Enterprise
Sun Inns building a strong brand
Calyn Yap 
Ng says investing in technology will help increase efficiency and cut costs
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Despite rising costs and increasing regulations, Sun Inns Hotel Group is determined to make the best of it by ensuring efficiency in its operations and cutting down on waste.

Its director Ng Hong Keat says the company will make improvements at the front desks, by installing self-service machines for guests to check-in and collect room keys as well as to check-out.

At the moment, it is still vetting the technology available in the market but is looking to implement the plan within the next few years due to compatibility with existing systems.

“All of our front office systems are already computerised, but we want to ensure there’s a proper link between the check-in systems and these front office systems. There are already some hotels that have such facilities,” Ng tells FocusM.

The move is part of its technology drive, as the company already has centralised control for front office and audit systems as well as CCTV.

One of the largest budget hotel groups in the country, Sun Inns Hotel has more than 20 one- and two-star hotels in the Klang Valley and several other states. Some 70-80% of its guests are locals, followed by Singaporeans and Indonesians.

It wants to open more hotels in key cities at home through partnerships with like-minded associates, leveraging on its franchise programme. The hotel chain successfully registered with the Domestic Trade, Cooperatives and Consumerism Ministry in 2013 to attain its position as a licensed franchisor.

At present, it has six franchisees, but Ng stresses it is stringent in its selection of such partners. It is also considering overseas investments in a few Asean countries, but the plan is still in the early stage.

“They have to realise their business objectives; it’s not about collecting fees. We have an obligation to ensure the good name of Sun Inns Hotel is maintained,” he opines.

 

Tackling costs

Budget hotels have also had to “tighten their belts”, which Sun Inns Hotel does by implementing a monitoring system for detailed cost control.

“We have a monitoring system for electricity and water consumption per room, per night. Then we dive into detailed cost control to make ends meet,” Ng explains.

With an average of 50 rooms per hotel and 12 to 15 staff on average working in its centralised structure, Sun Inns Hotel is able to minimise the staff requirement, depending on the size and location of the hotel.

This centralised structure consists of an internal engineering and maintenance department as well as a finance department, which cuts down, for example, the necessity of deploying maintenance workers at each hotel.

“All our hotels are designed internally. We come up with the plans and amendments and this is crucial because a lot of budget hotels are constructed within existing buildings. We have to design based on the building’s condition and restrictions, which is why we need a complete team for maintenance, engineering and interior design input,” he says.

The group sells about 10,000 room nights through online travel agencies (OTAs) and marketplaces such as Booking.com and Agoda, which form 60% to 80% of its bookings. On average, the company sells 17,000 to 20,000 room nights, with a portion sold through franchisees and cooperatives.

“We have an aggressive marketing and e-commerce sales team of more than 10 people working round the clock to lock in sales. Our internet and e-commerce sales have increased from less than 5% a decade ago to more than 50% now,” Ng shares.

Active management of its digital presence, including responding to tourist queries and feedback, is also a key focus.

At the same time, it has invested in better facilities, design and quality amenities to attract guests and stay ahead of the competition.

“Room facilities and amenities in Sun Inns hotels are comparable to those at three-star hotels, such as good quality beds and linens. The main difference is the lack of space available as we can’t afford to provide guests with similar sizes for the type of room rates we’re charging,” he adds.

Its hotels also provide welcome drink, free breakfast, airport transport options and discounts for tourism packages.

Sun Inns Hotel D’Mind 2 in Seri Kembangan, Selangor, is equipped with various facilities for its guests


Highlighting challenges

One of the main challenges in the hospitality industry, especially for hotels, is manpower.

The industry average is about one staff to four rooms but it is difficult to even meet this minimum requirement.

“The biggest cost is human resource, followed by rental and property cost, utility and then the rest of it.

“We can’t find suitable human resource in the industry to run our housekeeping or even the front office, which is why we’re forced to resort to foreigners.

“After you throw in the levy and permit, among other costs, the recruitment for one foreign worker would cost around RM5,000 to RM6,000,” Ng laments.

To make matters worse, the lack of suitable local talent also necessitates intensive continuous training. The shortage results in job hopping from one hotel to another, even at the senior management level.

Budget hotel chains like Sun Inns Hotel are able to pay them RM4,000 to RM5,000 and have to invest in training, but Ng admits this is the norm.

Another challenge is overcoming the language barrier as it is becoming more and more difficult to find employees who are able to speak proper English.

As Sun Inns Hotel is planning for a few new hotels, Ng notes there has been a substantial increase in the cost of renovation, which has gone up by 2.5 times. For some hoteliers, rental of the premises has also increased.

On the back of rising overheads, stiff competition is also eroding profit margins and market share but increasing costs at the same time. Hotels are not able to charge guests more for a one-night stay, which indirectly contributes to higher operating costs as well.

“The intense competition has resulted in more comfy rooms with better conceptual designs and service, so guests are ultimately the winners,” says Ng.

“It has also led to an increase in operating costs, apart from rising electricity bills. For example, towels that cost RM12 three to four years ago, now cost RM16 or more now.”

The tourism tax, which was implemented on Sept 1, 2017 after the passing of the Tourism Tax Bill 2017, has also impacted the industry negatively. Foreigners are charged a flat rate of RM10 per room per night, regardless of the hotel’s classification.

This led to a further slowdown in business for SME budget hotels last year. Ng is also anticipating new taxes this year that would further impact the hotel industry.

Growing to 20 hotels in 20 years

While it has more than 20 hotels now, Sun Inns Hotel Group started from humble beginnings with its first hotel established in 1997 in Bandar Sunway, Petaling Jaya. The aim was to tap into the increasing demand from tourists, businessmen and families visiting the fast-growing township at the time.

During the Asian financial crisis in 1997, Sun Inns Hotel director Ng Hong Keat – along with his four co-founders – was looking at hotels as a possible business venture.

“The five of us were engineers and we didn’t have the know-how to run a hotel, but it was with the good intention to maintain jobs for our staff,” he shares.

Sun Inns Hotel has grown organically by channelling the profit generated every year to its expansion plans. At the same time, it invests in additional facilities, such as food and beverage components and laundry services, as well as clinics.

“We’re slowly upgrading our laundry services and it’s not easy because we have to familiarise ourselves with the business. We also ventured into six clinics; hopefully we can establish new products for medical tourism,” says Ng.



This article first appeared in Focus Malaysia Issue 270.