I am writing now a few articles about some serious
challenges a consultant or manager might face sometimes. Out of respect, and to
be professional, I will not mention any names.
I hope that this and upcoming articles will inspire and
help other hotel owners and investors somehow when planning to build and
operate a hotel or resort.
Article 1 – Challenges
with some Hotel Owners and some Hotel Developments
Ones I was asked to work and support a hotel owner in the
northern part of Thailand who worked on a medium sizes resort. At first the owner was very kind,
understanding and admitted that he does not have any experience on how to open
and operate successfully his resort. At this stage the hotel was about 2 month
prior opening – in his opinion! He
talked a lot about the importance of people and always repeated to me how kind and
generous he is to local people. He mentioned that he donates ones a year about
us$ 15,000 to the poor people of northern Thailand. These donations make him feel
good he said!
When visiting his resort the first time, my first
impression was that this resort could become one of the leading resorts in the
north! The words “unique”, “cute”, “spacious” and “high potential 5-star” did
come to my mind.
After walking around and inspecting the resort, I however
discovered serious flaws as follows:
·
There was not one single office in the whole resort,
with the exception of one small room behind the reception. The owner proudly pointed
out that this is his office which he will be use to run the resort.
Unbelievable, but no other office did exist. No Accounting, No Human Resources,
etc. etc.
·
There was no Staff restaurant (Canteen) and no
staff lockers.
·
Not
one single store did exist or was planned for such as for dry-foods,
Housekeeping, General Store, Chemicals etc.
·
No
maid stations at all despite the size of the resort and its areas
·
Etc.
When talking to him about employees which he will need to
hire, and mentioning that those employees will also need to be trained well as
we wants to be a 5-star resort, he totally ignored this subject only saying
that employees at the area are easy to find and very cheap as there are lots of
remote hill-tribe people who wants to work.
I also found out some of this rules have been as follows…
·
Employees should NOT have any day off during the
119 days probation period.
·
All future Managers (including Sales and
Marketing) should NOT have a name card during the probation period as they
might leave and he might lose money.
·
Employees at his companies do not receive a
minimum wage as per law of Thailand as the poor people work for less without
complaining!
·
Employees at his companies do not any receive
any benefits as per law of Thailand.
When pointing at about 20
people I did observe sitting in the grass since several hours, he mentioned
that this will be once the hotel staff and now they have nothing to do as the
hotel is not really ready. I hinted that some basic training can already be done
or even some basic team-building exercises such as sport or games might be good
to raise the moral of this obviously bored looking people, he mentioned, “I
don’t want them to come here and enjoy, I want them to work as I pay them a
salary…..”
I started to understand soon
why he feels the urge to donate yearly a very small amount of money to others
since he took so much from his employees!
Another discovery later on was
that employees at his main business factory are not allowed to leave his
factory compound during on meals and break times since he already provides a
small employee canteen where he charges his employees for any meals as per
market price (not cost price!)
Next I mentioned to this person that the resort will
surly need some experienced employees such as Department Heads (Food and
Beverage Manager, Housekeeping, Human Resources etc)! He replied as follows:
·
My gardener from the construction team will be
the Executive Housekeeper! He knows well how to clean and how to make-up a
bed…..
·
Human Resource will be a friend of him as this
person is also the relative of the local police chief which will solve all
staff issues.
·
Chief engineer will be a member of the current
construction team. (This person was also introduced to me. He was obviously very drunk with a ‘Rambo” behavior
and guess what? ….. He was only working at constructions – before this, the future Chief Engineer did logging in the
mountains)
·
Sales and Marketing is second priority for him
as his resort is so nice and guest will come anyway … so he thought.
When inspecting all M&E of the resort I found out
that there are no construction drawings (blue-prints) for this resort at all, even
before the opening, nobody could really remember where electric cables and
water pipes are placed at in the ground etc. There was no proper drainage to
address the sub-tropical rains, nothing…..
First I did feel very sorry for this owner/investor and
tried hard to give best advice, but it soon turned out that this owner was very
over-confident and he strongly believed that he has a top 5-star resort where
he can charge above us$ 300 average rate and where the guests will come
automatically.
Right now this particular owner tries very hard to sell
his resort without success. His average room rate is us$ 30 and the occupancy
is around 10%.
What seems to be a future leading 5-star hotel turned out to
be a nightmare just because the owner without any hotel experience did not
believe others at all! He did not trust his consultants, his managers and he
also did not believe in having a management company as recommended. He thought that he can be the perfect hotel
manager himself.
For me, it is very sad to see a nice idea and hotel to be
such a failure just because of the over-confidence and the high ego of an
individual. In the end it is the owners own money and investment, but I feel
sad that a potential 5-star boutique resort turned out to be a struggling 2
star resort with a few sad looking staff and few guests.
Klaus R. Rauter
Gentlepeople,
Maybe this is just me, but places like this represent an excellent investment opportunity. The previous owner neglected so much obvious details of the business that I dare to believe this place has a lot of upward potential.
Let me know what you think?
When first reading the article, I assumed, perhaps incorrectly that the owner was not a Thai national. After reading the last comment I realize I may have been mistaken and the owner is Thai. If that is indeed the case, I certainly agree with Dawn’s comments.
Sadly, training at what should be top travel destinations in Thailand – and throughout the region is often lacking. In some cases even when the need for training is accepted, the hotel ownership or upper management fail to hire a qualified trainer and/or team of trainers or implement an acceptable in-house training program. Guests who travel from outside of Thailand and are willing to pay $300 a night expect not only a top notch facilities and accommodations but a professional staff which can quickly and easily both understand their needs and requests and take the necessary steps to satisfy them. Failure to address these critical training needs prevents many guests from becoming repeat business for the resort and certainly dramatically decreases business generated from personal recommendations from past guests.
There’s social and cultural history behind this seeming ‘arrogance’. It has to do with the hierarchal relationship of Thais to each other. It is related to wealth/power in their communities, and the pedagogical practices of never challenging authority taught to them from the earliest school years onward.
Thus small biz owners who come from traditional backgrounds (education and provincial communities) with great potential cannot think outside the box of their relationships with others. They cannot receive advice or insight from those who might be ‘lower’ on the socio-economic scale (but higher on intelligence and experience), nor, often, can they tolerate guidance from farang. Now, this isn’t every Thai by any means! But the story is not an uncommon one. Add profoundly racist attitudes toward the hill folk, and you’ve got a potential megalomanic that thankfully, won’t get very far in this modern, competitive environment.
Hi Klause, I came across your post on Linked in. I can empathize with you. Having consulted for many hotels in Thailand. I have been in the EXACT same situation at least 4 times. Ultimately I had to leave the contracts.
Seems that this is the case in our part of the world. When you find a good owner, hold on to them tight with both hands!!!!
best of luck
J. Polito
Dear Klaus,
What a great story but unfortunately this is much more common than most people think. When the arrogance takes control over logic and professionalism, usually results aren’t good.
You cannot play with a resort in a so competitive industry like hospitality and tourism here. I hope others owners learn from this to avoid to do the mistake them self.