Hostel operator beds down expansion plan

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Hostel operator beds down expansion plan

By SOMLUCK SRIMALEE 
THE NATION

 

Jeraset Yokdee, director and co-founder Oxo Hotel Chiang Mai Co Ltd and Mama Rich Co Ltd

 

ARCHITECT Jeraset Yokdee, spotting a trend in the hospitality market, branched out into the hostel business with the launch of his Oxotel brand in Chiang Mai three years ago.

 

That decision has paid off for Jeraset, 38, who was running a contracting business when an employee told him about his experiences of travelling overseas.

 

“My employee, who had worked in Australia, spent his one-month holiday travelling abroad,” Jeraset said in explaining the inspiration for his decision to diversify his business into the hostel sector. “When he came back to work, he asked me if I had any interest to get into the hostel business and went on to tell me how hostels were common overseas and that he could see this form of budget accommodation taking hold in Thailand.”

 

Taken with his worker’s suggestion, Jeraset, who graduated with a bachelor’s degree in architecture from Chiang Mai University, decided to look for an appropriate building in the city, which is renowned as one of the top tourist destinations in Thailand. 

 

Jeraset, in an interview with The Nation, said he also drew on his long business experience in the province while researching how to get started on the plan. His ambitions later led to a further diversification into the restaurant business.

 

 Jeraset and six of his friends spent combined savings of Bt10 million to renovate an old building in Chiang Mai and fit it out with six hostel rooms accommodating 34 beds, along with six private rooms. All the guests were required to use shared bathrooms. For this purpose, they established Oxo Hotel Chiang Mai Co Ltd, with registered capital of Bt1 million.

 

For the first year of operation – from December 2015 until the end of 2016 – the hostel enjoyed an average occupancy rate of 85 per cent. Up to 90 per cent of the guests were foreigners holidaying in Chiang Mai, as Thais tend not to like shared bathrooms. The hostel generated an average daily income of Bt18,000.

 

For the second year, Jeraset and his partners spent a further Bt2 million on additional renovations to increase the number of private rooms to 10 and included private bathrooms in order to attract more Thai visitors. They also provided a camper van as an accommodative alternative for guests. Over that time, Chiang Mai saw an increase in the number of hostels, leading to a drop in the occupancy rate to an average of 65 per cent at Oxotel. Average daily income declined to Bt15,000.

 

Faced with high competition in the hostel market, Jeraset and his friends decided to open a restaurant to offset the reduced income from the hostel.

 

“With a hostel, our income is limited according to the number of the rooms, but it’s different with a restaurant,” Jeraset said. “Our potential income with a restaurant has no such limits, as that depends on the number customers and their orders. We were inspired in this thinking by a partner who owns a coffee shop in Chiang Mai and also joined in with Oxotel.”

 

Acting on the restaurant idea, Jeraset and his friends asked around among their friends and raised Bt10 million from 30 of them. This funding enabled them to open a restaurant in Lad Proad 71. Called Kien Kai Ka, the restaurant is operated by a newly established company, Mama Rich Co Ltd, with registered capital Bt4.95 million. Since opening last year, Kien Kai Ka has brought in an average of Bt3 million a month, exceeding that of the hostel business. The restaurant is on a list of establishments recommended by the Michelin Guide Book.

 

Encouraged by the success of the restaurant, Jeraset and his partners opened a second Kiea Kai Ka outlet in Chiang Mai on April 2. They now plan to open a new restaurant each year in provinces popular with tourists.

 

 “We are confident about our plans for a restaurant chain and are looking ahead to a plan to open a branch in Bangkok,” he said.

 

“We believe the restaurant business can double our group income, given the attention we pay to service and quality of the food we serve.

This commitment is the key to our success in both the restaurant and hostel operations.” 

 

Source: http://www.nationmultimedia.com/detail/Corporate/30342665

 

 

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