A new star in Damansara

Since its opening in July this year, the 150-room Royale Bintang Damansara hotelhas been enjoying high occupancy rates.

OPENING a new hotel just two doors away from another from the same chain seems to be making good business sense for Boustead Hotels & Resorts Sdn Bhd. The Royale Bintang Damansara has been seeing good occupancy rates since it started operations in July.

Vibrant setting: The Royale Bintang Damansara (above) is sited in a strategic location in the heart of Mutiara Damansara

Built on a two acre site, the Royale Bintang Damansara is the latest addition to Boustead’s chain of hotels. The hotel is nestled in the Mutiara Damansara area and is surrounded by malls such as The Curve and Ikano Power Centre. The new four-star business hotel is tastefully designed with a distinct old- English flavour featuring white walls, narrow corridors and leather furniture.

“The Royale Bintang at The Curve is already 100% occupied. Granted it is a small hotel with only 150 rooms, but we saw a need here and we decided to build another hotel. This time we wanted the whole English ambience,” Boustead Hotels & Resorts director of operations Datuk Mokhtar Khir said.

The Royale Bintang Damansara has its own unique features including an indoor ice skating rink and duplex rooms. Mokhtar was inspired to have a skating rink after a visit to a mall in the Philippines. He said he had initially asked for the skating rink to be opened at The Curve but due to space constraints, the idea was shelved.

Opulent: Mokhtar in one of the duplex rooms at The Royale Bintang Damansara.

“So when we started building this new hotel, we thought why not have our skating rink here. It has never been done before with other hotels in Malaysia and it’s our chance to be a first,” he said laughing.

The skating rink has proven to be a big hit, particularly on weekends. “The skating rink is doing well. It was a good decision to build a skating rink here. Our only regret is that we didn’t build it bigger,” he said, adding that he even contemplated the idea of expanding the rink, but structural pillars stood in his way.

According to Mokhtar, the ice skating rink draws more than 300 visitors a day on weekends. With an entrance fee of RM25 per person, this could mean sales of at least RM7,500 a day for the weekend. But Mokhtar contends that there are a lot less people on a weekday and the cost of running the skating rink is high.

There are about 380 rooms available at Royale Bintang Damansara, with the main draw being the duplex rooms with two floors, a kitchen, hall and dining area.

Growing the hotel operations

Boustead Hotels & Resorts is a wholly owned subsidiary of government-linked conglomerate, Boustead Holdings Bhd. The group’s venture into the hotel and resort line has proven fruitful. Last year, the hotel operations generated revenue of RM109mil, making up 24% of Boustead’s property division revenue of RM449mil.

Boustead, which has businesses in plantation, marine, property development and finance, first entered the hospitality sector in 2003 when the group’s managing director Tan Sri Lodin Wok Kamaruddin took over the Novotel Hotel in Bukit Bintang from the Lion Group. “We got the hotel at a very good price,” Mokhtar said with a hearty laugh, though he declined to reveal the figures.

Boustead decided to start its own hotel chain and went about acquiring the right people and skills to kick-start the new business. Mokhtar was brought in to head the hotel operations in 2003.

He has been in the industry for 40 years, starting out as a front office manager in 1970 in Genting Hotel. Prior to joining Boustead, he climbed up the ranks in various hotel chains including the Faber Merlin Group hotels and Landmarks Bhd, where he helped set up The Andaman Resort and The Datai in Pulau Langkawi as well as oversaw the operation of Carcosa Seri Negara.

Although he is past retirement age, Mokhtar is still a ball of energy as he chatters away enthusiastically about the hotel business. Boustead refurbished its hotel in Bukit Bintang and started on The Royale Bintang The Curve located in the Boustead group’s development project in Mutiara Damansara.

The group then expanded into the resort and spa business in Seremban. Mokhtar is proud to point out that the Royale Bintang Resort and Spa Seremban is running profitably. The Royale Bintang chain currently has five hotels in its stable, including the Royale Bintang Chulan Kuala Lumpur.

“All our hotels have very good occupancy rates. The Curve sometimes sees 100% occupancy and the Damansara and Chulan hotels are at 80% occupancy,” Mokhtar said, noting that on average, occupancy for all its hotels is about 70%. What is important for a hotel is the location and of course its facilities. So being accessible and surrounded by malls certainly helps with business,” Mokhtar said the chain’s success.

Boustead is also in the midst of completing its hotel in Penang, which is expected to open by the middle of next year, and its luxury holiday villas in Cherating, which will be ready in two years time.

Moving forward, Mokhtar said Boustead hopes to move more into managing smaller hotels. Apart from its own hotels, the company is currently managing The Royale Aryani Resort in Terengganu.

“We have received a lot of enquiries from other hotels for us to come in and manage the place for them. But we are thinking more of creating a new segment for ourselves where we manage three-star inns. We can call them the Royale Inns,” he says. “I think we will do well with that as long as we have good ambience, food, service and it is clean. Ideally, we would like to have a unit in every state,” Mokhtar added.

Working around the industry’s quirks

Mokhtar describes the local hotel industry as strange. He said competition is stiff. With more hotels coming into the market, room rates have seen a big drop.

He explained that an average five-star hotel room in another country can easily costf US$300 (RM900) a night. However, in Malaysia, the average room rate for a five-star hotel is US$100 (RM300) per night. Nonetheless, he noted that there is no over-supply of hotel rooms in Malaysia.

“So it is very strange. Occupancy rates are usually good because we have different tourist seasons and conventions going on that will bring in the visitors. And yet, room rates are so low. It is quite a puzzling market,” he said. But low room rates have not stopped hotel developers from pursuing their business plans even though that would mean taking a longer time to recoup their heavy investment.

On average, Mokhtar estimates that it takes about 15 years for hotel developers to make back their money. While returns on their investments can take a while, hotel developers often gain from capital appreciation as their asset’s value, being property based, can see enjoy good growth. “For us, The Royale Bintang chain is doing very well. It is a profitable chain and we have seen good asset value growth. The Bukit Bintang hotel is now worth RM350mil,” Mokhtar said.

-thestar online.

http://www.royalebintangdamansara.com/ppc/index.html