Case Study - Barun Hotel
My father continually goes back and forth between the United States and Nepal to help my 80-year-old grandmother manage the small hotel that she owns. She has been running the hotel for about 30 years. However, the hotel was a distressed business, and it was on the path towards bankruptcy. On top of that, my grandmother was going through medical illness. For about three years, my father and I always chatted on the phone while he was in Nepal. He knows that I have multiple degrees in business would ask for my advice to improve the hotel, but during those three years, the news kept getting worst.
During January of 2016, the situation was so bad that my father told me that I might have to come to Nepal. It was a now or never case, and I felt that I had a moral obligation to help my grandmother. So I booked a plane ticket right away and left my house the next day.
When I got to Nepal, the situation was worse than I had expected. I felt like a captain of a ship in the middle of the ocean, where the ship had a giant hole on the bottom of the ship, and the engine was broken, and my job was to direct it towards land safely. I went to work right away. For the first three days, I chatted with employees, customers, and neighbors to get as much information as possible. The employees were very unmotivated. They despised me. Customers, employees, and even the manager were stealing from the hotel. The hotel almost had a reputation that things were free. Further, the hotel was also struggling to make loan payments to the bank.
To gain control, I decided to have full access to the hotel's financials. I created financial statements on my laptop, and every penny that left and came to the hotel went through me. I also fired the manager because I found that he was using the hotel as his piggy bank. Having access to the money supply helped me monitor the hotel's financial health and allowed me to create incentives for the employees. Where I gave weekly bonuses to employees who behaved well and worked hard. This helped me with the operations of the hotel.
The culture of the hotel slowly improved during the first week, but there was a lot more to be done. Every day, I woke up at 4:00 A.M. and worked until 11:00 P.M. for the four months that I stayed in Nepal. To help me manage the hotel, I promoted one of the waiters to assistant manager, whose name was Narbadhur Rai. He was a lifesaver for me because he knew the hotel inside out, and he was one tough guy. I told Narbadhur, your biggest goal is to make sure every customer that steps in this hotel is to be treated like a boss. Every day, we reinforced this concept. We also had to let go of a few employees that didn't shape up, which was tough for me. It broke my heart to fire someone, but it had to be done. Few employees not being part of the hotel; we had to be more efficient and effective. We never hired new employees, which saved us money to make a loan payment.
Further, we tried to maximize profit by only buying the needed supplies and tweaking many of the operational aspects of the hotel. For the next four months, we swam as fast as we could to reshape the culture of the hotel. During the end of April, the hotel was up and running and profitable by a wide margin. The hotel was in an excellent position to rerun the course. I promoted Narbadhur as the head manager, and I decided to come back to the United States to finish my degrees. My grandma was very sad about the fact that I was leaving, but I hope she was proud of me. Her health also started to get better with time, where she is now more involved.
All in all, the thing I was proudest of was what I had learned. I learned that the art of business was not only in increasing revenue but also in reducing expenses. Further, I learned that the culture of the company was essential. Without an ethical business culture, the business is likely to fail. I was lucky that things went as well as it did. However, I still have something to worry about because the clock is always ticking. Below are some before and after pictures.
General Partner
Rojan Shrestha
