Indonesia-based hotelier leverages her keenness to help the less privileged into a sound business proposition
(LI NA / FOR CHINA DAILY)
An unwavering commitment to corporate social responsibility has enabled Shirley Tan to carve a successful niche in the high-end hospitality segment.
Tan is the CEO of the Indonesia-based Rajawali Property Group’s property and hotels division. Initially focused on investments in hotels and apartments in the Indonesian archipelago, the division’s operations today have expanded to other international destinations.
Tan was brought up in a very orthodox Chinese family. “My father had his own food and trading business. I grew up in a very strong and cultured overseas Chinese entrepreneurial community. My parents always taught me to share what we have with those around us. I would play with my toys and I would eventually give them to the children of my father’s employees. We were taught philanthropy from a young age,” she said.
“We were not rich, but I never felt deprived. I was never interested in becoming an entrepreneur or becoming a big-time CEO. I was an ASEAN (Association of Southeast Asian Nations) Scholar in Singapore although I was born in Malaysia.”
Tan entered the hotel industry by working for the Banyan Tree hospitality brand, which started in Singapore but went global, along with a strong presence in China. She worked in many hotel developments in Chinese cities, including Shanghai, Lijiang in Southwest China’s Yunnan province, and Guilin in South China’s Guangxi Zhuang autonomous region.
Tan’s work experience over the years instilled a very strong focus on corporate social responsibility.
After working for a decade in the hospitality sector, Tan met Peter Sondakh, the founder and owner of the Rajawali Group as well as the brother-in-law of her best friend.
“(Sondakh) asked me if I was really willing to oversee social and economic development to help the poor. He said that I ‘should work in Indonesia because the people (in the country) are a lot poorer. Many people still live below the poverty line, and if you really want to contribute, and develop socially and economically, then Singapore is not the place for you to stay any longer’.”
Tan accepted the job offer from Sondakh and started working for the group in 2011. “The main reason why I joined the group is because of its vision to eliminate poverty and create jobs through hotel developments, branded hospitality departments.”
The hospitality industry, compared to sectors such as banking or technology, does not demand a high level of education. “We witness how people realize their full potential, and eventually earn their own income, buying their own farms, supporting their communities. This makes us realize that what we have done over the last 20 years is something that is not just profitable but also meaningful,” Tan said.
“My role is (hotel) development. I work with my colleagues to conceptualize the hotels. I work with architects and the designers, and visualize how we can develop a hotel in a piece of empty land, develop feasibilities and run investment returns. I work in the business development segment.”
Tan has also initiated various strategic partnerships between the Rajawali Property Group and select foreign investors. The Rajawali Group has a diversified business base that includes agriculture, mining, infrastructure, information and communications technology and media.
“Lately we have established seven joint ventures with different partners and collaborations with sovereign wealth funds from Singapore, Malaysia, or leading private equity firms,” Tan said.
The group’s hotel in Lake Como, in northern Italy, has partnered with a Dutch Italian private equity fund, while in Malaysia it has a joint venture with United States-based Marriott International and a few local partners.
“In the hotels segment you don’t see profits immediately. The investment horizon has to be long, and one might need to wait seven to 10 years before even seeing a payback,” Tan said.
“Properties are among the investments where you don’t see immediate returns but you also don’t see a quick decline in your value either. You put your money in the stock market and a financial crisis may wipe out your money by 40 percent, but a crisis will never wipe out the value of your property in two quarters,” she said.
“If you see the historical timeline of Indonesia throughout most of the crises, (the property sector) is always on an upward trend.”
Tan added that real estate has always seen value creation, even if slow and steady. “It has been proven all around the world,” she said, noting that The St. Regis New York, the luxury hotel that opened early last century, was once valued in the tens of millions of dollars but is now worth billions.
“Historically, if a property is in a good location, it has long-term value creation.”
Tan noted that business growth in Bali, the Indonesian holiday destination, is between 6 and 10 percent. In the meantime, in the country’s capital Jakarta, the hotel sector faces oversupply right now.
“Every single capital city in the world has experienced it. During 2012-14, year-on-year growth in profit margin from our hotels reached 20 percent, but by 2015-17, Jakarta was oversupplied with hotel rooms, which meant a lower annual growth in net income for us. But, in the long term, you will make a return as your asset value appreciates.”
When it comes to choosing destinations for hotel development, the group is highly selective, maintaining its focus on the luxury segment. “We choose cities where we think there will be growth and build a stronger international presence,” Tan said. “(In Indonesia) we are the developer with the strongest hold on the premium realty market, and we spend a lot of time researching what the market wants and we deliver a quality that our clients deserve.”
The Rajawali Property Group so far does not have a presence in China but could be open to a joint venture deal in the country.
“Right now we don’t see our company being competitive as a foreign investor in China,” Tan said, observing that Chinese have a strong appetite for investing and are very savvy, especially in their own market — “a really well developed economy with its own domestic enterprises which can fully capture all the opportunities”.
Tan recognizes that outbound Chinese tourism still has huge growth potential. “In Bali, the Chinese tourists have reached the top three in the last 10 years. China will continue to contribute to us.”
The Rajawali Group plans to target investors in the emerging wealth management market who are upwardly mobile millennials seeking high-quality products which are also affordable. “We aim to make sure there are enough real estate products which are affordable and small in size, to cater to the needs (of these millennials) who are socially and digitally connected,” Tan said.
Like other industries, the real estate and hotel business segments also face many challenges.
“We need to upgrade our human capital. We have to make sure most of the Indonesians working in my team understand the challenges of globalization and its opportunities,” Tan said.
Tan has taken the initiative to provide online Bachelor’s and accredited MicroMasters degrees for deserving employees, to enable them to fully understand changes in other global economies. MicroMasters programs offer a series of graduate-level talent development courses from leading universities that enable Indonesian managers to advance their careers. The Rajawali Group’s courses are offered in partnership with the US-based Thunderbird School of Global Management to develop business mind-sets.
Another initiative the company supports is the highly customized Young Eagles corporate programs that offer 17- to 25-year-olds exposure to senior management roles.
The corporate social responsibility programs of Rajawali include an Adopt a Tree program in Mount Gede, in West Java, and donations to victims of Typhoon Haiyan. In Malaysia, the company has conducted the Run to Give marathon to help the local population.
“Rajawali will continue to be a pioneer in many ways, because we create value and deal with the challenges of a globalized world. We have always been the preferred partner of foreigners because we know Indonesia very well and we know foreign investors too.
“We will continue to invest in Indonesia because it will bring benefits to a lot of people in terms of better jobs and higher quality of assets.”
CEO, property and hotels division, Rajawali Property Group
How would you describe the new generation?
The world is looking for a generation of people that is trying to make a bigger impact and have a bigger voice through business. When you look at (Facebook CEO) Mark Zuckerberg or the pioneers of (ride-hailing startups) Grab or Go-Jek, their key value proposition is to make an impact. The young generation believe that they are capable of changing the world. They are living in the greatest time ever, where their voices will be heard and they can make a difference at a very young age. They have the courage to pursue their dreams.
What are your hobbies?
I love to travel. I spend some time in charity projects. I love social dining, also reading and writing. I love to invest my time in people.
Is there a dream that has come true for you?
One of my biggest dreams was to be a bridge to connect the rich and the poor. I never thought that dream could be realized in hotel development. At one point I was in one of the richest areas in the world in Sumba (an island in eastern Indonesia) and the next moment I was with my friend at a charity event in one of the poorest villages in the world. My dream did come true.
Was there a turning point in your life?
Coming to Indonesia.
Do you have a favorite quote?
Performance is what makes people stay in their jobs.
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