Article 1 - Challenges with some Hotel Owners and some Hotel Developments

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.