Here at apaleo, we’re big fans of Dialoog Hotels, a pioneering Indonesian group offering simple sophistication with smart and uncomplicated accommodation, and also our first customer in Asia. Technology plays a key part in their drive for efficiency and simplicity, so we caught up with Eric Faivre, MD, to discuss how the lean business model he developed is now helping them to survive the COVID-19 crisis.
Alan: Hi Eric. Perhaps you can start by telling us about yourself and your background. What brought you from France to Asia?
Eric: Well, I studied at hotel school in my hometown of Strasbourg in France. Then, as part of my compulsory military service, I worked as a butler for a 5-star general, who fought in Vietnam and used to tell me stories of his time in Asia. It inspired me to combine working in hospitality with travel, so I moved to London, where I spent 7 years. From there, I went to Moscow for 2 years, another eye opening and very rewarding experience from a cultural aspect. After that, I joined The Peninsula Hotels and spent several years with them in Beijing, Chicago and Bangkok. In 2004, I relocated to Chiang Mai with GHM Hotels, a really interesting change from the corporate structure at Peninsula to a smaller boutique hotel environment. I then spent a few years as an F&B consultant, working on projects in Beijing and Bangkok, before joining Alila Hotels & Resorts in Indonesia 11 years ago.
A: You were working mostly in F&B until you joined Alila, right?
E: Correct. I joined Alila as General Manager of their Jakarta hotel. I decided to practically ignore the F&B department and took myself out of my comfort zone, focusing on areas like sales and finance to radically impact the bottom line. It was during this time that the Dialoog story began to take shape in my mind.
Alila’s hotels are mainly 5-star properties in places like Bali, charging $300 or more per night. The Jakarta property was a 246 bedroom, 4-star hotel with an average room rate of around $50 per night. Great occupancy, but low margin. I could see that the systems were too complicated, causing too many human errors. I spent the first year getting to understand the business inside out and reviewing systems. I then implemented changes which resulted in a GOP increase from 26% to 42% in 3 years. Rate increased by 40%, occupancy decreased by 20% and EBITDA pretty much doubled over that period, which made the owners very happy.
So Jakarta essentially became a testing ground for this new operational concept the owners of Alila had been considering, which would eventually become Dialoog Hotels. I was able to demonstrate that an efficient and well run 4-star hotel can be very profitable, similar to a 5-star resort and with lower investment costs.A: So you conceived a new brand based upon your learnings at Alila’s 4-star property and created a model that could easily be replicated. Perhaps you can expand on that?
E: I realized that some departments were very inefficient. Take, for example, the reservations office. We had four staff and one supervisor, with manual processes executed daily. Also, with a high staff turnover and the cost of repetitive training, there was too much room for human error. So we began implementing tools to simplify processes and, crucially, provide management with the control and insight we needed to drive the business.
The role of the GM was an important factor too. Naturally, he or she needs to be visible and to interact with guests, but also needs to understand every system in the hotel, in my opinion. That’s why Sena, our GM at the (116-bedroom) Dialoog Banyuwangi Hotel, was so instrumental in the evaluation and implementation of apaleo. I was also heavily involved because I think it’s really important for somebody at the top to take ownership and truly understand the tools that we rely on to analyse and run our business properly.
A: It sounds as if you had freedom to select the best tools for the operation, regardless of any existing solutions in place at Alila?
E: Absolutely. Because of the success in Jakarta, I had full control. It was great to have the shareholder’s trust and to implement new technology instead of better-known legacy systems that would have held us back. We had created a standard in Jakarta and this became our blueprint, but with the flexibility to add modules or change systems as required.
A: Your web site positions Dialoog as “a progressive and technology-savvy brand that understands the modern traveller's need to stay who they are - individual, independent but connected”. How that is reflected in your overall IT strategy?
E: It became clear to me quite early on that many hotels used old-fashioned, expensive and complicated systems that are more of a burden than an asset to the staff. Other industries, such as airlines and retail, are smarter with their use of technology. For example, I found a cost-effective HR tool from the retail industry that does everything we need. And for internal communication, we use Slack, which is not a hotel specific application but serves us very well.
At Dialoog, our IT strategy focuses on systems that are simple to use, affordable and can be easily and quickly trained. Their main purpose is to save time, automate processes, ensure data accuracy and increase overall efficiency. As a small company, I have the luxury of being directly involved in tech decisions and we can be flexible and do thorough research. It also means that we can move quite fast.
Of course, the main technology driver in our company is to allow our staff to do what they do best: deliver great hospitality and cater for our guests. In order to do that, they need to be freed up from time consuming, repetitive tasks that can be better handled by technology.
Regarding apaleo specifically, it was a no brainer. During the research and development for Dialoog, there were a couple of interesting findings I made. First, a lot of hotels don’t always know what they really need to run the business and tend not to place enough value on efficiency and simplicity. They overcomplicate things. Secondly, you have to choose the right vendor to partner with. It’s really important to work with professionals that understand the client’s business and their product inside out.
A: We talked recently about the impact of COVID-19 on your business and you seem to have created a model that is very well positioned to ride out this crisis. Can you tell us more about that?
E: We are probably the least affected in our competitor set by COVID-19, mainly because we operate a lean model with a very healthy bottom line. Now, in a time of crisis, we are able to limit the damage accordingly. We can reach breakeven point and stay open with a much lower level of occupancy. That said, we never stop trying to improve and we keep reviewing our tools, looking for ways to be even more efficient and to maintain competitive advantage. This is so crucial in an industry that can be impacted by a crisis at any time.
A: And you’re still open today, right? Do you plan to stay open throughout the crisis?
E: Yes, we plan to stay open, but if we feel that it’s too dangerous from a health perspective, we will close. Even if we do have to close for a while, it will not be a huge issue for us.
A: Fingers crossed! You mentioned that you don’t pretend to have the perfect solution yet and you are still exploring new systems for some areas of your hotel. Any particular learnings from the first hotel that you will apply to the next one?
We’ve learnt a tremendous amount. The first thing is that you can never be too prepared! Opening the first hotel is inevitably more difficult than the second, third or fourth, so we expect it to be an easier ride with the next properties, because we have created a Dialoog standard and fine-tuned it in the process.
I must say, though, as important as concept, SOPs and technology are, what’s really crucial is to hire the right talent and to train them efficiently on the platforms so that they fully embrace our philosophy. Because we run a smaller team, they have to be good at multitasking and the technology they use needs to support that. We are recruiting talent with a hotel background, but also from outside the industry, so it has to be easy for them to understand.
A: Are there any challenges you’ve come across that you feel have not yet been adequately addressed by technology?
E: I still think the industry in general has a lot to improve on in the area of check-in. It’s often too complicated. There is some good technology available now, but it needs to be implemented properly. It’s when you get that combination of human touch and technology just right that you really deliver a great guest experience.
Another area that needs improving is communication between the guest and hotel staff. I think the traditional reception desk is a bit old-fashioned these days. Surely, with the technology available today, it should be possible for the guest to communicate easily with staff without having to go to the desk?
Of course, both of these examples will become more relevant because of coronavirus and the demand for a contactless experience.
Uli: Eric, when you look outside your own brand, are there any comparable concepts around the world that you think are doing it well and that come close to your vision in terms of what the hotel group of the future should look like?
E: I do like what citizenM and YOTEL are doing. They’re very clear about what their market is. I also like The Hoxton.
Here in Indonesia, with the quality of people that we have, and having analyzed the challenges the industry is facing, I felt there was an exciting opportunity to develop a lifestyle and design led hotel brand, using technology to help staff deliver to our standards.
In a nutshell: talent with an ingrained hospitality culture using simple and efficient technology. I see our brand sitting somewhere between the fully automated hotels and more traditional properties with personalized service.
A: Eric, thanks so much for taking the time to chat with us.
Posted byAlan O'Riordan