in 2012 and 2013
respectively. Among the four membership types, silver package was
the most popular one, which occupied for 50 percent of the companys
customer base. This was followed by gold package with 30 percent,
titanium package with 5 percent and diamond package with 15
percent.
Promises and Commitments of Ninh Van Bay to its Members In
becoming member of Ninh Van Bay Holiday Club, vacationers were
guaranteed by the club in two commitments: (1) point system would
be stable within a year and yearly change in point price will not
exceed five percent; and (2) members would be offered with the best
price at the four resorts of Ninh Van Bay at any time of the year
during membership period. The best price meant that the most
competitive price in the market at the time of booking for a
particular unit, compared to which any lower price found by the
customers for similar offers at other booking service providers
were entitled to compensation for the price difference. Due to
these commitments, members of Ninh Van Bay Club could avoid
significant price increase in high inflationary periods and
seasonal price fluctuations. According to Mr. Hang Minh Tan - Sales
Manager at Ninh Van Bay Holiday Club, the point price had been
stable for two years since 2012.
In addition, members of the club also had many advantages over
normal vacationers in that they were offered with a variety of
priorities in Ninh Van Bay's resort system such as 20 percent
discount for restaurants and spa and 10 percent discount for
shopping, as well as incentives at Ninh Van Bay's partner resorts.
Furthermore, members could use their membership cards to book rooms
for their friends, partners or acquaintances with relatively
competitive price than normal bookings or they transfer, lease or
use as gift the membership cards. During their vacations,
membership card holders could ask for private secretaries appointed
by the club to ensure customers' satisfaction and enjoyment. For
Diamond card, holders would receive two more privileges: free
airport shuttle service when taking vacation at any of the four
resorts of Ninh Van Bay resort system and twice-a-year playing golf
for free at golf courses of Ninh Van Bays partners such as Royal
Golf Club Ninh Binh, Montgomerie Links Vietnam and Vinpearl Golf
Club Nha Trang ect.
To diversify its offerings to customers, Ninh Van Bay Holiday
Club sought partnership with Resort Condominium International (RCI)
Group, which allowed the clubs members to have access to more than
5,000 resorts all over the world by using a system of point
transfer.
Dilemma for Future Development after Re-Positioning Despite the
remarkable growth in recent years, the sales revenues generated
from the holiday vacation business were still much lower than the
expectations from the management team of Ninh Van Bay Holiday Club.
Given the huge amount of funds invested in existing resorts and the
need for capital accumulation for future projects, Ninh Van Bay
Holiday Club was looking for measures to boost the sales of
membership packages. However, it was recognized by the management
team that this task was uneasy because of many issues and
hindrances.
Even though timeshare was not a new type of tourism in the
world, it only appeared in Vietnam in 2010 with the initiation of
Ninh Van Bay Holiday Club. At that time, Ninh Van Bay only targeted
high income individuals and families, which occupied a tiny
fraction of Vietnamese population. However, according to
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Hoang, This is a failure of the company because price is not the
major concern of these rich people and it is very difficult to ask
them for long-term commitments. Additionally, in the last few
years, as the middle income class in Vietnam grew considerably,
more and more people could afford the offers of the company.
Therefore, the management team of Ninh Van Bay Holiday Club decided
to shift its target to this segment. However, persuading potential
customers to spend a large portion of their incomes in its products
was a challenge because they were unfamiliar to this new type of
tourism while the companys current marketing strategies, which were
telemarketing and its own website, turned out to be ineffective. In
addition, there was at this time no formal exchange system for Ninh
Van Bay Holiday Clubs members to resell or transfer their
memberships to a third party. As a result, even though members had
the option to resell their memberships, finding an appropriate
buyer would be uneasy because of the high costs and unpopularity of
these products.
Ninh Van Bay was looking for ways to increase the level of
service it could offer to its customers in order to enhance its
products attractiveness. For instance, members of Ninh Van Bay Club
were entitled to 10-25 percent discount for value-added services
such as restaurants, spas and souvenirs in the clubs resorts.
Besides that, Ninh Van Bay also worked with its various partners
such as O HUI Beauty Center, Elite Fitness & Spa and Ming so
that their customers could receive incentives from their services.
Additionally, maintaining a sales team, who would be available 24/7
for customers inquiries and would contact the customers regularly
in order to inform them the newest information about the clubs
special events as well as to build close relationships with them,
was an attempt from the management team to increase the customers
satisfaction. However, these seemed to be inadequate for Ninh Van
Bay to differentiate itself and create enough demand for its
products and services, especially when compared to the prices it
charged its customers. Consequently, in order to develop
sustainably in the future, finding out more appropriate value-added
services, which could enhance the products value while balancing
the costs, was another issue that Viet and his team had to deal
with.
Urgent Need for Better Revenue Management Method According to
Hang Sales Manager of Ninh Van Bay Holiday Club, even though the
number of members of the club increased significantly, all the
resorts of the club faced the problem about room occupancy when
there were times in low demand seasons, a significant number of
their total units were unoccupied. This was mainly caused by the
small customer base and the booking habit of Vietnamese as they
were not used to booking in advance. Hang said that many members
only booked their vacation some days or a week ahead and some
cancelled their bookings right before the arrival date. Therefore,
it was very difficult for the club to plan for proper room
reservations. Moreover, customers booking habit also imposed
problem because Ninh Van Bay Holiday Club was unable to deliver its
commitments and fulfill customers orders in peak seasons, which
were usually in months such as January, February, April, May,
August, September and in national holidays; leading to recent
complaints and disrepute about the club.
To handle this problem, Ninh Van Bay Holiday Club was planning
to develop an online portal where the clubs members could book
their holidays as well as manage their points more conveniently.
Each member would be provided with an account from which they could
buy, grant or sell their points and receive updates about the
prices of each unit, the clubs activities as well as receive
real-time assistance from the clubs sales team. Moreover, members
could also give feedbacks about the products and services of the
club, based on which it could increase the customers satisfaction
by adjusting its services accordingly.
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The Decisions In order to expand its business and develop
sustainably into the future, Ninh Van Bay Holiday Club had to come
up with solutions to the various prevailing problems regarding both
internal and external matters mentioned earlier. Establishing a
portal seemed to be a potential idea from the management team, but
in which way the portal should be managed to boost customer
retention and customer extension and what factors do Hoang and Hang
have to consider when designing this portal.
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12
References Blanke, J Chiesa, T & Crotti, 2013, The Travel
and Tourism Competitiveness Index 2013: Contributing to National
Growth and Employment, The Travel & Tourism Competitiveness
Report 2013, World Economic Forum, retrieved from
http://www3.weforum.org/docs/WEF_TT_Competitiveness_Report_2013.pdf
Canadian Resort Development Association, History of Vacation
Ownership, CRDA, retrieved from
http://www.crda.com/the_history_of_vacation_ownership.shtml
Government Portal, 2011, Strategy on Vietnams Tourism
Development until 2020, Vision to 2030, Government Portal,
retrieved from
http://www.chinhphu.vn/portal/page/portal/English/strategies/strategiesdetails?categoryId=30&articleId=10051267
HITT, 2013, HITT Inception Analysis: Vietnam, High Impact
Tourism Training for the Informal Sector, retrieved from
http://www.hitt-initiative.org/wp/wp-content/uploads/2013/03/HITT_Inception_Analysis_VIETNAM_English.pdf
Powanga, L & Powanga, A 2008, An Economic Analysis of a
Timeshare Ownership, Journal of Retail and Leisure Property, vol.
7, no. 1, pp. 69-83, retrieved from Proquest Database.
Tien Cuong & Phong Chuong, 2014, 2013 Sees Robust
Development of Vietnams Tourism Sector, NhandanOnline, 2 January,
retrieved from
http://en.nhandan.org.vn/travel/item/2240402-2013-sees-robust-development-of-vietnam%E2%80%99s-tourism-sector.html
Vietnam Briefing, 2013, Vietnam Tourism on The Rise, Vietnam
Briefing, 24 July, retrieved from
http://www.vietnam-briefing.com/news/vietnam-tourism-on-the-rise.html/
Vietnam National Administration of Tourism, 2014, International
Visitors to Vietnam in May and 5 Months of 2014, 26 May, retrieved
from http://vietnamtourism.gov.vn/english/index.php/items/7323
Vietnam National Administration of Tourism, World Heritage in
Vietnam, retrieved from http://www.vietnamtourism.com/disan/en/
World Tourism Organization, 2014, UNWTO World Tourism Barometer,
April, vol. 12, retrieved from
http://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_barom14_02_apr_excerpt_0.pdf
World Travel & Tourism Council, 2013, Global Travel &
Tourism Industry Defies Economic Uncertainty by Outperforming the
Global Economy in 2012 - and predicted to do it again in 2013,
retrieved from
http://www.wttc.org/news-media/news-archive/2013/global-travel-tourism-industry-defies-economic-uncertainty-outpe/
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Exhibit 1: International Tourism and Other Industries
Figure 1. Reproduced from World Tourism Organization 2014
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14
Exhibit 2: The Travel & Tourism Competitiveness Index
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15
Figure 2. Reproduced from World Economic Forum 2013
-
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16
Exhibit 3: International Tourism Receipts and International
Tourist Arrivals
Figure 3. Reproduced from World Tourism Organization 2014
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17
Figure 4. Reproduced from World Tourism Organization 2014
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Exhibit 4: National Tourism Receipts and Tourist Arrivals
Figure 5. Reproduced from World Tourism Organization 2014
Figure 6. Reproduced from World Tourism Organization 2014
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19
Exhibit 5: World Heritage Sites in Vietnam
Figure 6. Reproduced from Vietnam National Administration of
Tourism
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20
Exhibit 6: International Visitors to Vietnam in May and 5 Months
of 2014 by Countries
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21
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22
Figure 8. Reproduced from Vietnam National Administration of
Tourism
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23
Exhibit 7: Ninh Van Bay JSC: Company Structure
Figure 9. Reproduced from Ninh Van Bay JSC
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Exhibit 8: Guideline for Using Points at Resorts Owned by Ninh
Van Bay Holiday Club (applied from 20/12/2013 31/12/2014)
1. Six Senses Ninh Van Bay
Number Types of Room
Low Demand Season
(points/night)
Ordinary Season (points/night)
Peak Season (points/night)
Tet Holiday (points/night)
1 Hill Top Pool Villa 238 261 277 629 2 Beach Front Villa 261
301 319 673 3 Two bedroom Beach
Front Pool Villa 421 453 467 869
4 Two bedroom Hill Top Pool Villa
475 491 507 1002
5 Water Pool Villa Rock Pool Villa
475 491 507 1002
6 The Rock Retreat 958 974 989 1829
Low demand season:
05/05/2014 15/07/2014
01/11/2014 19/12/2014
Ordinary season:
13/01/2014 30/01/2014
10/02/2014 29/04/2014
16/07/2014 31/10/2014
Peak season:
31/01/2014 09/02/2014
30/04/2014 04/05/2014
29/08/2014 02/09/2014
Tet Holiday:
20/12/2013 31/12/2013
01/01/2014 12/01/2014
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25
20/12/2014 31/12/2014
2. Evason Ana Mandara Nha Trang
Number Types of Room
Low Demand Season
(points/night)
Ordinary Season (points/night)
Peak Season (points/night)
Tet Holiday (points/night)
1 Garden View 136 152 183 277 2 Superior Sea View 186 203 233
337 3 Deluxe Sea View 217 233 274 393 4 Deluxe Beach Front 261 277
315 453 5 Beach Front Ana
Mandara Suite 281 295 335 476
Low demand season:
05/05/2014 15/07/2014
01/11/2014 19/12/2014
Ordinary season:
16/01/2014 30/01/2014
10/02/2014 29/04/2014
16/07/2014 31/10/2014
Peak season:
31/01/2014 09/02/2014
30/04/2014 04/05/2014
Tet Holiday:
20/12/2013 31/12/2013
01/01/2014 15/01/2014
20/12/2014 31/12/2014
3. Emeralda Ninh Binh
Number Types of Room
Low Demand Season
(points/night)
Ordinary Season (points/night)
Peak Season (points/night)
1 Superior 59 66 86
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2 Deluxe 92 102 122 3 Duplex 155 128 149
Peak season:
01 04/01/2014 & 30 31/01/2014
01/02/2014 03/02/2014
30/04/2014 03/05/2014
29/08/2014 02/09/2014
21/12/2014 31/12/2014
4. Ana Mandara Villas Da Lat
Number Types of Room
Low Demand Season
(points/night)
Ordinary Season (points/night)
Peak Season (points/night)
1 Villa Studio 71 79 95 2 Villa Suite 86 95 111 3 Bellevue Suite
122 135 151 4 La Villa 213 237 253
Peak season:
01 04/01/2014 & 30 31/01/2014
01/02/2014 03/02/2014
30/04/2014 03/05/2014
29/08/2014 02/09/2014
21/12/2014 31/12/2014