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KRITTINEE NUTTAVUTHISIT Yaowawit School Kapong The tsunami of December 2004 caused widespread devastation in the southern part of Thailand. The number of newly homeless was staggering: 58,550 homes had been destroyed in the disaster and another 6,824 homes were damaged. In addition, 882 children became orphans.1 The tidal wave swept away more than just lives and properties; it destroyed the hopes of countless people. However, just as these unfortunate victims were sinking under the disastrous repercussions of the tidal wave, they were pulled to safety by many helping hands. One of the benefactors was the Children’s World Academy Foundation, which aims to provide education and living support to needy children between four and eighteen years old. The organization’s founder, Philipp Graf von Hardenberg, established the Yaowawit School Kapong to help the youngest victims of the tsunami. This public welfare boarding school, located in Phang Nga province, has been completely funded by partners and donors from all over the world. Currently about 113 children live and study in its modern and friendly environment. However, a major question looms: For how long can the school continue to financially rely on charitable help? Because of this challenge, from the beginning the school’s planners intended to create projects that offer a practical education for the children and also generate income to cover the costs of running the school. One of these projects is the Yaowawit Lodge, which was developed to serve as the essential income-generating unit and to provide children with practical training in the hospitality business, the most promising job opportunity in this part of Thailand. Because of its unique character as a for-profit unit within a non-profit organization, Yaowawit Lodge must find ways to target niche customers, position itself in the market, and deliver marketing strategies accordingly. Additional challenges it faces include the location, which is far from the popular tourist areas; market perceptions concerning the combination of a primary school and a hotel; and the child labor issue. In the Cloudy Days In the morning under a clear blue sky, the tsunami hit the world by surprise on December 26, 2004. After an earthquake off the Indonesian island of North Sumatra, six provinces on the Andaman coast of southern Thailand were devastated by a massive wave. Thousands suffered the loss of families, friends, and property. As of April 19, 2005, the Thai Ministry of Interior 1 Department of Disaster Prevention and Mitigation, reported in “Economic Impact of Tsunami in Thailand” by the Thailand Development Research Institute, March 2005. Nuttavuthisit of the Sasin Graduate Institute of Business Administration of Chulalongkorn University. Cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. 1 Department of Disaster Prevention and Mitigation estimated that there were 5,395 dead (1,961 Thais, 1,953 foreigners, and 1,481 unidentified) and 2,845 missing. After the disaster, a wide range of help and support poured into the area, including donations of food, money, and medical supplies. The basic humanitarian needs were addressed within days, specifically by Thai public and private sectors. As for the long-term recovery, the government, with support from nongovernmental organizations (NGOs) and the private sector, has continued to help restore livelihoods in the fisheries, tourism, and agricultural industries. However, challenges remain in ensuring sustainable recovery for the vulnerable communities, particularly children, who must bear the long-term effects. The Children’s World Academy Foundation was founded after the tsunami by Graf von Hardenberg, an entrepreneur based in Hamburg, Germany. Its profit and loss account meets international standards and is checked monthly by an independent auditor. The foundation has two aspects: the German-based Stiftung Children’s World Academy (a member of the Donors’ Association for the Promotion of Sciences and Humanities) and the Children’s World Academy Foundation, officially registered in Thailand. The foundation’s main goal is to provide a home, hope, and prospects for the young. Graf von Hardenberg described his vision as follows: After having seen the devastating state of parts of the Andaman coast only some days after the tsunami and spoken to many poor people who were already socially disadvantaged before the catastrophe but now are really in a helpless situation, I decided to help these people in the long term. I believe that the most important parts of my vision were and are . . . one, the children must be able to break out of the vicious circle of poverty by receiving a fundamentally first-class school and vocational education. Two, Yaowawit School must be a project mainly run and supervised by Thai people. And lastly, Yaowawit School must be able to generate its own income so all people involved feel responsible for the future of the project. To begin, a team of volunteers went into Ban Namkem, a village completely destroyed by the tsunami, to research what the villagers needed for sustainable recovery. Graf von Hardenberg then set up the foundation and a school project that was fully supported by several friends, partners, and donors such as Help Alliance e.V. (Lufthansa), Daimler Chrysler Thailand and International, Thyssen Krupp, Jägermeister, Ein Herz für Kinder e.V., Mahr GmbH, Allianz AG, and Swiss Education Group. Toward a New Beginning The concept of the Yaowawit School project is based on the ideas of Professor Juergen Zimmer and Graf von Hardenberg. Zimmer is a renowned educator who works on school reform and runs the School for Life, which is based on concepts similar to those of the Yaowawit School, in Chiang Mai in the northern part of Thailand. Graf von Hardenberg has extensive experience in educational projects, including Steven Spielberg’s Shoah Foundation, as well as private school and boarding school management. He was chairman of the supervisory board of the International School Berlin/Brandenburg (ISB) and was instrumental in developing strategies to rescue the nearly bankrupt school. He was also chairman of the board of the Stiftung Louisenlung, the leading state-approved private boarding school in Germany. Graf von Hardenberg is now developing—with Swiss and German scientists—a boarding school with a state-of-the-art curriculum based on the latest neurological research on learning. 2 Graf von Hardenberg’s efforts, together with support of several friends and partners, made the Yaowawit School project possible. The school, situated on a large 22-hectare plantation in the village of Kapong, is approximately 125 km north of the city Phuket and about 65 km east of the tourist spot Khao Lak. The school is located in an orchard outside Kapong with a unique landscape of hills and valleys, tropical forests, creeks, lakes, and gardens. The Children’s World Academy Foundation raised funds for the formation and management of the school. The first section of the boarding school was opened on April 24, 2006, with HRH Princess Maha Chakri Sirindhorn in attendance. On May 17, 2006, the regular school operation started as a public welfare school with 79 boarding students ages three to fourteen. Although the school was originally designed to support children and orphans who suffered from the tsunami aftermath, it was later expanded to include disadvantaged children living in poverty, facing diseases (e.g., AIDS), or suffering unacceptable social circumstances (e.g., being forced into beggary or prostitution). The mission of Yaowawit School Kapong is to provide a community of wellbeing and care where children can obtain an excellent education and practical training. Graf von Hardenberg described the benefits of the school as follows: We pledge to provide a first-class education that helps our children to become openminded, confident, caring, and happy people. This will enable them to break out of the vicious cycle of poverty. Yaowawit School, Kapong, benefits its neighborhood and will make a positive difference in everybody’s life. Yaowawit School Kapong The Yaowawit School’s main task is to provide a home and education for children to make them self-sufficient. The school believes in each individual’s capability and tries to support children by giving them a chance to improve their lives. Its philosophy rests on the belief that the children will be able to help themselves break out of the vicious circle of poverty, illness, and ignorance. The curriculum is designed to meet Thai educational standards, the students’ needs, and the regional situation. The goal is for the children not only to learn the required subjects but also to acquire practical skills and craftsmanship, as well as entrepreneurial spirit and know-how. Their learning environment is not limited to classrooms but also extends to the surrounding area such as the plantation and nearby village. The school intends to create an inspiring and motivating environment to enable its students to develop in a lively but professional way. The Pedagogy Following the concepts of educational reformer Kurt Hahn and based on the most up-to-date knowledge about how children learn successfully, the Yaowawit School aims to teach students to develop personal leadership, to explore, and to be responsible for the results of their own actions. Moreover, the school emphasizes the importance of developing compassion for other people and believing in the pursuit of truth. Realizing the inquisitive and motivated nature of children, Yaowawit School lets students have space and time to generate their own learning activities. In addition to following the standard Thai curriculum, children can initiate their own projects (e.g., a 3 camp in the forest or a make-believe fortress) and work on them to learn by success and failure. “Children’s world” is the name of their private space, which adults cannot enter without permission. This practice is intended to encourage the development of an independent and entrepreneurial spirit. At Yaowawit School, the disadvantaged children receive high quality teaching and facilities. Despite questions about whether such superlative facilities are necessary, the school stands firmly in the belief that it takes these kinds of extra efforts and surroundings to overcome extreme poverty and unfortunate conditions. Students learn bilingually, in Thai and English, and learn early how to use computers and the Internet. These language and computing skills will enable the students to establish relationships with other students enrolled in similar international projects; Yaowawit plans to set up a student exchange program with other schools worldwide. Currently, the school is establishing a facility to host sixteen guest students and their teachers, and in the future the school is hoping to organize international study trips for their students. Emphasizing children’s holistic development (e.g., brain, body, and mind), the Yaowawit School’s program incorporates intellectual development, sports, and fitness, as well as the practice of Buddhist meditation to help children find their inner balance. Also, because it is crucial for Yaowawit students to adapt to external circumstances, students are introduced to different traditions and values, particularly an amalgam of Thailand’s rich heritage, while keeping abreast of other cultures. In addition, the school has created a theatrical stage to encourage students’ creative expression through the performing arts. In the future, artists from all over the world will be invited to stay and work together with the children. Moreover, to provide a fertile ground for the future, Yaowawit students receive practical training in areas that complement southern Thailand’s businesses such as farming, tourism, and nursing. In the school’s plantation area and surrounding orchard, students are responsible for growing various plants and feeding animals so that they learn firsthand about ecology, biology, chemistry, and even economics. These subjects become more engaging when children can experience the activities in a real-world environment rather than simply reading theory in a book. Within walking distance of the school is the district hospital of Kapong. The school has developed a practical learning program for children at this hospital with the collaboration of the Bangkok Hospital in Phuket. With the support of HRH Princess Sirindhorn, who toured the rundown district hospital after her first visit to the Yaowawit School project, the facility has undergone significant renovations. Expected to begin in June 2009, the hospital training program will welcome student volunteers to first assist in simple activities (e.g., reading stories to the patients, creating artwork for room decoration, and playing with the sick children) and later may include more critical training such as caregiving for patients. Besides familiarizing themselves with a possible career, students can gain positive feelings and confidence from realizing that they can help other people. Additionally, practical learning provides an opportunity for children to develop functional skills that will remain with them throughout their lives. The Facilities By creating an environment of active learning and creativity, the Yaowawit School encourages children to learn from everything around them. With the support of William Gaynor, the Hawaiian architect who is also a partner and board member of the school, the idea of “total environment learning” became reality. In the first phase, Yaowawit School had six family houses 4 for teachers, staff, and the younger children; one administrative building; the commons (with a kitchen, dining hall, library, and student lounge); one kindergarten plus dormitory building; and three buildings with two classrooms on the first floor and four bedrooms on the second floor. From each room children enjoy a wide view of the unique landscape surrounding the school; the design concept is to broaden the students’ vision of limitless opportunities. Inside the classroom, children have space to study and conduct activities and, in the future, will have a small library so that they can learn independently about how to collect information and work in teams. In their bedrooms, children have their own beds (four per room), closets, and desks, and they are responsible for looking after their own rooms. In each dormitory, one teacher or nanny acts as the children’s mentor. All facilities are wheelchair-accessible. A few steps from the school down the valley, a multipurpose sports field almost the size of a football pitch is the site for ball games, a playground for the younger children, and other activities. Because the school is situated in the rain forest, indoor sports facilities are needed as well. Hence, the auditorium that seats up to 400 people can be converted to a gymnasium and the stage can be used for theatrical performances and shows. The Community The Yaowawit School is run exclusively by Thais. Teachers and staff are required to have a thorough understanding of the local children’s needs. They work as teachers, tutors, companions, foster parents, and coaches in all aspects of life. In close collaboration with the Thai school authorities and international organizations, the Yaowawit School has also invited many specialists from various disciplines such as sports, arts, and languages to participate and continually broaden the school’s horizons. Additionally, disadvantaged but capable adults who suffer from various unfortunate circumstances are employed to assist the school in areas such as gardening, cooking, cleaning, and maintenance. Currently, the school has ten Thai teachers who are mainly from the south, one foreign volunteer teacher from England, three nannies, and twenty-five staff working in administration and operations. Some of them were among the first group of volunteers working in Ban Namkem after the tsunami. Since January 2005, Graf von Hardenberg has been in Thailand more than twenty times to oversee the project and continues to visit the school twice a year. His main tasks are international fundraising and supervising the school’s policies, directions, and new developments. It is his belief that the school has to operate with total local understanding. Thus, he emphasizes the significant involvement of the Thai staff. For key decision making, Man Sooksawee, a successful businessman in Phuket and the chairman of the school board, participates in the process. Sooksawee has extensive experience, particularly in vocational education, as his family owns three major vocational schools in Songkla Province. Despite his busy schedule in Phuket and other provinces nationwide, he visits the school at least once a week for the regular management meeting and participates in the decision making. Sooksawee commented, “It doesn’t matter where we are in the world; we’re Yaowawit family members, and we will always be.” For overall school management, Wittaya Jarusathorn, the school director, is in charge. Before joining the school, Jarusathorn was in the banking business, his last position being branch manager. He also owned and ran a few small businesses in the areas of agriculture, tourism, and restaurants. Though he had no experience in the educational sector, he grew up in an educators’ house that once had served as a small recognized private school in downtown Phuket. Now in his 5 sixties, Jarusathorn took the job of school director because he wanted to give back to society. He commented: This is something new and really challenging. I had never seen such an education system in Thailand before. I started to fall in love with this project just hearing about its concept, and then I thought all I could do was “try” as I wanted to see our first kindergarten group in fifteen years when they finish from here. Our founder gave us such a wonderful vision and mission statement, so now it’s our job to follow up and make it happen. If Yaowawit were a factory, our founder were a customer, and our children were the products, we staff as the factory employees would have to produce the products the way our customer wants. We always keep in mind that our finished products have to be open-minded, confident, caring, and happy, so that they can eventually break the cycle of poverty. The school also hired a “family manager” to look after the wellbeing of the community and children in particular. Chatkaew Nuntapanich worked with the “Making Waves” organization right after the tsunami to assist the victims in healing psychologically. In June 2006 she joined the Yaowawit School as a family manager. With her MBA in marketing from the United States, she is also running the school’s public relations and marketing campaigns (e.g., a newsletter distributed to all partners and friends) to support the fundraising activities. At the moment, the Yaowawit School is accepting about fifteen kindergarten children every year. Once all phases of construction work are completed in spring 2010, the school will be able to accommodate 180 disadvantaged children. Moreover, the school will accept 50 external students from families who can afford to pay a fee for their education. This effort will create a real community with mixed backgrounds and also help cover the cost of the school’s operations. Sources of Funds The Yaowawit School is fully supported by the Children’s World Academy Foundation, which raises funds from donations and partners around the world. After the tsunami, the school received nearly 2 million Euro (about 100 million THB) to realize the school project. Individuals who want to sponsor a child donate 30 Euro per month (1,500 THB) to cover the cost of food, clothes, medical care, and caretakers. In addition, they can give another 50 Euro per month (2,500 THB) to sponsor a first-class education, which covers the costs for teachers, school supplies, and teaching materials. Each month the school has to bear expenses of approximately 650,000 THB, half of which goes toward salaries (the remaining half goes toward food, gas, electricity, etc.). Up until now, the school has mostly relied on income from fundraising. However, an increased scarcity of resources and unfortunate events happening around the world have made it more difficult for the Yaowawit School to rely solely on international donations. Jarusathorn explains as follows: It’s getting tougher to generate many donations from abroad these days. Some people might think we are already doing well judging from our first-class facilities and these beautiful buildings so there is no need to support us. It’s like driving a Mercedes and asking for money to fill up on gas. The previous donations were specifically for constructing buildings. But we still need more for running the school. 6 Realizing the need for the school to stand on its own, the foundation and the school started, as planned from the beginning, projects to reduce costs and possibly generate income. Among these, farming is of high priority because it is one of the most important businesses in southern Thailand. At the school plantation, children learn about agricultural ecology and at the same time produce food to supply the school’s meals. The farm consists of rubber, mangosteen, and sixteen different kinds of bananas. Due to the high demand for palm oil, the school has included it in the project along with rice, herbs, sweet potato, and a greenhouse for several fresh vegetables. The children and adults are also running a fish farm to provide for the school’s own needs as well as to sell at the local market. In the next few years, the school’s agricultural products such as latex from rubber trees and palm oil are expected to provide returns. Fresh organic vegetables that are not consumed by the children will be sold to hotels nearby. However, the school is concerned that an abundant supply and competitive market will make it difficult to sell all its products, particularly since the school is located far from the downtown and busy hotel areas, leading to heavy transportation costs. While the school is struggling to find more sources of income, its expenses are soaring because more children are being accepted every year and the older ones are entering a level of education that the school is not yet ready to provide. Sending these children to other secondary schools nearby requires extra spending on transportation, food, and personal expenses. Tourism Business: An Opportunity to Self-Sustain As planned from the beginning, the school seeks to self-sustain rather than rely fully on funds raised by the Children’s World Academy Foundation. Since the school’s inception, Graf von Hardenberg had been researching business opportunities to generate income. Because Phang Nga province is well known for its beautiful national parks, islands, and beaches, the tourism business attracted his interest because it would not only generate income but also provide the children with lucrative jobs in the future. Before the tsunami, more than two million people visited the province each year, with the peak at 2.89 million people in 2004 (see Exhibit 1). The most popular destinations are Khao-Lak with its beautiful beaches and Similan Island, a haven for scuba enthusiasts. Almost 65 percent of these visitors were foreigners, 53 percent from Europe (particularly Scandinavians, Germans, and Swiss) and 33 percent from Asia. The main purpose of international visitors’ travel was pleasure (about 95 percent) while domestic visitors traveled for both pleasure (70 percent) and business (30 percent), e.g., meetings, seminars, company visits, and exhibitions (see Exhibit 2). Most tourists who chose Phang Nga preferred seclusion and peaceful relaxation with their families. In contrast, tourists in the neighboring province of Phuket, another very popular tourist destination 80 km from Khao-Lak, enjoyed a combination of leisure and entertainment. In Phang Nga, many Europeans, particularly the Scandinavians, take long vacations (on average fifteen days2), and some return almost every year. Typical tourists include backpackers, adventure lovers, and scuba enthusiasts, as well as luxury seekers. Compared to the other tourism areas in the country, pricing is still quite attractive, with accommodations ranging from 500 THB to 20,000 THB per night. The tourism business in Phang Nga generated about 9,773.86 million THB in 2004. 2 Tourism Authority of Thailand. 7 After the tsunami destroyed 93 hotels and 215 restaurants in Phang Nga with more than 4,000 guests and staff dead or missing, the damage to private enterprises in Phang Nga could be estimated at about 6,207 million THB.3 With significant effort on the part of both private and public sectors in rebuilding tourism businesses, the situation has remarkably improved; the number of visitors is on the rise, increasing from about 800,000 in 2005 to 1.16 million in 2007 (see Exhibit 1). The ratio of domestic to international visitors was 52.74 percent versus 47.26 percent in 2007, whereas before the tsunami the percentage of international visitors was significantly higher. Most international visitors are still Europeans (53.40 percent, mostly from Germany, Scandinavia, and the UK) and Asians (20.43 percent, mostly from China, Hong Kong, and Taiwan). However, there were more Americans, 19.11 percent in 2007 compared to only 7.17 percent in 2004. Phang Nga generated 3,901.44 million THB from tourism in 2007 (see Exhibit 3). In the Khao Lak area, booking rates over the high season of 2007 achieved almost 100 percent of the total 4,000-room capacity of 54 operators. The five-star hotels, which accounted for about 10 to 15 percent, charged 10,000–20,000 THB per night while the three-star to four-star hotels charged 5,000–6,000 THB and the lower tier charged an average of 1,200 THB.4 It is expected that in the next few years Phang Nga will have 10,000 rooms available, up from only 2,500 rooms in 2002.5 Despite such challenges as mass protests, the political coup in 2006, and terrorism in Thailand’s deep south, overall the country’s tourism business has grown significantly to a point exceeding pre-tsunami levels. In 2004 there were 11.65 million international arrivals in Thailand; this number dropped slightly in 2005 to 11.52 million international visitors before rising to 13.82 million in 2006 and 14.46 million in 2007.6 Among Scandinavians, who are the primary market of Phang Nga province, it was reported that 770,000 (out of a total 22 million population) visited Thailand in 2007, 17.55 percent more than in 2006.7 The domestic market is also expanding from 74.8 million visitors in 2004 to 79.53 million visitors in 2005, 81.49 million visitors in 2006, and 83.23 million visitors in 2007.8 In general, the future of Thailand’s tourism business remains positive. Tourist arrivals are expected to reach 19.7 million people in 2012 (see Exhibit 4). Clearly, Thailand has made a strong comeback from the effects of the tsunami tragedy. Aggressive public relations and marketing activities from the cooperation between government organizations and private operators have resulted in the continual growth of the tourism business. Theme concepts and holiday packages were offered to boost demand in both high and low seasons. Governments and trade associations are active in promoting business tourism to generate income from MICE (meetings, incentives, conventions, and exhibitions) and to earn extra from additional leisure activities. In 2006 many corporate deals were introduced for business travelers to participate in golf packages and spa treatments during their stays. The Tourism Authority of Thailand is aiming to fill up the low season (i.e., the rainy green season) with new markets such as tourists from the Middle East and South Africa who tend to stay only for two to three days. Increasing numbers of Australians and New Zealanders are arriving during the low season to visit Thailand’s beaches for longer periods (up to a month). Niche tourism, such as healthcare tourism 3 Department of Disaster Prevention and Mitigation, reported in “Economic Impact of Tsunami in Thailand” by Thailand Development Research Institute, March 2005. 4 Phang Nga Tourist Association. 5 Thailand Tourism Report Q2 (2008) by Business Monitor International Ltd. 6 Tourism Authority of Thailand. 7 Ibid. 8 Ibid. 8 and eco-adventure tourism, is becoming a popular focus because of the trend of sustainable tourism. It is expected that the number of medical tourists will reach two million by 2010. Thailand may actually discover new tourism opportunities because of the tsunami as the country finds an increase of “alternative” tourists who intend to come to support the affected communities.9 Alternative tourists, as opposed to the mass tourists, are believed to be more concerned about social, cultural, and environmental issues. Their travel demands are shaped by the local needs and conditions, and they travel in search of authenticity, creativity, novelty, and self-discovery.10 After the tsunami many survivors, their families, and friends truly learned about the kindness and solidarity of the Thai people, and their deep impressions have brought more visitors to help support and strengthen the local communities in Thailand. Yaowawit Lodge: A Social Entrepreneurship Development Early in 2007 Yaowawit School initiated a small hotel project, the Yaowawit Lodge, for 400,000 Euro (about 17.6 million THB) with two complementary objectives: to provide practical training in the hospitality business for the children and to generate income to cover the school’s operating costs. Because tourism is a significant source of income in the southern part of Thailand, young Thais can find many career opportunities in this field. Moreover, the school has plans to open a small hotel management college to teach older children how to operate a hotel business, specifically with support of the school’s partner the Swiss Education Group, which is one of the world’s leaders in hotel management. On March 13, 2008, HRH Princess Sirindhorn paid her third visit to Yaowawit School for the opening of the Yaowawit Lodge. The first phase of the hotel has four buildings with a total of twelve guest rooms as well as a guest lounge and lobby with a restaurant located in the school’s commons building. It is expected that in three years the hotel will be a significant source of the school’s income, covering about 40 percent of the total operating costs. Currently students participate in the daily hotel operation as part of their education on a voluntary basis. Trained staff members instruct them in English communication, manners, and service. Children also learn directly from performing the housekeeping, laundry, and kitchen tasks. Chatkaew Nuntapanich, the family manager, tells of their experiences: We have many children as young as five- and six-year-old kindergarteners who want to participate in this hotel training program. They have a good time learning new skills. One little girl tried to bring water to our guest. Once she got there, she forgot what to say so she ran back to the instructor before returning and said, “Would you, er, like, er, some water?” The Yaowawit Lodge has three different types of guest rooms ranging in designation from standard (S) to moderate (M) to luxury (L). All the guest rooms have panoramic views of natural scenery. The rooms are built with light walls, so if needed they can be converted easily to classrooms or dormitories. The four S rooms are similar to a quality guesthouse (i.e., guests share a shower room). The six M rooms have basic facilities (e.g., built-in shower, closet, and desk), 9 Reas Kondraschow, “The Lessons of Disaster,” Journal of Retail and Leisure Property 5, no. 3 (July 2006). Nick Kontogeorgopoulos, “Keeping Up with the Jones: Tourists, Travelers, and the Quest for Cultural Authenticity in Southern Thailand,” Tourist Studies 3 (2003). 10 9 and the two L rooms have extra living room space and a small walk-in closet. During the low season, room rates are 600, 900, and 1,200 THB for S, M, and L rooms, respectively, for domestic guests. International visitors are charged an additional 300 THB per room. Competitors’ prices are taken into consideration, particularly those in nearby Khao-Lak. The Yaowawit Lodge tries to maintain a medium-range pricing level to avoid competing with low-priced bungalows for backpackers while also recognizing that its limited resources are not at the premium level either. Room rates are presented in the form of a minimum donation. In the high season, prices are expected to increase to 1,000, 2,000, and 3,000 THB for domestic guests and 1,200, 2,500, and 3,500 THB for international guests. The facilities of Yaowawit Lodge are built a distance away from the school buildings, but they remain in close proximity to enable the operation to use manpower from the school. In the future, when the school grows, the lodge may be separated from the school function. The restaurant can accommodate about fifty guests. To make it cost efficient, the central kitchen caters to both the schoolchildren and visitors, but the main goal of the restaurant remains to provide healthy meals for the children. The school has invited Bangkok Hospital Phuket to oversee its meal plan and teach the cooks about nutrition. Children can also learn about cooking (with a focus on southern Thai cuisine) and how to run a business. They will become familiar with the whole supply chain, from sourcing and purchasing (e.g., bargaining and buying ingredients from the local market) to cooking, pricing, service, and quality control. For other activities, hotel guests are permitted to explore the school’s plantation and orchard. They can also take an excursion tour with children guiding them to visit the neighboring villages. For example, Ban Kapong is a small mountain village with 13,275 residents living in an abundant cultivated area full of rubber, oil palm, mangosteen, durian, rambutan, and other fruits to supply the different parts of Thailand. Though it is situated far off the popular tourist track, the village’s largely fertile and cultivated area has plenty to offer with its beautiful countryside and tropical forests, lakes, and brooks. There are also several waterfalls nearby as well as famous hot springs. Guests can also visit the two temples in the village, both of which cooperate with Yaowawit School. The monks teach the children meditation and take them on trips to the cultural spots of the region. The Challenge The Children’s World Academy Foundation and the Yaowawit School project are made possible through the good will of generous people around the world. However, in business it takes not only good intentions but also significant strategic efforts to achieve success. The Yaowawit Lodge is unique in that it is a for-profit operation within a non-profit organization that blends the essences of a school together with a hospitality business. Still, in a competitive tourism market such as Phang Nga, the Yaowawit Lodge must be proactive in delivering marketing strategies to attract its target customers. It is possible that during its initial phase, not many people will know about this business. Other difficulties include the location, which is far from the famous tourist destinations (approximately 65 km from Khao Lak and 125 km from the closest airport in Phuket). There are no luxuries such as a pool or spa for guests to use in the hotel and no shops in the area. Adding to these concerns is market perception. The Yaowawit Lodge learned that some local authorities and domestic tourists feel uncomfortable with the idea of combining a school and a hotel. To them, a hotel is a place for pleasure and leisure while a school is regarded highly for its 10 where they can hear classes taking place not far away. Though children are told not to enter the guest areas unless they are in training and the guest lounge serving alcohol is at the far end of the facility, many people are still concerned about the children’s safety and possible opportunities for corrupting the morals of the young people who live and learn in this connected environment. Moreover, in Thailand, not many public welfare organizations also serve as profit-generating units. The need for self-sustainability has been recognized, but no clear steps have been taken to resolve the issue. As for the potential foreign customers, many are receptive to the practical learning concept and the school’s attempt to become self-sufficient and self-reliant. Yet the school has received some queries and concerns about the issue of child labor and children’s involvement in the hotel’s operation. In fact, there already exists a negative public perception of Thailand, specifically in the areas of industrial production and sex tourism. It is not uncommon for foreigners who have never visited the country to have doubts about this concept of school training combined with the hotel business. November to March is considered high season for tourism in southern Thailand. Starting in the fall of 2008, Yaowawit Lodge will place a three-page advertisement in Germany’s leading Asian travel brochure from Lotus Travel. Wittaya Jarusathorn and his team are currently seeking other ways to promote the Yaowawit Lodge. Given the small size of the business, the team aims to opt for niche marketing. YOUR FINAL PROJECT IS TO ANSWER THE FOLLOWING QUESTIONS IN A 5-6 page paper and to make a Powerpoint presentation on the last day of class. When writing your paper, please answer the following: 1. What kind of customer should the lodge target? 2. How should it deliver Product (the lodge), Pricing (how should the rooms be priced) and Promotion strategies to attract the target customers? PLEASE NOTE: The syllabus says that DISTRIBUTION STRATEGY will be 10% of the grade. However since the location is fixed, I will assign this 10% to question 1 instead (What kind of customer should the lodge target?). You do not need to create a distribution strategy for this case. 11 Exhibit 1: Number of Visitors to Phang Nga, 1999–2007 Number 3,000,000 2,500,000 2,000,000 1,500,000 Δ% Year Number 1999 1,702,929 2000 1,875,404 2001 2,002,747 + 6.79 2002 2,328,190 + 16.25 2003 2,334,609 + 0.28 2004 2,894,654 + 23.99 + 10.13 2005 821,263 - 71.63 2006 1,021,448 + 24.38 2007 1,160,535 + 13.62 1,000,000 500,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 Exhibit 2: Phang Nga Tourism Profile, 2004 Domestic Number of visitors Average length of stay (days) 1,036,047 International (35.79%) 1,858,607 (64.21%) Total 2,894,654 2.58 4.90 3.57 Expenditure (THB/person/day) 1,628.90 1,793.12 1,734.33 Revenue (THB in millions) 3,035.07 (31.05%) 6,738.79 (68.95%) 9,773.86 Purpose of visit: Pleasure 70.69% 95.15% 86.39% Business 29.31% 4.85% 13.61% International Total Exhibit 3: Phang Nga Tourism Profile, 2007 Domestic Number of visitors Average length of stay (days) 612,020 (52.74%) 2.41 Expenditure (THB/person/day) 1,655.02 Revenue (THB in millions) 1,685.22 548,515 (47.26%) 3.71 2.89 2,197.95 (43.19%) 2,216.22 1,160,535 1,925.14 (56.81%) 3,901.44 Purpose of visit: Pleasure 75.29% 95.38% 84.78% Business 24.71% 4.62% 15.22% 12 Exhibit 4: Thailand Tourism Statistics: Historical Data and Forecasts, 1998–2009 International Year Number of Tourists (in millions) Average Expenditure per Person per Trip (THB) Tourism Receipts (THB in millions) 1998 7.76 31,189 242,177 1999 8.58 29,488 253,018 2000 9.51 30,001 285,272 2001 10.06 29,722 299,047 2002 10.80 29,955 323,484 2003 10.00 30,913 309,269 2004 11.65 32,990 384,360 2005 11.52 31,899 367,380 2006 13.82 34,896 482,319 2007 14.46 37,872p 547,782p 2008f 15.48f 38,760f 600,000f 2009f 16.00f 39,375f 630,000f Year Number of Tourists (in millions) Average Expenditure per Person per Trip (THB) 1998 51.68 3,585 187,897.82 1999 53.62 3,702 203,179.00 2000 54.74 4,260 210,516.15 2001 58.62 4,274 223,732.14 2002 61.82 4,308 235,337.15 2003 69.36 4,762 289,986.81 2004 74.80 4,816 317,224.62 2005 79.53 4,829 334,716.79 2006 81.49 4,757 322,533.71 2007 83.23 4,648 380,417.10 2008f 84.00f 3,450f 388,200.00f 2009f 87.00f 3,500f 407,600.00f Domestic Note: p = Preliminary Data; f = Forecast Source: Tourism Authority of Thailand, May 6, 2008. 13 Tourism Receipts (THB in millions) Service Marketing Project Each student group must develop a new service's marketing strategy and present it at the end of the course. This project will consist of a 10-15 page written paper and a Powerpoint presentation. Each case grade will be based on the presentation itself (25%) and the written paper (75%). Final projects should use 12 point Times font and 1" margins. Tables, figures and references do not count toward the limit and, if needed, must be placed in an optional appendix at the end of the last page of the case. Additional information about the final project will be provided in a separate handout at the beginning of the course. Grades will be based on: QUALITY OF PRESENTATION: (25% of the grade) • Professional in appearance and delivery, engaging, and convincing. •Unique, highlighting individual approach to provide distinction from other groups. •Demonstrates understanding of the project and plan recommendations. •Follows a logical order. PRODUCT STRATEGY: (25% of the grade) • Is conceptually sound. •Takes into account target customer needs. • Is distinctive from key competitors' products. • Provides rationale. PROMOTION STRATEGY: (25% of the grade) • Includes appropriate sales promotions and/or sponsorships • Demonstrates effective and efficient use of budget. • Is creative and unique. • Applicable for target audience. • Provides rationale and illustrates use of media choices. DISTRIBUTION STRATEGY: (10% of the grade) • Is creative and unique. •Makes sense for the target market. • Demonstrates effective and efficient use of budget. • Provides rationale. PRICING STRATEGY: (15% of the grade) • Makes sense for the target market. • Is conceptually sound. • Provides rationale.
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Explanation & Answer


Running head: YAOWAWIT LODGE


Yaowawit Lodge Service Marketing Project

Student’s Name




It is sad that the people of Southern Thailand had to experience the tsunami in December
2004. Sadly, many people lost their homes during the event and more seriously, around 882
children lost their parents as well. As the tides swept through the area, they took with them more
than just lives and property but hope as well. However, Yaowawit School Kapong decided to
make something god out of the event. The idea to start the Yaowawit Lodge project was a great
one which would help the community to regain some of its lost glory and hope as well. However,
they would have to deploy the right product, promotion, and pricing strategy as the target the
right customer.
Yaowawit Lodge Project
It is important to understand the Yaowawit Lodge project in order to make the right
strategic plans. The Yaowawit Lodge project came about as a result of the Yaowawit School
Kapong project. The school project was envisaged after the tsunami with the intention of helping
the community regain its education infrastructure. It was geared to help turn the students into
self-sufficient persons in life. The project was based on the ideology that if these children were
not assisted, then they would not be able to break out of the poverty cycle. It is worth noting that
the poverty cycle was made worse by the tsunami although the situation was not too god even
before the tsunami.
The Yaowawit School Kapong was developed using educational concepts borrowed from
Kurt Hahn who was a reformer. The schooling methodology that was developed under his
mentorship was one that would encourage self-reliance, equality and special schooling of the
disadvantaged children. The school enjoys the privilege of receiving grants to help it meet its



needs. However, with the increasing needs and dwindling sources of income, the school decided
to initiate projects that would help turn it into a self-sustaining institution. Apparently, this is one
of the main agendas that are taught to the children. In this context, the school initiated projects
which mainly bordered on farming. The school also started the Yaowawit Lodge project which
was geared to target the tourism sector in Thailand.
Target Customer
When determining the target client/customer, it is important that certain factors be
considered. These include the economy of Thailand, the current customer base, competition,
product, demographics, and psychographics. As far as the Thailand economy is concerned, it is
worth noting that the economy was affected to a great extent by the tsunami. However, after the
tsunami event, there was great response from the world over since Thailand received wide range
of support in terms of food, medical supplies, money, etc. The Thai private and public sectors
helped to address the basic humanitarian needs.
As far as the long-term needs are concerned, effort continues to be made by the
government together with the private sector as they try to restore the country to its former glory.
Non-governmental organizations also played and continue to play a major role together with the
private sector. The fisheries, agricultural, and tourism sectors were affected to a great extent. As
such, after the event, most of the persons visiting the country were on a mission to help restore it.
These are the main target that the school should be focusing on. As such it is important to
understand them in order to present a service and goods package that will best suit them and
meet their needs so that they can lodge at the facility.



As noted earlier on, target customer for the Yaowawit Lodge project are mainly tourists
that visit the country to assist those that were affected by the tsunami. It is worth noting that the
current customer base includes a wide range or persons and organizations. Firstly, it is important
to also note that there are no age limits to the clients that are visiting Thailand on mission to help
those persons that were affected by the tsunami. There are families that are visiting in the
company of young children. As such, it is important that the lodge should have this in mind.
When developing facilities such as lodging facilities, it is important to have a great idea
of the target client. If the target client includes children, there are certain factors that will have to
be considered such as adult facilities like bars. In such a lodging facility, there should be
designated areas where children can be allowed to have fun and rest away from the bars. There
should also be restrictions in place that regulate how the bar facilities are operated. The room
setting should also accommodate such options where a family is lodging and might want to share
facilities. There should be some family options that allow the whole family to share the same
lodging option.
When consideration of the target client is being done, it is also important to consider the
competition that the facility is likely to come across. Notably, there is not much competition in
Thailand as far as the tourism sector is concerned. This status quo was achieved after the tsunami
struck since many lodging facilities were destroyed as well as the infrastructure of those facilities
(XXXX). As such, Yaowawit Lodge project might take advantage of the situation and take up
most of the targeted clients. It is also important to consider the target markets finances. When
people are on a mission as donors or volunteers, they probably are on a strict budget.



The budget of the target client is likely to also influence how the Yaowawit Lodge
project will carry along. Notably, the target client who as noted earlier on are families and donor
institutions that are on a mission to offer aid and assistance might not be willing to be spendthrift
when they visit especially when it comes to their lodging expenses. The main reason behind this
reasoning is that when they make and plan for the trip, their foremost important mission is to
visit and offer their help. This help is mostly in the form of financial aid. As such, it would not
make sense for them to visit and spend most of their resources on their lodging needs. In such a
case, some would even decide on lodging with the victims as many donors and volunteers do. As
such, this issue should influence the pricing of the lodging services.
Product Strategy
The product strategy is instituted in order to help the business package its product in a
way that will attract the target customer. The product should be packaged such that the client will
feel it meets their needs and even more. In the context of Yaowawit Lodge project, the target
clients who are mainly donors, volunteers and families out on a mission to help the community
regain its glory should be considered in the development of the product strategy. The main
agenda here is to note the reason why these clients are visiting Thai.
The Yaowawit Lodge project should be packed in a way that will firstly meet the needs
of whole families. These include the needs of the parents/adults as well as those of the
children/minors. In this context, the adults have specific lod...

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