Aman Resorts
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9-111-012 REV: APRIL 9 , 2011 EUGEN E SOLTES ALDO SESIA JR. Aman Resorts You admit you are an “Amannjunkie.” You have been to seven of the twenty-four Amman Resorts and are headinng to your eighth—and for good reason. Since 1988, when the flagsship Amanpuri opened in Phuket, Thailand, Aman has opened propeerties across fourteen countries ranging from the Himalayan peaks of Bhutan to the crystal blue waters of Turks and Caicos. Each time you visited an Aman, you were struck bby the individuality of the property, while at the same time taking comfort in the common elements that characterize them all—a beautifuul natural location, outstandinng facilities, and exceptional service. Your flight just landed a few minutes ago at the airport in Denpasar, in Bali, Indonesia. A young man quickly ushers you past the chaotic immigration line with a simmple nod to the customs officer. Outside the air is warm and you are led to a white SUV where your driver greets you with the traditional Sanskrit salutation of ‘namaste’. Your driver introduces himself as Suarsa and offers you a cool white towel and a bottle of sparkling water. He informs you that the drive to Amandari will take approximately two hours. As you pull away from the bustlinng airport lot, Suarsa inquires about your journey and ooffers some background on the resort. You learn that Suarsa grew up in a village adjacent to Amandari and has been workinng at the resort since it opened 20 years aago. Ass your drive continues, Suarsa notices a marked increase in your energgy and suggests you might enjoy a longer, but more scenic route through the countryside which passes by ruins dating back to the eleventh centurry. From your conversation, Suarsa also detects your keen interest in crafts and suggests a visit to a renowned woodcarver in one of the more rural villages along the way. As he drives, Suarsa points out things of interest—the statues of holy deities and the colorful bamboo poles, called penjors, which line the roadside to express gratitude for the recent successful harvest. Ass you pull into the impeccably maintained grounds of Amandari, you see three people waiting to greet you including Liv, the geeneral manager, and two guest assistants, Asrami and Ayu. Asrami escorts you to your private villa to complete your check-in. As you pass by the restaurant, she notes that “dinner is served on the patio from seven until eleven in the eveninng, but naturally that’s flexible.” Arriving at your villa, Asrami pooints out the amenities, which are simple but many. The thatched rooof, the vases of freshly picked jasmine flowers, and the basket of local fruit and freshly baked cookies all catch your attention with delighht (Exhibit 1). ________________________________________________________________________________________________________________ Professor Eugene Soltes and Senior Researcher Aldo Sesia Jr. of the Global Research Group prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2010, 2011 President and Fellows of Harvard Colleege. To order copies or request permission to reproduce materials, call 1-800-545- 7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. This document is authorized for use only by Lorie Loeb ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. 111-012 Aman Resorts Only a few minutes later, you are lying on the large cream-colored day bed on the spacious outdoor terrace listening to the slow rhythmic chant of the insects from the surrounding forest. As you page through the activities book deciding what might interest you for the following day- perhaps a hike through the countryside or a visit to the market and private cooking class with the executive chef- you begin to get thirsty. You check the small refrigerator tucked discretely into an elegant teak cabinet and find it entirely stocked with your favorite beverage. You smile as you recall how you mentioned your favorite drink to the guest assistant, Aurosman, while visiting another Aman property years ago. Since then, you’ve always discovered the refrigerator filled with the drink upon arrival at any Aman. As night falls, you walk to the restaurant where the host greets you by name. In the distance, you hear traditional Balinese music being played on a bamboo rindik. As you gaze over the menu, the server notes that the chef would be delighted to prepare another dish if you are in the mood for something not on the menu. After completing your skillfully prepared, but simple meal, you stand up to leave without needing to sign a check. As you walk back to your room along a pathway illuminated by candlelight, you arrive back in the room to see your purchases from earlier in the day already delicately wrapped up and ready to be brought home. You also notice Aman’s version of a turn down service treat on your bed- an intricate handmade figure with a handwritten note describing its significance to the Balinese. As you fall asleep, you are already eagerly looking forward to the day ahead. The Aman Story Aman (“peace” in Sanskrit) Resorts was the creation of Adrian Zecha. Born in 1933, Zecha had a privileged childhood. By his early twenties, Zecha found his niche as a journalist for United Press International and later Time magazine. In 1961, Zecha launched Asia magazine, which was partly funded by an equally ambitious young Australian newspaperman named Rupert Murdoch. By the 1970s Zecha found himself in a new line of business: hotel management. He co-founded Regent International Hotels, which was one of Asia’s early luxury hotel groups. In 1986, the 53-year- old Zecha sold his 30% stake for $30 million.1 The Beginning and Growth of Aman Soon thereafter, the energetic Zecha began searching for a secluded piece of property where he could build a holiday home. When Zecha came across a sheltered bay near Phuket’s Pansea Beach in Thailand, he was immediately enthralled. Zecha, however, soon discovered that “the cost of bringing in water would have to be shared so the solution would be additional villas for friends. Since my friends were spread across Asia, Europe, and America, it seemed like common sense to build a small hotel that could look after these villas and would be the center of a shared social life.”2 He contacted Edward Tuttle, a Paris-based American architect who had previously designed residences for Zecha in Bali and Hong Kong. Tuttle hopped on a flight to Thailand to examine the site and was also struck by the spectacular views of the Andaman Sea. Zecha and Tuttle quickly got to work designing plans for the site. “Working with my friend of fifteen years” Zecha noted, “we didn’t sit across from each other at a conference table trying to design something the market was asking for—the market didn’t know it wanted something new until it saw it. Our goal was simply to build something that we each would like to live in.”3 Zecha and Tuttle reached similar conclusions about the design of the property: They should build a small unconventional hotel without the typical commercial trappings. Tuttle fondly recalled that “aesthetically, Adrian and I think alike. We wanted the hotel to express an attitude that was far from the commercial approach that was typical in the high-end hotel industry.” The hotel sought to 2 This document is authorized for use only by Lorie Loeb ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies. Aman Resorts 111-012 incorporate traditional Thai architecture with the comforts of a contemporary lifestyle.4 Thai banks refused to finance the project so Zecha and a private equity firm, co-founded by a friend, invested $5 million to buy the property and build the resort. Zecha and Tuttle insisted on using simple, durable, and, most importantly, local materials. Amanpuri (“place of peace”), opened in 1988, with 40 Thai-style bungalows averaging 1,200 square feet each. At the time, the daily rate for a pavilion room during the high season was an unheard of $300. Two restaurants served Thai and Italian food and amenities included a swimming pool, and tennis courts. A 55-foot boat, Amanpuri I, was also available for charter for an additional $720 a day.5 Although Zecha did not have plans to create a set of resorts when ground broke on Amanpuri, a year later he opened a second resort, in Bali, Indonesia, well before any other high-end hotels had entered the inland market. He named the 30-room property Amandari (‘peaceful spirits’). Nestled in central Bali, high above a river gorge and surrounded by rice paddies and forests, Amandari was built to replicate a traditional Balinese village. By 2000, there were 11 Aman resorts—five in Indonesia, one each in Thailand, French Polynesia, France, Morocco, the Philippines, and the United States. Aman Resorts was the envy of the hospitality industry with a gross margin that was widely believed to be among the highest, if not the highest, in the entire industry.6 Following the Bali nightclub bombing in October 2002 and the outbreak of severe acute respiratory syndrome (SARS), there was a severe leisure tourism downturn in Asia which affected the occupancy rate at several Aman properties.