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21 May, 2001

Thai Resort Club, Bought by German Bank, Faces Overhaul

An old 235-room holiday club in Pranburi, set up originally for the German market, has been partially bought by the Deutsche Bank and is undergoing a 300 million baht retrofit to join the growing range of classy resort properties in Thailand.

The old Club Aldiana Siam is due to open in November as the Evason Hua Hin, the eighth in a growing group being developed under the management of Six Senses Hotels and Resorts by its Chairman & CEO Sonu Shivdasani, 35, an Oxford-educated British businessman.

Through its real estate unit, Deutsche Bank owns 49% of the Hua Hin property as well as 20% of Six Senses Mauritius, a management company. It is expected to be a major partner for Mr Shivdasani as he seeks to expand into Asian resorts by picking up under-performing assets at distressed prices. A holding company for Mr Shivdasani’s diverse investment portfolio is registered in the British Virgin Islands.

The Hua Hin property is the group’s third in Thailand, after the D’Ma Pavilion in Bangkok with which it first got involved in 1991, and the former Phuket Island Resort, which came under Six Senses’ management last May and is to be closed down soon to be renovated and reopened as the Evason Phuket. The group has two properties in the Maldives, one of which enjoys an average room rate of US$ 400 a night, and resorts in Singapore and Vietnam. It also has the land for a property in Samui.

The Evason brand is a combination of ‘Sonu” and his wife Eva, the group’s creative director. The luxury market product, Soneva, is the brand-name in reverse. Mr Shivdasani says he spends about four months a year in Bangkok.

The Hua Hin property is being totally overhauled to include 40 deluxe villas with a small private pool, and 160 suites and rooms. These, along with all public and function areas, are being renovated with elegant interior decoration, art and furniture.

Mr Shivdasani says the target market is going to be health-seekers, families and other holiday-makers fond of the sea and sand. The Maldives properties have a high repeat and referral clientele, an important source of cross-selling business for the Thailand properties.

Tour operators say the Evason Hua Hin should sell well, especially in view of the wholesaler-friendly rates and policies being put into place.

However, some major challenges lie ahead.Club Aldiana was developed by the German tour operator Neckermann primarily to cater to its German-speaking clients. Based on the Club Med commune-type of holidays popular at the time, it was the group’s first property outside Europe. A joint venture between the Thai land-owner, Neckermann and some smaller investors, it fully opened in 1989 on a 30-year lease, with an option to renew for 10 more.

The concept never caught on. While other Club Aldianas in Spain, the Canary Islands, etc., were just a few hours’ flight away, Bangkok was a good 10 hours by air plus another gruelling five hours or so in those days before the current dual-carriageway highway was developed.

As everything had been designed for the Germans, everything was in German. When efforts were made to diversify the market and bring in a more international clientele, the Germans stayed away. Hua Hin, too, did not have the high ‘branding’ advantage of Samui and Phuket and events like the 1990-91 Gulf crisis and 1997 Asian economic crisis did not help either.

The place, including land and buildings,was eventually sold for 201 million baht to the Six Senses/Deutsche Bank group. Today, Hua Hin is much better known, and the highway has vastly improved accessibility.

While other upmarket beach resorts world-wide often boast a private, secluded beachfront, a critical component of the high-yield repeat business that Mr Shivdasani hopes to attract, the Evason Hua Hin has a public dirt road running right in front of it, which is bound to soon attract vendors.

While that will be good for the national policy of “distributing income to the local people,” vendors are not known for being either environmentally friendly or well-organised. The resulting mess may not go down too well with people paying up to 12,000 baht a night for a pool villa, the opportunity to “interact with the local people” notwithstanding.

Neither community relations nor environmental protection measures were addressed in the media briefing organised by the group last week. Both may be just as critical to the resort’s success as its marketing strategies.

The resort is also roughly 20 minutes drive from Hua Hin, not as convenient as downtown properties for a night of shopping, dinner or enjoyment of local sights and sounds. Within the resort, one major flaw of the original Club Aldiana design was that only a few of the villas have a sea-view. Not much can be done about this, short of rebuilding the entire place from scratch.

Indeed, as Hua Hin gains more fame on the world-wide tourism circuit, more international brand-names are entering that resort, like Hilton and Hyatt, adding to those already long there, like Accor. Battling these ‘big boys,’ their distribution networks, alliances and reservation systems is going to take some doing.

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