System of Indicators for Evaluating the Efficiency of Travel Business

2.5. Evaluation of travel business performance

The efficiency of tourism business can be understood as the level of demonstrating the ability to use input factors and tourism resources to create and consume a volume of products and services in a certain period of time to meet the needs of tourists at the most reasonable cost, achieve the highest revenue, gain maximum profit and have a positive impact on society and the tourism environment. Including input factors such as technical facilities, production and business capital and labor, natural tourism resources and human tourism resources, revenue from goods and services and finally the cost of labor objects, labor materials, pure labor.

2.5.1. System of indicators to evaluate the effectiveness of travel business

From the perspective of tourism business management, business efficiency is understood as an economic category reflecting the level of use of human and material resources of the enterprise to achieve the highest results in the business process with the lowest total cost. To evaluate the management level of the enterprise, it is necessary to rely on the system of indicators stated below:

- General performance indicators:

Reflects how many currency units are earned for every unit of cost spent, or unit of capital spent on the travel business.

Recipe:

H = D/F

In which: H is the overall efficiency

D is total revenue from travel business F is total cost from travel business

From the above formula, we see that to have effective travel business, H must be greater than 1 and the greater H is than 1, the higher the business efficiency of the enterprise and vice versa.

- Profit target:

This indicator reflects how much profit is brought in for every unit of currency spent or unit of capital spent on travel business.

Recipe:

I = L/F

In which: I is profit

Just like the general efficiency index, the larger I, the higher the business efficiency and vice versa.

- Profit margin index:

Recipe:

L' = L/D

In which: L' is the profit rate

This indicator reflects how many percent of net profit each unit of revenue is. This indicator is used to compare with previous analysis periods, forecast business trends or to compare with businesses in the same industry.

- Average labor productivity index by revenue:

Recipe:

W D = D/LD

In which: W is the average labor productivity according to revenue in the period.

Labor is the average number of workers used during the period.

This indicator reflects how much revenue each employee in the enterprise generates from travel business during the analysis period.

- Cost efficiency assessment criteria:

Recipe:

HF = D/F

The above indicator reflects in the analysis period how much revenue a business earns per dollar of expenses. This indicator needs to be improved in businesses on the basis of expanding business scale, increasing revenue, income,

Ensure that the growth rate of results achieved is faster than the growth rate of costs.

- Total number of visitors:

This indicator reflects the number of tourists participating in tours during the analysis period. This indicator most generally reflects the business performance of the travel agency.

- Average revenue, cost, profit per customer:

Formula: D TB/k = D/KF TB/k = F/KL TB/k = L/K

In which: K is the total number of guests D TB/k is the average revenue per guest F TB/k is the average cost per guest L TB/k is the average profit per guest

- Market share index:

The ability to do business in the tourism market reflects the position of the enterprise. The position of an enterprise is assessed through the market share index of that enterprise. The market share of an enterprise is the portion of the market that the enterprise occupies compared to the tourism market in a certain space and time. Also through this index, managers will plan their business strategies more reasonably and effectively. The market share of an enterprise is determined as follows:

Recipe:

M = (D/D total industry ) x 100 In which:

M is the market share of the enterprise in the analysis period (%)

D is the total revenue from the company's travel business during the analysis period.

D total industry is the total revenue of Vietnam tourism industry in the analysis period

The result of the above calculation allows to evaluate the position of the enterprise, it comprehensively reflects the capacity, level and scale of the enterprise compared to other enterprises in the industry.

2.5.2. Factors affecting the effectiveness of travel business

a. Objective factors

- Customers : for travel businesses, customers are essentially the market. The market of a travel business is a group of tourists who have the need to buy and consume the company's tourism products and services and have the ability to pay. It can be said that customers directly affect the reputation and business efficiency of a travel business.

- Competitors : the level of competition among competitors in the tourism industry as well as other service industries is very high. It is reflected in price wars, promotional campaigns, marketing, and changes in product designs. This has a significant impact on the customer market as well as the business activities of travel agencies.

- Government policies, laws and regulations : the policies and guidelines of the Party and the State have a strong impact on the economic efficiency of businesses in general and especially travel businesses, through factors such as tax policies, credit, and immigration procedures affecting both businesses and tourists. With the characteristics of the travel business, the number of international tourists plays a very important role in the development of businesses. Therefore, travel businesses depend a lot on the open door policy to welcome foreign investment and welcome international tourists to Vietnam. For domestic markets, the policy of encouraging consumption rather than accumulation will have a great impact on tourism demand.

- Seasonality : this is a factor that directly affects the effectiveness of travel business. Seasonality in travel business is closely linked to natural factors such as weather, climate, and tourists' free time. It is an annual repetitive process of travel activities.

- Development of other economic sectors : travel and tourism is an industry that needs the support of many other economic sectors such as post and telecommunications, transportation, aviation, maritime, banking, hotels... The development of travel businesses cannot be independent, it is truly highly effective when other economic sectors grow strong enough to meet the comprehensive needs of the whole society.

b. Subjective factors

- Business capital : it can be said that the effective use of capital directly affects the survival of a business.

- Infrastructure and technical facilities : are means of labor and equipment to serve work requirements. Using reasonable facilities will save costs for businesses. However, technical facilities need to be invested and upgraded continuously, in line with the general development of the whole society and, more importantly, to best serve the production and business activities of the business.

- Service quality : is determined by 3 factors: service staff, service and technical facilities. This is the factor that ensures success for tourism businesses in the fiercely competitive conditions. Customer service is a complex process to meet diverse and increasingly high demands in terms of quality as well as quantity. Improving service quality will increase business costs, but good service quality will be the deciding factor in the volume of products sold, which means it is closely linked to the business's profits.

2.6. Business performance results

2.6.1. Revenue

Table 2.1. Summary table of revenue of Vietravel tourism company, Hai Phong branch in 2015, 2016, 2017.

Unit: 1 billion VND

Year

Total revenue

revenue plan

Total revenue

actual revenue

% refund

plan

Speed of increase

Head of Business

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				actual revenue
2015	116	126.2	108%	-
2016	130	142.6	109%	113%
2017	155	164.4	106%	115%

(Source: Accounting Department of Vietravel tourism company, Hai Phong branch)

The above table not only shows us the company's revenue results in the last 3 years, but also shows us the percentage of revenue plan completion as well as revenue growth rate over the years. The revenue growth rate exceeding the plan is not high but is very stable, which proves that the company has accurately predicted its growth rate as well as made reasonable and effective business plans. In terms of revenue growth rate, it generally increases very steadily over the years and falls between 10 - 15%.

2.6.2. Costs

Table 2.2. Summary table of expenses of Vietravel tourism company, Hai Phong branch in 2015, 2016, 2017.

Unit: 1 billion VND

Year

Total cost	Cost ratio	Cost growth rate
2015	116	91.2%	-
2016	130.2	91.3%	112.2%
2017	149	90.6%	114.4%

(Source: Accounting Department of Vietravel tourism company, Hai Phong branch)

Through the data table, we can see that the total cost of the company in the years has increased and decreased slightly, the cost level is still maintained at a fairly high level. Therefore, setting measures to reduce costs and optimize profits is very necessary for the company in the coming time.

2.6.3. Profit

Table 2.3. Summary table of profits of Vietravel tourism company, Hai Phong branch in 2015, 2016, 2017.

Unit: 1 billion VND

Year			Profit growth rate profit
2015	2016	2017	2015 – 2016	2016 -2017
Profit	10.2	12.4	15.4	121.5%	124.2%
Profit margin/revenue	8.1%	8.7%	9.4%	+0.6%	+0.7%

(Source: Accounting Department of Vietravel tourism company, Hai Phong branch)

Through the above table, we can see that the company's profit growth rate, although not yet having a strong breakthrough, is at a very stable level, which also proves the company's great position in the tourism market in Hai Phong.

2.7. Evaluation of business performance

2.7.1. General performance indicators

Table 2.4. General performance indicators

Target

Unit	2015	2016	2017
D	1 billion dong	126.2	142.6	164.4
F	1 billion dong	116	130.2	149
H	Time	1,088	1,095	1,103

We see that the economic efficiency of each year increases gradually over the years and remains stable. 2017 is the year the company has the best business efficiency when 1 dong of cost spent generates 1,103 dong of revenue.

2.7.2. Profitability indicators

Nowadays, profit indicators are of great interest to managers as well as stakeholders. Because through this indicator, it can reflect whether the company's operations are effective or not, on the other hand, it also reflects the level of effectiveness in using costs in business operations.

Table 2.5. Profitability indicators

Target

Unit

2015

2016

2017

L	1 billion dong	10.2	12.4	15.4
F	1 billion dong	116	130.2	149
I	Time	0.088	0.095	0.103

The company's profit target has increased steadily over the years. This is a good result, proving that the cost usage is reasonable, ensuring revenue and profit.

2.7.3. Some other indicators

* Total number of visitors

Table 2.6. Summary table of the number of visitors of Vietravel tourism company, Hai Phong branch through the years 2015, 2016, 2017.

Unit: number of visitors

Business Block

2015	2016	2017	Growth rate
2015	2016	2017	2015 - 2016	2016 - 2017
Retail customers	5625	6389	6821	113.6%	106.7%
Group guests	10029	11698	13276	116.4%	113.5%
Total number of visitors	15654	18087	20097	115.5%	111.1%

(Source: Sales Department of Vietravel Hai Phong Company)

From the summary table, we can clearly see the steady growth in the number of visitors each year, which clearly reflects the company's business performance as well as the trust from customers in a big brand like Vietravel Hai Phong.

* Some other synthetic indicators

Table 2.7. Summary table of some other evaluation criteria

Target