Some Solutions to Improve the Efficiency of the National Convention Center Villa Investment Project

CHAPTER 3

SOME SOLUTIONS TO IMPROVE THE EFFICIENCY OF THE INVESTMENT PROJECT IN THE NATIONAL CONVENTION CENTER VILLA AREA

3.1 Project development orientation

Building the National Convention Center into a destination for international conferences and a place to organize large-scale events has become the core task of the National Convention Center. Many delegations attend events taking place at the National Convention Center, but the number of guests staying is not high because the Villa Area is still not competitive and does not have adequate facilities while competitors are increasing in number and are equipped with more modern and classy facilities.

Currently, in the National Convention Center, the 5-star hotel project invested by Bitexco Company is under construction and is expected to be put into use by the end of 2012. In addition, at the X2 land plot on Pham Hung Street, the 5-star hotel invested by the RIVIERA - CSK complex is in the construction phase, in addition, the Grand Plaza Hotel has just been completed and put into use for 1 year... These are facilities fully equipped with facilities and amenities while many delegations attend events taking place at the National Convention Center, however, the number of guests staying is not high because the Villa Area is still not competitive, not fully equipped while competitors are increasingly numerous and equipped with more modern and classy facilities. Therefore, the National Convention Center is aiming to welcome potential customers by completing the service area with full range of relaxation and rest facilities for guests staying at the Villa Area.

The target audience is customers who go for meetings, travel and vacation (MICE tourism). The number of guests at the National Convention Center is quite high, in 6 years of operation, on average each year there are 4-5 major international events, the number of international guests coming to each session is 2000-4000 people including delegates, reporters... However, the target audience is not only foreign guests but also domestic groups with vacation needs, tourists with high service needs will be the target audience of this investment project. To meet this goal, in addition to the quality of technical infrastructure, it is also necessary to pay attention to the service quality of the Villa Area.

The investment project lacks a service area. If more service areas are invested, the customer base will be expanded. Service users are divided into two groups: guests staying at the Villa Area, guests coming to hold meetings and conferences at the National Convention Center, and guests coming just to use the service. It is expected that this service area will account for up to 20% of the project's revenue.

3.2 Some solutions to improve the efficiency of the investment project of the National Convention Center Villa Area

3.2.1 Invest in additional service areas

Based on the analysis of the villa construction investment project in two aspects: financial and socio-economic, the author believes that to improve the investment efficiency of the National Convention Center villa area, it is necessary to systematically and scientifically research and add items suitable to the project's objectives, including:

1. 02 international standard tennis courts

These two tennis courts are built to international standards with lighting systems, changing rooms, and resting chairs, mainly to serve the relaxation and training needs of guests at the National Convention Center villa area.

On the other hand, because the surrounding area is developing rapidly, the opportunity to attract outside customers is also very high, creating conditions for additional income.

2. 01 hot water swimming pool with jacuzzi system

The swimming pool is designed with a modern hot water system and 01 jacuzzi. This swimming pool will meet the needs of many types of guests, single guests, guests traveling with family. Guests coming to the swimming pool can rest, exercise, or relax with the jacuzzi system (aerated pool, creating a relaxing massage feeling, reducing stress and fatigue). On the other hand, because the swimming pool has hot water, it can be swum in the winter, increasing the usage rate and meeting the increasing needs of customers. Similar to the tennis court, the swimming pool mainly serves guests staying at the villa, but still welcomes outside guests to create additional income for the villa.

3. Outdoor restaurant system near the lake area.

The villa has a banquet hall for parties as well as guests staying at the villa, however, a simple restaurant right next to the lake area will attract guests to use the tennis court and swimming pool, as well as create a space close to nature for guests to have a new experience when staying at the villa. The restaurant is designed simply but luxuriously with soft awnings creating a cozy, friendly atmosphere.

With the above analysis method, the author calculates option two with the project of investing in an additional service area for the Villa Area with a total investment for the Service Area of 15 billion VND.

Based on the analysis of investment plans with similar calculation methods, the author summarizes the following comments:

The plan to invest in additional service areas requires nearly 10% more capital, but revenue and contribution to the State Budget both increase by 22%.

This option has a faster payback period than the old option (option 1).

This option has a larger NPV and IRR, so the project's investment efficiency is better. In conclusion, option 2 is more valuable.

Table 3.1 Summary and comparison of investment options

STT

Indicators

Unit

Option 1

Option 2 (Additional investment in service areas)

Note

Financial indicators

Revenue

trđ

61,134.88

74,793.05

Up 22%

Investment capital includes interest payments during construction.

trđ

166,872

181,585

Up 9%

Fixed capital

trđ

113,753

120,606

Total net profit

trđ

380,930

452,662

Up 19%

Average net profit

trđ

24,281

25,441

Return on investment

(=Average annual profit/ Unit)

12.73

14.01

Increase 10%

Fixed capital turnover

( = Average annual profit / Unit price)

18.67

21.09

Profit and revenue ratio

(= Average annual profit/ Average annual revenue)

34.73

35.88

Minimum acceptable interest rate

Net present value

trđ

72,065

114,900

Increase 59%, plan

2 more worth it

Internal rate of return

18%

23.11%

Solution

2 more valuable

Maybe you are interested!

Payback period through profit		2 years 3 months 26 days	one year
13	Payback period through profit and depreciation loss		6 years 11 months 24 days	4 years 2 months 26 days	Payback period faster
14	Payback period time value of money		10 years 0Month 24.9Days	6 years 7 months 19.7 days	Time faster recovery
15	Break-even revenue	trđ	28,155
16	Break-even rate	%	3.8%
17	Ability to pay debt		2.21
II	Socio-economic performance indicators
1	Number of workers attracted project	People	160	200
2	Average income of workers of the year	VND/person	52.37	50.83
3	Total contribution to the budget	trđ	73,361.85	89,752	Up 22%
4	Average budget contribution		3,668	4,487.6	Up 22%

(Source: author's synthesis)

Thus, the National Convention Center villa project needs to invest in additional service areas to increase the project's investment efficiency as well as the project's investment recovery time.

3.2.2. Restructuring the organization and management apparatus

a. Organizational structure

Due to the nature of the business being a service business, and being a unit under the National Convention Center, the management structure will be by department, and the management apparatus will be simpler. Regarding the operating regulations, it will follow the operating regulations of the National Convention Center, with dependent accounting and monthly reports.

The departments advising the Director include: Finance Department, Business Department, General Administration Department, Technical Department.

Departments directly involved in labor: Reception Department, Desk Department, Housekeeping Department, Security Department, Kitchen Department, Janitorial Department, Service Department.

Expected working mode:

- Number of working days in a year: 340 days

- Number of working shifts per day: 3 shifts (with Reception - Housekeeping - Security, Engineering), 2 shifts (Kitchen, Table), the rest do not work in shifts.

- Working hours per shift: 8 hours/shift

b. Management apparatus

The management apparatus must be suitable to the scale and structure of the business or service activities, ensuring good implementation of the project's objectives while ensuring unified direction combined with management assignment, clear division of responsibilities and powers, avoiding overlapping and omissions.

The management apparatus ensures smooth information flow, improves management efficiency, contributes to quick and accurate decision making, strives to streamline stages and levels of management, closely follows the base and market, is highly flexible, easily adapts to changing external circumstances, is suitable for the management level that can be provided to the project, ensures economic efficiency for the project, strives to achieve the lowest management apparatus staffing ratio and the proportion of costs for the management apparatus within a reasonable general cost.

Forms of management organization:

* Online organizational structure:

- Characteristics: + The manager performs all management functions in a centralized and unified manner.

+ Commands are transmitted in a straight line (the relationship from top to bottom is unilinear and direct).

+ The executor only receives and carries out orders from the direct commander.

- Advantages: + Centralized and highly unified management

+ Problems are solved simply and quickly

+ Suitable for small organizations, simple technology

- Disadvantages: + Requires managers to have comprehensive synthesis capacity

+ Limit the use of experts and consultants

+ Easily arbitrary when making decisions

* Functional organizational structure:

- Characteristics: + Management activities are divided into functions and each function is assigned to a manager.

+ The executors receive orders from different functional administrators.

+ The orders of the highest-level managers of the entire enterprise are transmitted down to the grassroots level mainly through functional management departments.

- Advantages: + Attracting the opinions of experts in charge of management functions to solve production and business problems.

+ Professional issues are resolved more quickly and proficiently.

+ Reduce the burden on business leaders.

- Disadvantages: + Executors have to receive many orders from different functional departments, so it is easy to overlap, unity and concentration are reduced.

+ Weakens the role of business leaders.

+ The leader must combine the leadership of functional departments in a difficult and complicated way.

* Online type structure - function:

- Features: + Combines 2 online and functional types to take advantage of the advantages and overcome the disadvantages of the 2 above structures.

+ Functional administrators only play an advisory role to the highest level manager in making decisions, checking and urging units to implement the leader's decisions.

+ All decisions are made by the highest level manager after consulting with functional managers.

+ The basic units only receive official orders from the head of the enterprise, the opinions of functional managers for the production units are only of a professional advisory nature.

- Advantages: + Take advantage of the advantages and overcome the disadvantages of the two types of online and functional structures when kept separately.

+ Commonly used today

- Disadvantages: + It takes effort to combine functional departments with online departments.

Comment