UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Huynh Minh Phuong FRONT LINE STAFF TURNOVER & RETENTION AT MAJESTIC SAIGON HOTEL MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City - 2019 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Huynh Minh Phuong FRONT LINE STAFF TURNOVER AND RENTENTION AT MAJESTIC SAIGON HOTEL MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr. NGUYEN THI MAI TRANG Ho Chi Minh City - 2019 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com EXECUTIVE SUMMARY The most important feature of the hospitality sector is that it is based on human element and it is labor intensive. Since one of the competitive advantages of a hotel business is the customer service, it is crucial to manage its people assets. The customer satisfaction in hotel accommodation will be greatly depend on the success of the personnel.
Nevertheless, there is a rising problem of staff leaving as opposed to the ongoing growth of tourism industry and important extension of job possibilities in Ho Chi Minh City. It is demanding for hotel itself to attract and retain qualified experts. Reducing the rate of staff leaving and keeping them involved in activities is the option to lessen economic losses and maintain competitiveness. This thesis aims at investigating the causes of Majestic hotel’s present changes in front office personnel.
A qualitative research methods via in-depth interviews with the objective of gaining preliminary perception of human resource management at Majestic hotel. The goal was to gather more comprehensive data in order to get a further idea of their work. The findings are discussed in details in the research along with some recommendations for the hotel and management board to improve turnover rate in the hotel. 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT A completed study would not be done without any assistance.
Therefore, I gratefully give acknowledgement to all who supported me during the time of doing this research. First of all, a special thanks to my supervisor – Professor Nguyen Thi Mai Trang for all valuable guidance, without her advice this could not have been possible. I also would like to show my gratitude to my colleagues at work and my friends for a continuous support. I also send my sincere thankfulness to my parents for their care and love.
4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS EXECUTIVE SUMMARY. 4 LIST OF TABLES. 6 LIST OF FIGURES .1 Saigontourist holding company background .2 Majestic Saigon Hotel .1 Overview of the operation of the hotel for 3 years: .2 The turnover rate status in hospitality industry .3 The turnover status in hotel .1 Policies on working hours .2 Bonuses and benefits .5 Cause –and –effect tree. 25 the line manager assign or reallocate the appropriate tasks to staffs.
27 Reorganize training sessions on time management and task leadership. ORGANIZATION OF ACTIONS. 55 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 1: Business Performance of the Hotel 2016 - 2018 Table 2. Quantity and income/month of hotel in 2018 Table 3 -4 Training costs for management Table 5.
Action plan LIST OF FIGURES Figure 1 –Organization Chart (2018) Figure 2 – Business results of Majestic Saigon Hotel from 2016 to 2018 Figure 3 – Annual revenue breakdown of Majestic Saigon Hotel from 2016 -2018. Figure 4 – Analytics of each function ‘s turnover rate Figure 5– The turnover rate of other hotels 2017-2018 Figure 6 - Recruitment cost 2018 Figure 7 - Cause –and –effect tree 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1 Saigontourist holding company background Saigontourist was founded 44 years ago since starting from 1975 in Ho Chi Minh city originated from the travel industry. Saigontourist has diversified its company, and now manages travel agents, hotels, resorts and restaurants fully equipped. It will actively grow its branches overseas to guarantee a continuous development in a variety of fields .2 Majestic Saigon Hotel Majestic Saigon Hotel is a member of Saigontourist Corporation.
A 5 star hotel with French architecture located next to Bach Dang wharf, in the center of city. The richest Vietnamese American merchant of Saigon - Gia Dinh built a hotel named Majestic at the corner of the Catinat. It was renamed Cuu Long, but the name was still Majestic, under the leadership of the department of tourism. It continued with the upgrade to 8 floors and expanded further to Ton Duc Thang Street until 2000s.
On February 27 2007, this hotel was recognized 5 star standard by the Vietnam National Administration of Tourism. Majestic is also the first five-star hotel by the Vietnamese self-investment and management. The Majestic Hotel was awarded the "Green Hotel" by the Asean of Asia Association and includes 175 rooms. In addition, Majestic also has restaurants: - Cyclo Restaurant specializes exclusively in serving food bearing Vietnamese identity.
- Catinat Lounge serves Majestic's signature tea, coffee, fruit, and cocktails. - Breeze Sky Bar opens 24/24 and serves breakfast, lunch, seafood buffet in the evening. - Serenade specializes in serving European dishes. - Prime hall: accommodating 500 guests, fully equipped with the facilities of an international meeting room.
- M bar: serve the food, favorite drink is prepared in Majestic style. Especially the presence of the band Flamenco. - F & B (food and beverage) restaurants are responsible for catering to guests when they 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com come to the hotel. The customers to the hotel are businessmen, high class tourists, tourists in the form of MICE (a type of tourism combining conferences, seminars, exhibitions, corporate travel for employees ) and international visitors.GM DGM HR Dept Sales & F&B Dept Housekeeping Energy & Front Office Accounting Dept Dept Marketing Dept Mineral Dept Dept Figure 1.
Majestic hotel’s organizational structure (Source: Majestic’s Human Resource Department) 8 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com This thesis focuses on the research of front line staffs who make a direct interaction with guests. Therefore , it is easy to see that they are valuable assets and play key roles in the hotel and their contribution are important in hotel growth. According to the statistics shown in the hotel report, the number of employees leaving has dramatically increased in the past 3 years from 2016 to 2018. Especially in front office area, this number of staffs quitted their jobs are even more surprising.
This will be done through the use of qualitative research. Specifically, it will be an analysis of reviews by employees and managerial responses. The outcome provides a guidance tool to management, and it relates to turnover levels has to be reduced and minimized by applying possible methods.1 Overview of the operation of the hotel for 3 years: This is reflected in the targets of total revenue, profit of the business activities of Majestic Saigon hotel over the years as follows: 9 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Business Performance of the Hotel 2016 – 2018 2016 2017 2018 Category Bil.
Profit before tax 118.85 (Source: Accounting Division of Majestic Saigon Hotel) The chart below shows the business results of the hotel over the past few years. : 300 250 200 150 100 50 0 Revenue Cost Profit 2016 2017 2018 Figure 2. Business results of Majestic Saigon Hotel from 2016 to 2018. 10 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com From the data in Table 1 and Figure 2, we see that hotel revenue is decreasing.
For years, profits have not changed much compared to 2016. If in 2016 total revenue reached 269 billion, then by 2017 total revenue has reduced to 266 VND billion in absolute terms decreased 3 billion or 1. And by 2018, total revenue was just VND253.422 billion, a decrease of 4.73% or an absolute loss of VND12,578 billion compared to 2017. Thanks to the cost cutting, the profit of the hotel still slightly increased.
As follows: In 2016, the profit was only 118.43 billion dong but in 2017, the profit has increased to 123.252 billion dong with the increase of 4.822 billion dong and the growth rate is 3. 2016 profit reached 121,31 billion VND has decreased 1.6% or absolute number decreased 1.942 billion compared to 2017. Annual revenue breakdown (2016 – 2018) 100% 9.00% 20% 10% 0% 2016 2017 2018 Room sales F&B sales Other sales Figure 3. Yearly analysis of Majestic Saigon from 2016 to 2018.
Its revenue included sales of rooms, food and beverage and others. Room sales are always Majestic’s largest share of income .3% in 2017 , which is 1. During this period of time , F&B sales have been fluctuated at 34. Meanwhile, other revenues decreased slightly by 0.8% to total number last year.
11 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.2 A turnover rate status in hospitality industry Ho Chi Minh city is rapidly emerging as a top worldwide travel destination and according to the 2018 Tourism Highlights Report of the United Nations World Tourism Organisation 1, Viet Nam is among the top ten speedy increasing traveller attractions around the globe. The overall amount of tourist has risen by 19 per cent to 86 million last year, while the amount of global visitors has risen by 29 per cent. According to Grant Thornton Vietnam’s 2018 Hotel Survey 2, the luxury hotel industry continued to see a better year with the ration EBITDA in previous year growing by 1. Revenue per available room for hotels continued to expand, 10.2 per cent for five-star — the study2 showed.
The Vietnam Tourism Association 3estimated a shortage of 40 percent of employees. Hotel officials remarked on elevated turnover of employees. Indeed, a number of scientists found that the hotel sector faces the issue of staff shortage according to Mohamad & Nurzeti 4. Alan et al 5 mentioned that there is redundant rate of leaving around 60% of all employees in hotel sector worldwide and Vietnam is not excluded.
As stated by Aizzat Mohd Nasurdin 6, there is always a high turnover among hotel staffs. The greater intention they are to quit, the poorer service quality. Based on some opened speeches from representatives of some other hotels and front line staffs ,in the hospitality industry, employee turnover stays greater than in other service-oriented companies. Despite ongoing improvements in HRM strategies and policies, hospitality experts find insecure and unwanted employment in hotels.
In addition, FO manager made a brief about the problem of high turnover rate in current situation. He shared that : When I joined the FO team meetings or Human resources member from the hospitality industry openly shared that in hotel industry, young front line staffs have trend to stay in 1 year and a half to 2 years in the current place before moving to another workplace. 12 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.3 The turnover status in hotel Based on the HR report and analysis from hotel, as shown in Figure 4, the turnover rate of hotel staffs was 41% (it means 34 staffs left the hotel) in 2018, which is the highest number in the last 3 years. The point is that from the secondary data, in the last three years , the percentages of leavers in FO team has been rising and as the result, when looking into the turnover rate of total hotel , the overall percentage is quite competitive in the market.
In specific, the turnover rate of a whole hotel from 2016 to annualized 2018 was quite stable , with 22 % in the year of 2016, 16.5 % in the year of 2017 and 17. However, in FO team this rate is much higher compared to the total hotel.