Hotel industry seen as shifting to three-star property

Hotel industry seen as shifting to three-star property

By Vincent Lingga

Karl Linus Waelti a Swiss national with more than 33 years of
experience in hotel management around the world, including
Indonesia in the late 1970s, projects the future trend in
Indonesia's hotel industry in an interview with The Jakarta Post.

JAKARTA (JP): Karl Linus Waelti, President of PT Qualita Pelangi, a
hotel management company which holds the master franchise of Choice
Hotels International of the United States for Indonesia, is not greatly
impressed by the mushrooming of deluxe hotels in Jakarta.

He, instead, foresees a strong move toward the development of
three-star, economical accommodation facilities throughout
Indonesia.

Waelti's main argument is that as the country's economy grows,
the middle-class expands and more highways are built, the
lifestyle of many people will begin to change and long distance
car travel will become increasingly popular.

Below are salient excerpts from the interview:

Question: Why the trend toward three-star accommodation?

Answer: The biggest source of tourists in Indonesia in the
future will be Indonesia itself. Assuming that a mere 10 percent
of the people (about 190 million) become middle-class, that will
be a huge market. Next come the other Asian countries which will
form the second largest supplier of tourists to Indonesia.

All Asians are tough bargain hunters and are budget driven
tourists, with the exception of the few in the top income
bracket. Even tourists from the developed nations have become
increasingly budget conscious. They don't want to pay for what
they don't use. You may also have noticed that most airlines have
sharply reduced or torn down their first-class sections.

Why, for example, pay US$200 for a room if you can get it for $80
with the same comfort but minus the crystal chandeliers in the
magnificent marble lobby? You don't want to pay more for the
rooms simply because the hotel lobby is so magnificent as to
account for a big portion of the hotel's total construction cost.
You want value for your money.

So I think the future is for three-star hotels (with rates of
between US$50-$80) or even lower, but with comfortable nice
rooms.

Hence, our business goal outside Jakarta is to manage 40
three-star hotels within the next few years. We now manage three,
one in Anyer, West Java and two in Bali. Four are hotels under
construction and nine more in the final stage of negotiations
with investors.

We will have an advantage in a global reservation system because our
franchiser has over 3,000 hotels bearing the Choice brand around
the world, including 70 in the Asia- Pacific region.

Q: It seems that economical hotels in Indonesia also have
lower quality management. Is this analog simply natural? How do
you plan, develop and manage three-star hotels?

A:First of all, you should do the fundamentals-- select the
site, study the potential customers and consult with the
architect. The timing is also crucial. Then the financial success
of a hotel project depends largely on construction costs. The
rule of thumb here is that the achievable room rate should be
calculated along with the construction costs. For example, if the
hotel construction costs $30,000 per room, the room rate should
be a minimum of $36. The generally accepted ratio is every $1,000
in construction cost per room equals $1 in room rate.

Operation management is the next crucial element. Many businessmen
profess the wrong perception that smaller hotels need lower-
quality management. There is actually no difference between
deluxe and economical hotels regarding the quality of management.
The only difference is the structure of the organization and the
combination of the various job functions. But for sure, big and
small hotels need the same high quality professional management.

In a small hotel with just 50 rooms, for example, the general manager
may function simultaneously as the sales, public relations and
purchasing manager. But his managerial skills should not be lower than
those in charge of bigger properties.

Q: Experience at many hotels show look as if the hotels hire
the wrong people. Since hotels are part of the hospitality or
service industry, how do you go about recruitment?

A: Yes, recruitment is another vital component for successful
hotel management. Here we talk about the intangible element of
hotel operations, to differentiate it from the tangible ones--
building, architecture and interior design etc. But the
intangible element-- service-- is the most crucial. Guests often
complain about slow service, bad food and the indifferent
attitude of room boys but very rarely about the size of the
furniture in the lobby.

The intangible element depends on the employees. Many often do
not realize that the service business depends on two factors: The
system (organization, job description and procedures) and what I
call the "conviviality" of the staff. This requires people who
are friendly, obliging, attentive and willing to please.

So what a hotel really needs is feelers rather than thinkers. For the
thinker, everything should be logic. For him one plus one must be
two. But for the feeler one plus one could be three, if the guest
says so, and look happy about it. They want to make you happy,
that is all. Hence, aptitude tests should be thorough, because
not all skilled people are fit for the hotel business. Waiters,
receptionists and others who are in direct contact with the
guests are the front-line staff whose performance counts a great
deal in creating customer satisfaction.

I like to compare a hotel to a football team in the United States.
The rank and file employees are the players (the service champions), the
supervisors (department heads) are the coaches, the managers are the
cheerleaders and the general chairman is the facilitator.

Window A: Hotels need more feelers than thinkers.

Window B: Three-star and deluxe hotels need the same high quality of
professional management.