Vacation ownership business in Vietnam - Trần Thị Bích Hằng

Vu Thanh Tu ANH - Fulbright University in Vietnam, USA Le Xuan BA - Centural Institude for Economic Managerment, Vietnam Hervé B. BOISMERY - University of La Reuinion, France H. Eric BOUTIN - Toulon Var University, France Nguyen Thi DOAN - Vietnam Learning Promotion Association, Vietnam Haasis HANS - Dietrich - Institute of Shipping Economics and Logistics (isl) Bremen - Germany Le Quoc HOI - National Economic University, Vietnam Nguyen Thi Bich LOAN - Thuong mai University, Vietnam Nguyen Hoang LONG - Thuong mai University, Vietnam Nguyen MAI - Vietnam Economist Association, Vietnam Duong Thi Binh MINH - University of Economics HoChiMinh City, Vietnam Hee Cheon MOON - Korean Trade Research Association, South Korea Bui Xuan NHAN - Thuong mai University, Vietnam Luong Xuan QUY - Vietnam Economicst Association, Vietnam Nguyen Van Song - Vietnam National University of Agriculture Nguyen TAM - California State University, USA Truong Ba THANH - University of Danang, Vietnam Dinh Van THANH - Institude for Trade Research, Vietnam Do Minh THANH - Thuong mai University, Vietnam Le Dinh THANG - University of Québec à Trois Riviéres, Canada Tran Dinh THIEN - Vietnam Institute of Economics, Vietnam Nguyen Quang THUAN - Vietnam Academy of Social Sciences, Vietnam Le Nhu TUYEN - Grenoble École de Managment, France Washio TOMOHARU - Kwansei Gakuin University, Japan Zhang YUJIE - Tsinghua University, China THE Members Editor in chief NGUYEN BACH KHOA Deputy Editor in Chief SECTRETARY OF EDITORIAL OFFICE PHAM MINH DAT Editorial SCIENTIFIC COUNCIL Dinh Van SON - Thuong mai University, Vietnam - President Pham Vu LUAN - Thuong mai University, Vietnam - Vice President Nguyen Bach KHOA - Thuong mai University, Vietnam - Deputy President Introduction The term “vacation ownership” first appeared in the world in 1960s, closely related to the development of hospitality and tourism industry. Since then, holiday ownership has drawn attention of many researchers such as Charles D.Patton (2009), Kaufmann, Tammie J.; Lashley, Conrad; Schreier, Lisa Ann (2009), Radall Upchurch. Conrad Lashley (2011). Their research has introduced fundamental theories on the concepts, mod- els, benefits, etc. of vacation ownership and discussed various issues such as finance, human resources, mar- keting, sales, service quality, etc. in vacation owner- ship management. In Vietnam, vacation ownership has just become popular in recent years and attracted the interests of several researchers. However, their studies just discuss theories and analyse specific reality related to the nature of vacation ownership, the differences between holiday ownership and traditional form of rental accommodation rent in presented in research articles or part of a book (Son Hong Duc, 2012; Doan Huong Lan, 2015), some studies analyse models and benefits of vacation ownership on the websites of hotels and resorts. It can be seen that from research perspectives, these studies are merely on theories or not sufficient and comprehensive in terms of theories and business practice of vacation ownership in Vietnam. This article aims to generalize fundamental theo- retical grounds on the concepts and models of vacation ownership, benefits it brings to customers when they use vacation ownership instead of traditional acco- modition forms. Upon clarifying the nature of vacation ownership nature, the article employs primary and sec- ondary data to analyze and comprehensively evaluate the situation of vacation ownership business in Vietnam, on that basis proposes solutions to help develop these models so as to promote our tourism industry in the coming time. To collect primary data for research, the author conducted a quick survey on 376 people and used a sample of 283 people who have certain knowledge of vacation ownership for a deeper survey on information channels, demand for investment and reasons for investment discouragement in vacation ownership. The recipients vary in terms of occupations (teachers, nursing workers, office staff working in administration agencies, entrepreneurs, etc.) who are working and residing in inner districts of Hanoi. Data were processed via excel software. 38 Journal of Trade Science 4:2 (2016) 38 - 46 JOURNAL OF TRADE SCIENCE ’S JTS Tran Thi Bich Hang Thuongmai University Email: tbh0202@yahoo.com Keywords: vacation ownership, vacation ownership model, holiday ownership business he article summarizes some theories on vacation ownership and analyzes the current situation of trading in holiday ownership in Vietnam with some comments on the benefits and challenges to the model. The author then makes some suggestions to promote the trading of holiday ownership in Vietnam in the coming time. Received: 3rd April 2016 Revised: 3rd April 2016 1. Models and benefits of vacation ownership to tourists 1.1. Concept of vacation ownership and its models Vacation Ownership/Timesharing has become a popular term in many countries in the world. It first appeared in 1960s in Europe and started to develop in 1970s. Vacation Ownership is simple understood as sharing vacation time in a luxury accommodation facility (often a resort or a high-class hotel) in a select- ed geographical location. In other words, vacation ownership can be defined as buying ownership and using a unit of real estate (an apartment or a villa) in a certain period of time (often a week or a year) in a cho- sen location (Charles D.Patton, 2009; Kaufmann, Tammie J.; Lashley, Conrad; Schreier, Lisa Ann,2009; Radall Upchurch. Conrad Lashley, 2011; Doan Lan Huong, 2015; Son Hong Duc, 2012: 144). Initially, the sales were offered in each fixed week. From 1970s to 1980s, customer demand became more flexible. Accordingly, the sales of vacation were offered in more diverse models (Radall Upchurch. Conrad Lashley, 2011) (Figure 1): (1) Fixed Week: In this model, customers are entitled to using a unit of real estate in a set week among 52 weeks of a year of their contract length depending on their choice. (2) Flexible week: This model has 2 forms: - Float Week: In this case, customers can use a certain unit of real estate in some certain weeks during the year or a cer- tain season. - Unit Float: In this case, the time customers can use a unit of real estate is fixed but customers can choose any real estate unit (under the condition that that unit is equivalent to their original choice such as 1 bed- room, 2 bedrooms, etc.) and its position can change. (3) Buying score cards in Vacation Club: in this model, customers can buy score cards instead of buy- ing weeks as in the previous two models. In ranking orders, the bought scores have an equivalent value determined prior to vacation ownership. In this model, customers can have higher control over the estate units that can best satisfy their demand. For example, a cus- tomer can buy enough scores for any estate unit with single room, 2 bedrooms or a 3-bedroom villa in any number of days. In the score system, customers just need to buy enough scores to satisfy their annual trav- el demand. With these 3 models, it can be seen that the sales of vacation ownership can be flexible to customers. Accordingly, they can have different choices depend- ing on their specific demand and conditions. 39 journal of Trade Science JOURNAL OF TRADE SCIENCE ’S JTS Source: Radall Upchurch. Conrad Lashley, 2011 Figure 1: Vacation ownership models 1.2. Benefits of vacation ownership to tourists Vacation ownership not only creates opportunities for people to travel and rest in well-equipped rooms like in some other tourism accommodation entities but also brings them various other benefits (Figure 2). Firstly, vacation owners are entitled to use high- class real estate with wonderful holiday experiences. With a certain payment when buying vacation owner- ship and annual service fees for maintenance, repairs or room services such as replacing carpets, broken bulbs, cleaning and other public services such as hygiene and security, vacation owners have the rights to spend holidays in their accommodation entity forev- er or in a certain period of time, depending on their vacation ownership transaction contracts. As such, owners can save time from booking rooms for each holiday as well as save money from increased prices, especially in high tourism seasons. Moreover, vacation ownership is a reminder to people about a fixed time they should spend for their families and relatives after a hard-working year. This is very ideal amid the mod- ern living conditions, especially to busy and successful ones. Unlike the traditional rental accommodation, vaca- tion owners can not only experience room services with luxury facilities but also enjoy good public services in the resort such as cinema, sports, park, etc. free of charge. Besides, as all resorts are built by the sea, near the mountains, lakes or rivers, they have green atmos- phere with pure air, suitable for relaxation and health enhancement. These resorts are designed comprehen- sively with many facilities to provide absolute conven- iences to customers. During their holidays, vacation owners can cook at their apartment/villa, use services in supermarkets, restaurants, etc. among others. These resorts can be regarded as a miniature city and their real estate units can be considered as second home. Secondly, vacation owners can use ownership as a gift to their relatives and friends. In case owners do not have demand for holidays, they can always use their ownership as a gift to relatives and friends. To do this, vacation owners just need to inform their management agency and procedures can be taken rapidly. Thirdly, vacation owners can get returns from leas- ing or selling their vacation ownership to others. Vacation owners can lease their ownership in any year if they cannot arrange time for holiday or they can also sell (transfer) their ownership to others if they do not wish to hold it. Moreover, when they need to lease or transfer ownership, owners can rely on the supports of 40 Journal of Trade Science JOURNAL OF TRADE SCIENCE ’S JTS Source: Customer's anticipation Figure 2: Benefits of vacation ownership to tourists accommodation operating agency to get an effective financial investment opportunity. Fourthly, vacation owners can inherit the owner- ship to their relatives. Vacation owners can always inherit ownership to their relatives if they want. This benefit ensures the absolute rights of vacation owners in necessary cases, especially when vacation owners cannot use their ownership. Fifthly, vacation owners can exchange their owner- ship with many high-class reports worldwide. One of the special rights of vacation owners is they can exchange their ownership with other owners in the world. This right can be conducted easily via RCI (Resort Condominiums International) system, born in 1975 in America as an intermediary for vacation own- ership exchange transactions. So far, RCI has joined by over 5,000 resorts and hotels in more than 100 coun- tries with 17 million participants. Therefore, interna- tional travel of vacation owners become much easier and economical as customers just need to pay a small exchange fee to RCI. At present, this fee ranges under US$500 depending on whether the exchange takes place within the country or internationally. 2. Situation of vacation ownership business in Vietnam 2.1. Situation of vacation ownership business in Vietnam in recent time With the vibrant development of tourism market, vacation ownership first appeared in Vietnam in 2009 with the pioneer of Sea Links Golf Resort - Mui Ne (Phan Thiet). Since then, a series of other resorts in Vietnam have participated in trading in this model, including Manna Resort, Merperle, Diamond Bay Resort 2, Nha Trang Plaza Hotel (Nha Trang), Ninh Van Bay Vacation Club, Ho Tram Sanctuary, Nam Hai Resort (Quang Nam), Furama Resort (Da Nang), Ana Madanra Resort (Hue), Flamingo Dai Lai Resort (Vinh Phuc), Tan Vien Resort (Ha Noi), FLC Samson Beach & Golf Resort (Thanh Hoa), NewLife Tower, Venus Cat Ba (Hai Phong), etc. Many other projects under construction have offered products to the market and will put them into use soon, including Alma Vietnam, Fusion Maia Cam Ranh (Nha Trang) Up to now, there has not been any official statistics on the number of businesses of vacation ownership. However, typical features shared by these accommo- dation entities are they are 4-5 star resorts under the ownership of big groups with world-class reputation and brands. Real estate used for vacation ownership business is designed as apartments or villas full of modern facilities. Most resorts offer apartments and villas with various space area, suitable for small fami- ly of 4-5 members or big, multi-generation family of 6- 7 or 8-9 members. The vacation ownership model applied in Vietnam at present is fixed week and gener- ally, customer rights are ensured (Table 1). Among accommodation entities participating in vacation ownership business in Vietnam at present, most combine the traditional form of rents and vaca- tion ownership. Just a few of them only trade in vaca- tion ownership, such as Manna Report (with 550 villas and hotel rooms), Alma Resort (with 200 villas and 400 apartments to be offered by January 2018, equal to 30,000 vacation units a year). To ensure financial transparence so as to create confidence in investors of vacation ownership, most resorts hire professional operating agencies to manage their business, for example, Six Senses group (Thailand) is now managing the operations of 3 luxury resorts of Six Senses Ninh Van Bay, Six Senses Evason Anna Mandara and Six Senses Con Dao or Alma Resort hires Continental Group. These are all profes- sional operation management groups with good inter- national brand names, long-term experience in hotel management sector. To ensure customer rights, every year, the operation management groups account man- agement costs (under the supervision of reputable accounting agencies), then divide the costs among owners to identify the annual fees. Financial state- ments are also published transparently to customers. At present, the fees range around US$200. Although vacation ownership has been transacted in Vietnam for nearly 7 years, the term is only known by a small group of urban people. Part of the reason is this business model is very new and totally different to the traditional rental accommodation. Besides, busi- 41 journal of Trade Science JOURNAL OF TRADE SCIENCE ’S JTS nesses have not paid adequate attention to advertising and introducing it to consumers but just focused on residents in big cities like Ha Noi, Ho Chi Minh, Da Nang, Nha Trang, etc. Promotional activities of these businesses are lim- ited to introducing products on their websites; intro- ducing, advertising and personal selling products in customer conferences held by businesses; advertising on billboards in popular tourism sites; only a small number of enterprises invest in advertising on mass media. Among these, customer conferences are used widely by enterprises, especially those who only offer vacation ownership serv- ices. To deploy this promotional method, enterprises often directly send emails or telephone to invite customers of middle income who have high demand and habit of travelling to invite them to the confer- ences. Here, they will play videos to introduce vacation ownership models and their products, there will be Q&A session where customer enquiries can be answered. Customers interested in the model will be consulted directly by com- pany's sales staff, who may provide them with specific information about products, prices, customer rights, etc. Customers who decide to sign contracts right in the 42 Journal of Trade Science JOURNAL OF TRADE SCIENCE ’S JTS Table 1: Features of vacation ownership in some resorts in Vietnam Source: Author's summary Accommodation entities Investors / Operators Prices (USD) Ninh Van Bay Vacation club (including a system of resorts in Da Lat, Nha Trang, Hue, Ninh Bình, Vung Tau, Phan Thiet, Ha Long, Hai An, Phu Quoc, etc.) Six Sences - Lifestyle card (duration 17 years): 6,600/ 7 night - Priority card (duration 27 years): 9,900/ 7 night Sea Links Golf Resort Rang Dong Group 12,000-15,000 (20 years)/ 7 nights/ 6-8 people Manna Resort Rafaeli - Israel Vietcombank Investment Fund 7,000-25,000/ 7 nights/ 5- 8 people Alma Resort Blenheim – Israel/ Continental 10,000-50,000(40 years)/ 7 nights/ 4-9 people (Note: A customer can know of vacation ownership via different information channels) Source: Survey data Figure 3: Information channels used by customers to know of vaca- tion ownership conferences can enjoy some preferential treatments, such as a gift of a free night in a luxury hotel for 2 peo- ple and/or free annual fees in the first years, etc. Survey findings in Figure 3 also indicate that the Internet is at present the most widely-used channel to provide information on vacation ownership to cus- tomers (51.24%). This shows that the Internet is a quite effective tool to communicate and introduce about vacation ownership. The next common tools are adver- tising by enterprises (39.58%) and words of mouth (34.28%). Customer conferences are used by many investors but the percentage of customers knowing about vacation ownership through this channel is only 30.04%. Besides, means of media and some other ways (tourism fairs, meetings, etc.) can also bring cus- tomers with relevant information. The findings on demand for vacation ownership do not show positive results (Figure 4). Of 283 surveyed customers, as many as 46.64% say that they have very low investment demand, only 11.31% and 4.24% sat that have high and very high demand for investment in vacation ownership respectively. The main reasons for low demand for vacation ownership investment are income levels, information, reliability, sales forms among others (Figure 5), of which most reasons originate from resorts. Customer income is not the main factor affecting investment decisions. It can be seen that the lack of accurate and sufficient information about vacation ownership is the main reason why customers feel reluctant to invest in this area (93.99%). Level of reliability on ensuring customer interests when investing in vacation owner- ship is also a reason why customers are not willing to make investment (71.73%). 70.32% customers rank income as the third biggest factor they need to consid- er when investing. Besides, not flexible and diverse sales forms discourage 66.43% of customers from investing in vacation ownership. However in Vietnam at present, vacation owner- ship business has shown sign of positive development. 43 journal of Trade Science JOURNAL OF TRADE SCIENCE ’S JTS Source: Survey data Figure 4: Demand for vacation ownership investment Customer conferences to introduce resorts have attracted considerable attention from many customers. Vacation owners have become more diverse in terms of occupations and social classes, most of whom are wealthy businesspeople, celebrities, politicians and high-income office staff (minimum income of 30 - 40 million dong/month). These people most buy vacation ownership to satisfy their holiday demand with fami- lies, relatives and friends. A small number of cus- tomers are organizations and enterprises who buy for diplomatic purposes. Generally, investment in vacation ownership is mainly not aimed at doing business. 2.2. Benefits and difficulties Based on the reality of vacation ownership models in Vietnam, the following benefits and difficulties can be seen: About benefits: Vietnam is regarded as possessing many attraction tourism destinations. Besides, that our country is accelerating its political - economic integra- tion process has promoted diplomatic and trade rela- tionships with other nations. Therefore the ability to attract tourists and working visitors of Vietnam is very high. Among these customers, a large number of local and foreign working visitors and businessmen have high payment capacity and high demand for travel and vacation ownership exchange. A proportion of urban people in Vietnam have quite high income, know of vacation ownership and tend to prefer owning a 'sec- ond home' as luxury vacation to satisfy the tourism and entertainment demand of their families. Besides, opportunities to invest in vacation ownership projects are available across Vietnam. In many forums, more opinions are exchanged about vacation ownership, which helps to provide information to and attract the attention of people in the country. Here are great advantages for vacation ownership models to develop quickly and strongly in Vietnam in the coming time. About difficulties: Generally, the number of Vietnamese people who know of and clearly understand about vacation ownership is not high. Meanwhile, offi- cial information channels from investors are still limit- ed. Besides, Vietnamese people are stick to the tradi- 44 Journal of Trade Science JOURNAL OF TRADE SCIENCE ’S JTS (Note: a customer can buy for different reasons) Source: survey data Figure 5: Reasons to discourage investment in vacation ownership tional habits of renting rooms for holiday. Here are big barriers which prevent them from approaching and investing in vacation ownership sector. Furthermore, investors are still cautious when considering invest- ments in this business sector. They still bear the idea of 'testing the market'. Besides, the vacation ownership model in Vietnam is still monotonous with just one form of fixed week, thereby not creating many choices to cus- tomers. Most providers apply two forms of traditional rental accommodation and vacation ownership and this may cause some suspects among customers over their investment rights and the rights of ordinary tourists when using common facilities at the resorts. These dif- ficulties have resulted in slow development of vacation ownership in Vietnam in recent time. 3. Solutions to promote the development of vacation ownership in Vietnam in the coming time Vietnam's Tourism Development Strategy by 2020, vision 2030 identifies the goals of "welcoming 10 - 10.5 million international visitors, 3-5 star accommo- dation units accounting for 35 - 40% of the total" to meet visitors' demand. As to customer market, the strategy says "focusing on attracting high-income and long-stay customer segments", "strongly developing domestic market, paying more attention to tourists for relaxation, etc." In the meantime, most international visitors with good financial ability have become very familiar with vacation ownership models, 17 million people in 100 countries have been members and par- ticipated in RCI system. The set-forth goals of the tourism sector as well as high travel and vacation own- ership exchange demand of international tourists pave great potential and prospects to promote the develop- ment of vacation ownership in Vietnam in the coming time. The following solutions are suggested to help realize these potentials and goals. To Vietnam National Administration of Tourism Orient plans and development of investment proj- ects in high-class resorts and hotels; Prioritize and encourage investors to develop vaca- tion ownership models; Increase promotion and introduction of vacation ownership models to local and foreign tourists at domestic and international tourism conferences, con- ventions, exhibitions and fairs; coordinate with the press to provide comprehensive and accurate informa- tion about vacation ownership so that customers can know, understand and feel safe when investing in this new product of tourism. To municipal and provincial people's committees: Create incentive policies and favorable conditions to attract investments in construction projects of high- class resorts and hotels, including policies on land rights, site clearance, tax, etc.; Ask investors to make commitments to implement- ing projects as scheduled to get investment permission; Issue policies to accelerate slow-progress or likely- to-be-slow projects so as to provide vacation owner- ship services which can best satisfy the demand of high-class local and foreign customers. To investors: Diversify models of vacation ownership business (fixed week, float week, vacation club) to make more choices of investment to customers; Increase promotion and introduction of vacation ownership to a majority of people so that they can know, get familiar with and understand vacation own- ership models. In that way, they may feel less insecure and more confident on investment benefits, thus feel- ing more encouraged to buy. Depending on specific contexts, enterprises may choose different forms of advertising and should pay more attention to setting up enterprises' information channels and organizing cus- tomer conferences, etc. Choose to cooperate with reputable operation man- aging agencies to ensure the mechanism of transparent auditing to ensure benefits and safety for customers when they make investments. Conclusion Vacation ownership is at its initial development stage in Vietnam but this model is proven to bring many bene- fits to tourists; customer market is also showing signs of positive development. With adequate supports from tourism authority, provinces as well as self efforts from investors, the market of vacation ownership in Vietnam may develop strongly in the coming time. 45 journal of Trade Science JOURNAL OF TRADE SCIENCE ’S JTS References 1. Son Hong Duc (2012), Vacation Ownership Business Management: Theories and Reality, P. 144- 148, Phuong Dong Publishing House, Hochiminh City. 2. Doan Huong Lan (2015), Trends of Vacation Ownership, Vietnam Tourism Journal, No. 8/2015, P. 44-45. 3. Prime Minister (2011), Development Strategies for Tourism Development to 2020, vision 2030 4. Charles D.Patton (2009), Fifteen Secrets to Successful Timeshare Management, Xlibris. 5. Kaufmann, Tammie J.; Lashley, Conrad; Schreier, Lisa Ann (2009), Timeshare Management: The key issues for Hospitality Managers, Elsevier Butterworth - Heinemann. 6. Radall Upchurch. Conrad Lashley (2011), Timeshare Resort Operations - A guide to management pratice, Routledge, Newyork, USA. 7. hinh-so-huu-ky-nghi-tiet-kiem-nhung-khong-phai-de- lam-giau-ar25473. Summary Baøi vieát heä thoáng moät soá vaán ñeà lyù luaän veà sôû höõu kyø nghæ, ñoàng thôøi phaân tích thöïc traïng kinh doanh sôû höõu kyø nghæ ôû nöôùc ta, nhaän ñònh nhöõng thuaän lôïi vaø khoù khaên ñaët ra cho moâ hình naøy. Töø ñoù, baøi vieát ñöa ra moät soá khuyeán nghò ñeå thuùc ñaåy phaùt trieån kinh doanh sôû höõu kyø nghæ ôû Vieät Nam trong thôøi gian tôùi. 46 Journal of Trade Science JOURNAL OF TRADE SCIENCE ’S JTS TRAN THI BICH HANG 1. Personal Profile: - Name: Tran Thi Bich Hang - Date of birth: February 2, 1977 - Title: PhD - Workplace: Thuongmai University - Position: Lecturer 2. Major research directions: Management of Hospitality and Tourism 3. Publications the author has published his works: - Tourism Review - Trade Science Review