Improving Travel Service of Smileviet Company

LUU MOC KHE Improving Travel Service of Smileviet Company FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT Ho Chi Minh City 2007... LUU MOC KHE Improving Travel Service of Smile

LUU MOC KHE Improving Travel Service of Smileviet Company

FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

Ho Chi Minh City

(2007)

LUU MOC KHE Improving Travel Service of Smileviet Company

FINAL PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT

Instructor: Nguyen Thi Mai Trang

Ho Chi Minh City

(2007)

DECLARATION

I declare that the project entitled “Improving Travel Service of Smileviet Company” is my own work

The information and data of the project are based on reliable sources

I hope that my project will be evaluated seriously and approved for applying at Smileviet Travel Company

Finally, my thanks are extended to Mr Luu Moc Thuy, Director and founder of Smileviet Travel Company for his assistance in supplying related and valuable information to help me complete this study

May, 2007 Ho Chi Minh City, Vietnam

Luu Moc Khe

Scope and limitation 10

Chapter 1: Tourism Situational Analysis 11

1.1 The demand trends 11 1.2 Tourism Favorable regulations 12 1.3 The economic and business conditions 13 1.4 Tourism difficulties 13 1.5 Competitor analysis 15 1.5.1 Saigontourist Travel Service Company 151.6 Company analysis 17 1.6.1 Company profile 171.6.2 The operation process 181.6.3 Smileviet customers 191.6.3.1 Smileviet Company target market 211.6.4 Company Product 221.7 Smileviet Company SWOT 23 Strengths 23Weaknesses 23Opportunities 24Threats 24

Chapter 2: Improving travel service of Smileviet Company 25

2.1 Strengthen the professional of current Tour guide 25 2.1.1 Fortify the tour guide knowledge ground 252.1.2 Narrowing the service quality gaps between expectations and

perceptions of tourists 262.2 Tour guide recruitment plan 28 2.3 Create company website and deliver the final offer 29 2.3.1 The E-album of the trip 29

2.3.2 The company website 30

Tables

Table1: The arrival figures of tourist from 2001 – 1st quarter of 2007 Table 2: Company tourist information of 2006

Table 3: Company tourist information of 1st quarter 2007

Table 4: Estimate cost of implementing website and E-album

EXUCUTIVE SUMMARY

Smileviet Company is a travel company targeting in bound tourists The booming

of Vietnam tourism marketing has created many favorable conditions for the flourish of Smileviet Company but also attracted a lot of players join in and to share the market Gradually, the competitive situation has become stiffer Consequently, Smileviet Company has to assess and analyze the current scenario and accordingly it must alter the traditional way of doing business or will be crossed out from the market The Company realizes that tourists have so many choices and that Smileviet Company has no chance to reach the tourist unless it positions in the mind of the tourists and differentiates itself from the competitors

A customer or a tourist select a product or service usually based on the price or the quality and the benefit brings to the customer or tourist Hence it presents two ways for positioning either in price or quality Positioning by pricing is only practicable to strong financial players or finally leading to bankruptcy The proper way of positioning is that Smileviet Company can pursue is positioning itself as a high quality travel company

What Smileviet Company offer is a travel service, an experience and a process Tourist can neither touch, nor feel nor try in advance Besides, travel service also requires many other supporting elements like: hotel, restaurant, transportations, sightseeing places and so on The competitors also exploit those same elements while providing the service The difference between Smileviet Company and the rest is the tour guide and the service professional While buying a tour, tourist does not own anything after the payment; he or she only becomes eligible to take part in the process of the trip in a certain amount of time When the trip is over, the tourist only has experience, memory, knowledge and or feelings Making the

tourist actually satisfied wholeheartedly processes a physical item after accomplishing the trip is another differentiating strategy that Smileviet Company can apply

To offer high quality service, Smileviet Company starts from the core of service which is the role of the tour guide Duty of the guide is to communicate, to introduce, and to convey local information and special facts to tourist Aiming to that point, Smileviet Company educates its guides team by the latest and most updated information so that while on duty, the guides can convey to enrich the tour, tourist joining the tour with a certain level of expectation, but sometimes it happens that the perception of the tourist is different from his or her initial expectation result in the evaluation of poor quality from tourist The guide of Smileviet Company is trained to manage this gap Offering high quality services

is also having same meaning of having sufficient man power to satisfy the increasing demand of market The back up tour guide work force also helps company to make a tool that help tourist storing his or her happy moment during the trip but also an effective advertising tool for company Currently company does not have a web site for tourist to search for it information, credibility A high quality service providing company not only has a website but the website existence is to serve its customer

INTRODUCTION

After Thailand, Malaysia, Singapore, China, Viet Nam has emerged as a new and safe travel destination in South East Asian for the global tourists Catching this opportunity, Smileviet Travel Company is established with the core to satisfy the growing demand of foreigners visiting Viet Nam It acts as a tour operator to arrange and to provide all kinds of travel related services for the in bound tourists upon they arrive Vietnam

Thanks to the modern technology, the tourists have the access to any information and become professional in making their choice or selecting the travel service providers even in their home The potential customers not only know your company but also find hundreds more of other companies probably providing the same kind of services If Smileviet Company wants to survive, not enough, and to

be successful, the company must provide greater customer value and satisfaction than its competitors It must find a way to outstanding, positioning itself by offering better quality and better services according the needs of the customers so that it becomes the ultimate choice

Since the travel related identities such as sightseeing sites, hotels, restaurants, local infrastructure… are fixed assets All travel companies are exploiting the same elements Then what elements can be differentiated? Why should tourists join Smileviet Company tour programs or services if all the travel companies offering the same things? The answer lies down on your competitive advantages

or how you introduce those differentiated advantages to the tourists in your own way, how you serve your tourists in the exclusive way Smileviet Company is a travel company; the product it offers is a service, an experience and the process that requires the participation of the tourists Therefore, its positioning strategies

must also focus on service-oriented and unlike the traditional marketing strategies Particularly, where a small number of travel firms that offer nearly identical services are competing within a small area, establishing a higher service quality may be the only way of differentiating

The purpose of this project is to position Smileviet Company as a high quality travel company by improving the professionalism of current tour guide, developing future tour guides for company grow and creating website that adds value to company’s tourists The project is written in two parts The first parts are situational environment of tourism; the second is the positioning strategies that help to differentiate Smileviet Company

Scope and limitation

Tourism is a combination of tour programming, hotel, transportation, sightseeing, restaurant, and tour guiding… that adds together All those elements have their own quality standardization and management organizations Only is the tour guide managed and provided by the operator company that accompanies and interacts with the tourists for the whole process Hence the scope of project will focus on the service aspect provided by the tour operator only

Due to Vietnam National Administration of Tourism restriction in publishing tourism detailed information, and the publishing policy is limited to internal use and to governmental agencies only In addition, the tendency of not holding the responsibility of the information sources causes many difficulties to researcher

Chapter 1: Tourism Situational Analysis

1.1 The demand trends

In 1988, Vietnam had only 92,500 international visitors, most of them were those who come to Vietnam according to political-economic exchange agreements and overseas Vietnamese coming back to see their family reported by Dr Vu Tuan Canh1 In the year 2006, according to Vietnam National Administration of Tourism statistic, the number of international visitor is 3,583,486; rise up 103 % in compare with 2005 From table 1, it shows that the figure is constantly growing According to World Travel and Tourism Council, the nations are expected to grow travel and tourism demand faster between 2006 and 2015 of which Vietnam

is ranked number seven and the percentage annualized real growth is 7.7%2 Besides, Vietnam is a home of numerous attractions such as ancient architecture, UNESCO world heritage sites, high mountains, beautiful waterfalls, sunny sea beaches and a cluster of wonderful places that appeal to tourists worldwide A well-known Vietnamese newspaper Touitre cited that The Pacific Asia Travel Association just conducted a survey of travel intention in Asia for 2007; the survey has reported that 31% of the interviewees would visit Vietnam in the next two year3 Also in 2006, tourism promotion met many favorable conditions It successfully conducted the Asia Pacific Economic Co-operation meeting and successfully negotiated to become an official member of the World Trade Organization Another factor contributing to tourism recovery in Vietnam is the successful organizing of major events such as the SEA Games in late 2003 and the recent ASEM 5 meeting in Hanoi These events present opportunities for the tourism industry to introduce tourism products and promote the image and people

of Vietnam This can conclude that the demand of international visitors traveling

to Vietnam will keep rising in steady speed This factor promises a perspective development for travel companies particularly targeting in the in bound tourists

Table 1: The arrival figures of tourist from 2001 – 1st quarter of 2007

Year 2001 2002 2003 2004 2005 2006 2007/1st Q Tourist 2330.8 2828.2 2429.6 2927.8 3467.7 3583.4 1462.2

Source: Viet Nam National of Tourism, 2007, unit in thousand

1.2 Tourism Favorable regulations

According to current Exit and Entry regulation of Immigration Department, effective from 1st Apr 2004, allows Japanese and South Korean travel to Viet Nam without Visa and from 1st May 2005 citizens of Switzerland, Norway, Denmark, and Poland are allowed to enter Vietnam without visa for fifteen days Besides, Viet Nam also signs agreement with Thailand, Philippines, Malaysia, Singapore, Indonesia and Laos to withdraw the visa requirement for their citizen’s travel between those nations This open border policy has created more convenience to attract regional traveler in Asia as well as high expenditure tourists from European and it is also one of the strategies to promote tourism development

Since May 2006, the Prime Minister has approved the National Action Program of Tourism in the term 2006-2010 with concrete objectives and implementation strategies and tactics to make Viet Nam recognized as a strong nation of tourism development in the Asia region4

1.3 The economic and business conditions

To impulse the development of tourism, it requires the supporting form several factors and the most basic ones are infrastructure, accommodation capability and professional workforce Currently, the service levels of these basic factors are poor and insufficient Infrastructure development relies much on the policies and strategies on Central Government; fortunately, The State has been clearly aware

of this issue and already takes necessary actions In the implementation of the strategy to develop tourism and the national action program on tourism, Vietnam has invested VND 2,146 billion (USD 133.7 million) for the past five years, in tourism infrastructure in key destinations and attracted more than 190 foreign direct investment projects in tourism with a total capital of US $4.64 billion5 In accommodation, The State has applied favorable policies to attract foreign investments in accommodation projects Through out the nation hundreds of foreign investment projects in building hotels, resorts, tourism complex from a few US million projects to a 500 million USD five-star hotel complex at Hanoi suburban district by Keangnam group of the Republic of Korea6 When those projects come into service in a few years later, it will open a new page of Viet Nam tourism industry as well as new business opportunities for travel companies

1.4 Tourism difficulties

According to Tuoitre newspaper (Dec 2005), in 234.000 direct workforce of the tourism field, only 60 percent are trained, in the tour guide team, only 5.104 are holders of tour guiding certificates, the non-certified tour guides are 2.854, account for 30 percentage of the guiding force7 The chairman of Viet Nam Tourism Association, Mr Nguyen Phu Duc, replies an interview that the current labor who directly participate in tourism industry lack of professional skills and

knowledge Some tour guides even do not process a though knowledge of national cultures, poor in communication skills when using foreign languages8 Most of the tour guides practice in the field must graduate from university and attend a supplementary tourism training course conducted by an authorized institution or have a university degree of any foreign language and attend a tourism language course educated by an authorized institution However, the tour guides who are capable of speaking foreign languages other than English, Chinese Mandarin, and French are so scarce that some travel companies hire ordinary persons with high payment providing that this person can speak the required language and the tour guiding skills are totally unmentioned Therefore the quality of the guiding service is not guarantee and may cause a bad image in the tourists

Another issue is the indifferentiation of sightseeing places in compared with the countries around Vietnam Usually, an average length of a European travel trip is about two to four weeks and it usually across two or three countries as the ticket price already eat up one third of the whole travel budget Thailand is famous for its giant pagodas, Angkor Wat heritage in Cambodia, China is full of historical monuments everywhere… After visiting the pagodas in Thailand, the tourists will

no longer be interested in seeing the pagodas in Vietnam Furthermore all tour products are monotones in general and unattractive to tourists These issue can heavily effect the profitability of travel companies as tourists may shorten their staying in Viet Nam consequently reduce their expenditure opportunities

Critically, most of the local is not well educated of the proper way to behave with tourists and actually causing a lot of annoying experiences to tourists They all bear in mind that tourists are richer people and they don’t mind to spend a bit more than ordinary price, so local shop sellers tend to set a much higher price and

try to take as much advantages as possible A more dangerous thinking is that tourist will not come back to make complain or does not know how to complain so that they think it is ok to deceive the tourist Such improper behaviors may cause annoyance to the tourists and making them never visit Vietnam again Worse, those tourists will apply word of mouth effect and making Vietnam a notorious place

Despite the fact that Vietnam is facing a lot of difficulties and there are a numerous of problems need to be solved, Vietnam is still full of potential The Government is obviously putting hard effort to improve the tourism environment and develop Even though the tourism situations now is less favorable than the neighbor countries, every travel company should try their best to minimize those defects and be creative in its service deliveries and provide high quality service that bring satisfaction to tourists

1.5 Competitor analysis

There are numerous of travel companies operating in Vietnam Author selects the

leader of travel company also targeting inbound tourism for deeper study

1.5.1 Saigontourist Travel Service Company

Saigontourist Travel Service Company established in 1975 and is a division of the state-run enterprise Saigontourist Holding Company It has pioneered inbound travel and has been considered one of the most prestigious and reliable travel companies in Vietnam It has been dealing with travel agencies of 36 countries worldwide Saigontourist will continue to focus on enhancing and expanding markets, especially international target markets such as Japan, China, Taiwan, Singapore, Korea, France, Germany, England, Canada, USA … As an official member of PATA, ASTA, JATA and USTOA and it has business relations with

more than 200 foreign travel companies In 2006, it served total 164.000 tourists and the in bound market accounted for 61.000 tourists

It strongest competitive advantages are the supporting from the mother company which is managing 08 travel service companies across nation, 56 hotels, 13 resorts and complexes, and 24 restaurants with well-appointed facilities These resources not only allow Saigontourist Travel Service Company better deal with the shortage of service facilities in peak seasons but also able to pursue pricing advantage strategies

It targets three tourism markets: domestic, out bound and in bound with wide arrangement of tour products Beside the traditional and classical tours, it also provides out door and cross country tours by motor bike, Meeting, Incentive, Conference, and Event (MICE) tour, international yacht racing, and cruising tour with a five star cruise ship

Saigontourist Travel Company is also the first company that establishes web BLOG http://www.blogdulich.com/ since May 2007 for its customers to express and share the trip feelings, experiences or anything they want to say about the trips However it is limited to outbound or domestic tourists only and the interface language is Vietnamese language only

Corresponding to the largest travel company in Viet Nam, Saigontourist Travel Company has a strong team of tour guide capable of speaking several foreign languages including English, French, Chinese Mandarin and Cantonese, Thai, Italian, Russian and Germany All tour guides must be university graduated and company will conduct training courses to update information of new destinations, services, tours, new regulations, and rules yearly

1.6 Company analysis

1.6.1 Company profile

Smileviet Trading and Travel Limited Co are established in March of 2005, a small size travel company with fifteen employees and thirty tour guides It head office is located in Hanoi and one branch office in Hochiminh city

The establishment of the company can be considered as the personal evolution of company founder, Mr Luu Moc Thuy In 1995, the travel company where the founder worked as its Taiwanese market tour guide ended the business due to the owner migrated to the US Since the market and the demand for making a tour in Vietnam was strong and growing and the support of the foreign partner, Mr Thuy decided to take over the business of the Taiwanese market with other guide colleagues Three years of knowledge and experience of a tour guide, he could not set up a company with his limited resources He then literally ran the operation by himself alone, from booking hotel restaurants to doing bank transactions By assuring the service standard as well as respecting business the deals, only promising what you can do, he has gradually gained good reputation and made the business went on well, he hired the first tour operator, an accountant until today to a travel company with nearly fifteen employees and other thirty freelance tour guides

Its main activity is providing full package of travel service across Vietnam Its responsibilities are ranging from planning tour, booking air, land and sea transportation, introducing daily cuisine, accommodation and the tour guide The company is acting as travel service provider and its customer sources are supplied from the aboard travel agents from Taiwan, Thailand, Hong Kong, Malaysia, Singapore, China, and Norway

Because of the above reasons, Mr Thuy is the core of company operation mechanism Alike the accountants, the rest of the colleagues are not specialized

in tourism industry Based on personal experience and knowledge of the field, Mr Thuy conducts all training and instruction to all staff in order to handle the related activities of an inbound travel company Therefore, the company is working in the simplest form consisting of tour operator who setups the tour program, the reservation that makes arrangement for all the supporting services from hotel, restaurant, transportation… and the sale to communicate and receipt tour bookings from the travel agents Other activities like marketing, business planning, advertising, quality control and measurement… are totally left out Even the most popular communication channel is the website representing the company has not been created

1.6.2 The operation process

Customers who have a need of travel may look for travel information on website, advertising leaflet, and mass media or through their friends and plan up their trips When they have decided a destination, they may contact our travel agents and tell the agents what their interests are, expectations of the trip, our agents will provide consultant service and help the tourists pick up the program or tour package that is suitable of their needs By this way, our agents will gather up all individuals to form a tour team or group and make tour request to Smileviet Company together with the passenger quantity, tour dates and the particular interests in sightseeing, specific accommodation, transportation … requests of the customers The tour operator is in charge of receiving tour requests Upon receiving the order, the operator then will plan the tour program, arrange places to visit, select hotels, restaurants, transportation means, and tour guide … After a program is created,

and booking officers will contact hotels, transportation, restaurants and domestic flight… and make necessary reservation When all reservations are confirmed, then the program will be delivered to our aboard agent for final confirmation If

no any amendment, then we will be ready for picking up passengers at airport On the date of arrival, our tour guide will meet and take over the traveling responsibilities of the whole group From this moment on, our tour guide will accompany the travel group, provide tour guiding services, looking after the eating, staying, visiting… of the trip Our responsibility is over when tour guide send off all the tourists to the airport for departure

Obviously, Smileviet Company plays a passive role in attracting the tourists It leaves alone all the marketing, advertising, promotions activities performed by the travel agents Hence, Smileviet Company has no knowledge of who are its customers, what are their characteristics, the reasons they choose to visit Viet Nam… and the markets information It also does not have any tourist satisfaction measurement methodology in order to keep track or make improvement

be the Norwegian On the other hand, the Taiwanese market is remarkable in size and can generate considerable figure of profit to balance the operational costs However, there is a new trend for Norwegian market, in stead of touring in Vietnam alone; the tourists often request visiting other neighborhood countries around Vietnam as well This trend strongly impacts to the margin of Smileviet Company but also pushes the competition situation to a bigger level Now company must fight to retain tourists spending more time in Vietnam than others The tourists arrival of the first quarter of 2007 have rapidly increased and almost half the figure of the previous year according to Table 3

Table 2: Company tourist information of 2006

Classify by age Total

tourists < 16 Y 17 – 30 Y 31 - 50 Y 51 Y >

Average day of stay Market

7110 258 1188 3275 2389 7 – 5 Taiwan 6666 242 1057 3075 2292 4 – 6