Azurro Di Boracay – new horizons – new challenges

”Testa di Katso!!”, Giordano cursed as he exited the kitchen at Azzurro di Boracay. He had
bought this resort only this year thinking to transform it from what it was; made by locals,
for locals and the occasional walk-in, into a modern, cozy, and atmosphere-rich resort for
international guests wishing to get away from the hustle and bustle of the city.
The resort had some 24 rooms, restaurant , a functional restaurant kitchen and beachfront
patio with adjacent “private” part of Boracay beach. For the right manager; a gem … if it
didn’t work out; a disaster. Gio had just scolded the cooks for not making the Mexican
courses on the menu Mexican; but cooking it simpler, easier and more pinoy’ish.
“If a meal is Mexican, we make it Mexican, not mexi-pinoy ... then it will be neither Mexican
nor pinoy, and have no real attraction to customers” he told the head chef.
“I’ve told you this before “
“Yes Sir, but this is how we always done it, and our guests never complained that much….”

The Resort, a 15 year old “provincial style” resort,

was bought by a group of Italian investors, the
Dolce Vita Corporation, with Giordano Galante, as
one of 5 partners, in early 2010. When bought, the
resort had a typical pinoy-run style, consisting of a
beachfront one storey flat roof main building (and
crawlspace), with a number (24) of rooms in the
back yard. Most of the rooms had seen better days,
and needed significant improvements to reach
international accepted standards. However; a full
makeover was already in the plans as the investor group had agreed to buy out the current
owner. Gio himself was no newcomer to the service industry. He had a long experience as a
world famous jewelry designer, and had also owned and operated several Italian restaurants
in the Philippines, including one already located on Boracay beach. He had an eye for design
and detail, and was renowned for the interior and atmosphere he had created in his
restaurants both in Boracay, and the most famous one, AlBachio in Angeles.
As customs were with small resorts, Gio also kept the local staff, figuring it would be cheaper
and more efficient to retrain these over time, than to take in new staff and train from
bottom up. Challenge was to de-learn certain impractical practices and procedures, work
ethics and ideas these local employees had. Quality was a concern as following recipes was a
concept that was rarely followed diligently, hygiene was occasional and customer
satisfaction was a concept often reaching only as far as the wallet of the customer in
question.
1.1 DESCRIPTION OF THE RESORT

The
resort in
the back
of the
compound was designed in a horseshoe style, and in 2 levels. This gave enough room for 22
rooms, giving enough room for having an intimate feeling, but not too many rooms to give a
cramped feeling. The Courtyard had been in need of some serious maintenance, consisting
mainly of free growth along the edges and sand on the walking areas. Gio and his wife spend
a full weekend working with the employees in turning over the entire compound, uprooting
wild and unwanted growth, and replanting luscious and tropical growth than would give a
soft, warm and relaxing atmosphere.

To top it off, about 2 tons of Boracay white sand had been replacing the former yellow
semi course sand that had filled the courtyard.

The structures had all been repainted from the original white and green(contrast) color, into
a warmer peach with white borders, a color palette which Gio felt was more easy on the
eyes, inviting and giving a relaxing feeling to the guests. In all, Gio had detailed plans for
making sure the new resort was the same structure as the old, but otherwise completely
reformed. Several tens of thousands Euros had been invested in the improvement of the
resort, improvements that the partners felt sure would be imperative to the success of the
resort.

1.2 THE BEACHFRONT

As part of the contract, the resort also came with

its own part of Boracay beach itself. Not “right by
use” but titled in the deed. When the partners had
looked for feasible prospects to invest in, a titled
beach front was a priority, and when this property
came up for sale, albeit at a painful price, it was an
offer hard to

resist. Gio knew an asset like this was important

to keep, and as such the employees had been
instructed to perform major clean every morning
at 0500, and tri-hourly clean up of trash, seaweed
and if needed re-rake the perimeters. This, Gio
imagined, would give a crisp and clean view of the
beach to all passerby’s, and add another image of
professionalism and care to potential new guests.
To make sure not only the beach were in great
shape, Gio made sure his caretaker also raked some
20 meter out into the water itself, in case someone would have lost or thrown garbage out
there which could be hazardous to swimmers or waders.
New sun beds were purchased as the old ones which came with the purchase were old,
matte and really had a cheap, worn look. Gio didn’t invest in the narra style sun beds some
of his competitors had, but opted for normal white, but sturdy plastic ones. The idea was to
maintain these with plastic treatment, rather than purchase expensive wooden ones, that
required expensive maintenance. Azzurro wasn’t a luxury resort, and therefore wouldn’t
need a luxury beach offering.

In line with offering sun beds for the resort’s guests, free beach services for resort guests
were included. Service was just a wink away and always served with a smile; and charged to
the room.

1.3 THE PATIO

The patio was another eye-gem of the resort. Gio

had spotted the opportunities in it instantly, as the
resort sported a 2 meter wide sand patio right in
front of the restaurant, between the beach
walkway, where all tourist passed by, and the
beach itself. On the point of purchase, the current
owner had only used it as relief and
waiting/storage station for deliveries, giving it a bit
of a “huddled together” and messy look. One of
the first actions Gio took after the take-over was to
convert this area into a patio with connection to his planned Italian coffee shop. Guests
could now sit and enjoy refreshments or food, while people-watching or simply dozing off.
Some of the local patrons had complained of Gio taking away their favourite hammocks, but
Gio felt sure sacrificing 2 hammocks to 4 tables and thus 8 chairs was a good change. Plans
were to convert the existing columns into column/tables, with sandbar chairs around, thus
giving a more “beach feeling” to its patrons. Also, Gio had taken it upon himself to change
the very outlook of the front building.

The original had been a mustardy yellow colour, which was supposed to give a Mexican style
to the resort, an idea which wasn’t too unfamiliar to Gio. However; a new look, more
reminiscent to Mediterranean style, even if the menu would have to change only over time,
appealed more to the design atmosphere Gio imagined his new resort to have. So a cool
azure blue style was adapted, contrasted softly with nice plum red, natural brown in the
columns, and carefully chosen colour scheme in the restaurant.

1.4 THE ROOMS

The resort held 22 rooms, consisting of 4 types, with individual characteristics and prices ( all
prices in PHP)
STANDARD (6) 1800 2500 2500 2500 1200
FAMILY (3) 3000 4000 4000 4000 2000
DELUX (8) 2300 3000 3000 3000 1500
SUPERIOR (6) 2800 3200 3200 3200 2000

At the point of
taking over, all
the rooms were
“typical “ local
style and
quality, with
unpainted
concrete floor,
naked cement walls and only cold shower.
Mattresses aged from the grand opening, and had all to be changed. Gio and his wife took
great care in redesigning all the rooms in line with vision, purchase accessories which were
in style, and to create rooms that were for more than simply sleeping in.
“ The Former owner had the idea that rooms were to sleep in, and as sleeping happens at
night, and in the dark; there were no reason to put money into it. My belief is that even if we
are at a beach, the rooms should be a place to enjoy, relaxing and where you’d WANT to
come to after or during a hot day at the beach. “
Several months, great efforts and much money went into redoing all the rooms.

All the rooms got hardwood floor and repainted or tapestry walls. New drapes and repainted
doors, refurnished or new air cons, and brand new digital room safes was also added. Brand
new room furniture were ordered with an Angeles craftsman, a family business, as Gio was a
firm believer in local quality workmanship and had experience with this craftsman from his
Italian restaurant in Angeles.

The bathrooms also got a full work over and got brand new water
heaters, lighting fixtures, ventilators and azure, blue tile works along
the walls to give the vision of Mediterranean relaxation, and a resort
rather than a place to sleep. The floors were upgraded from normal
unpainted concrete to light terracotta-brown tiles with marble sides
along the bottom. The sink was changed from ordinary “hanged on
wall” to stiletto type secured in floor and wall. New mirrors and wall
shelves were installed so that the bathrooms now following any rooms are as beautiful as
the rooms themselves.

1.5 THE RESTAURANT

In line with the vision Gio had for the restaurant, it

also got a full work over. From a fully yellow style
Mexican style with little decorations for contrast,
complimentary art, and plastic tables / chairs. So
Gio decided to throw it all out, and bring in simple
new but practical chairs, tables and decorations.

New tables and chairs, made in local style, by a

local craftsman, sturdy but practical gave a
completing design to the tiles which were laid at the
overtaking of the resort. In all; more lively colours, more appealing to the eye and more in
tune with the vision Gio had for the resort.

The menu was predominantly Mexican, but the previous owner had adapted all the offerings
to local palates, which Gio found to be too different, compared to real Mexican style
cooking. He figured there would be a lot of effort to be thrown into getting the kitchen up to
par, with himself as a master chef and mentor, but it would naturally all be worth it in the
end.

As for the restaurant, the menu offerings themselves were many:

5 starters 7 breakfast choices

4 mexican soups 12 snacks / lunch choices
2 Pinoy Soups 18 alcoholic drinks
8 mexican meat/pork main courses 6 red wines
6 pinoy meat/pork courses 3 white wines
8 Mexican Chicken courses
4 Pinoy Chicken courses Coffee / tea.

4 Mexican fish courses

 3 pinoy Fish courses

5 desserts

In the far end Gio built a genuine Italian coffee shops where the aroma of freshly ground and
prepared coffee, along with real Italian gelato and complimentary offerings were on display
for the coffee lovers on the beach.
“ Starbucks is good, but you go there for the experience. At Azzurro, the coffee in our coffee
bar is the attraction” Gio quoted. Quality, flavor, service and relaxation at an affordable
price; that’s what Azzurro’s guests want, he mused.

1.6 THE STAFF

Giordano had taken over the current staff from the former owner, just as norms were for smaller
resorts. He had noted that there were certain irregularities that had to be addressed and changed.
For example there was a severe lack of knowledge and interest for extended service with the
restaurant staff, the kitchen cooks had large gaps in their basic culinary knowledge, often varying
significantly in the quality of their food; especially when it came to non-filipino food. But the going
reasoning for not improving was always “ Sir, the guests weren’t complaining that much!”, a reply
that Gio intensely hated as he saw it as an excuse for non-improvement. The former owner had given
them a basic run-down of the resort, and taught them the basics of the menu, but mostly the staff
had from then on been self-taught, with little or no further development. It seemed to Gio that most
of the staff had a job, but none felt they had a career. As an added item, the staff were quite set in
their roles; a cook worked only in the kitchen, a chambermaid only cleaned the rooms and so on. Gio
knew he had to make changes...

1.7 MARKETING

The former ownership had zero knowledge of marketing, and had used only leaflets printed
on plain white paper, which had been distributed along the beach, and given to the
professional referrers (which claimed 20% of total guest turnover ). Outside of that, the
resort had had little or no direct marketing done. There had been no data analysis for use in
statistics, and no customer surveys, feedback forms or customer satisfaction programs in
place. Records had been kept handwritten in books, but not been used for anything as a log,
for accounting purposed. Extracting data for nationalities of guests, room stays in days and
other data would be a tedious and time consuming task.
As such it seemed that the resort had had much of their guests purely by chance, or through
friends of the owner / returning guests.
Gio noted that the family rooms had had much use, often with as much as 10-12 persons in
it, while the restaurant in the same timeframe could not show related sales.

Azurro’s marketing was based much on the

knowledge of service offering Gio had from earlier
experiences.
Brochures were made, and spread to all known
network, a website was created:
http://www.azzurro-boracay.ph, which was to be
the portal to the resort. Also, co branding with the
Italian restaurant in Angeles and the existing
Italian restaurant in Boracay was initiated. This
meant that guests at the restaurants were informed
about Azurro, and vice versa.
In In addition, the whole beach of Boracay had a “referrer” program set down by the mayor
of Aklan, the municipality of which Boracay was a part of. These referrers would approach
new guests on the airport of port, and try to get these to go with them to any of the resorts
they would suggest. This referrer would then with (local) law in hand demand 20% of the
room rates for every day the guest stayed with the resort. Being a resident of Boracay,
Azurro was also a part of this system, and got a few guests this way. Staying on good footing
with the referrers were therefore important if one depended on this type of walk-in guests.
Word of mouth and by regulars and returning guests comprised another major segment, but
Gio was concerned this segment might decline with the new management and the slight
increase in price the do-over incurred.
The last type of local marketing came from the adult industry. It was not uncommon for
first-time tourists to bring a girl to Boracay, and this girl then bringing the tourist to one of
several hotels and resorts which gave her the same type of referral fees as the professional
referrers demanded. The rationale was “ .... as long as we get the guests...” Even though Gio
considered these 2 marketing channels as necessary evils, it was marketing channels he
dearly wanted to get rid of; both for the clientele, and the ethical implications, and naturally
the economic impacts it had on his operations.

Lastly, the resort had commission agreements with a vast number of smaller, tourist
agencies in manila. Angeles, Davao and other cities, along with several Italian travel agencies
of which Gio had network with.

Gio initiated several improvements when he took over the resort. Among others he initiated
a program to better focus on customers’ needs, making sure that if any new customers were
expected, someone from the resort would meet him/her on airport or boat station, to carry
the guests’ luggage and otherwise assist were needed.

Gio spent several months studying the business of tourism in Boracay, while improving the
resort. He had a friend of his ( who was a marketing professional) design a professional
coloured brochure which he distributed in Italy, and he had (the) website go live, still while
under development, just so the website and the resort could start showing up on internet.
Gio soon noticed that there were a overwhelming amount of Europeans spending time on
the website, while Asians were actually the least represented group.

1.8 THE BUSINES ENVIRONMENT

Boracay is a near 4 kilometre long beach located off the north-western corner of Panay
island, and belongs to Western Visayas region.

“Partly because of its wind and weather

patterns, tourism in Boracay is at its peak during
the Amihan season. During Amihan, the
prevailing wind blows from the east. Boracay's
main tourism area, White Beach, is on the
western side of the island and is sheltered from
the wind. During the Amihan season, the water
off White Beach is often glassy-smooth. On the
eastern side of the island, hills on the northern
and southern ends of the island channel the Amihan season wind from the east onshore,
onto Bulabog Beach in the central part of the island's eastern side. This makes the reef-
protected waters off that beach ideal for windsurfing and kiteboarding / kitesurfing1.”

The beach is today littered with resorts and hotels, ranging from small cabin huts, run down
building converted to the cheapest of inns, to the most luxurious of resorts demanding
thousands of dollars per night. The full range of support services is in place catering to
absolutely every need a tourist could possibly have; and as with all successful tourist spots,
there is also a presence of the local mafia dealing with the more sinister adult industry, drug
industry and its offerings.
Establishing, running and maintaining business in Boracay involve strict planning, stomach to
follow through and ability to measure the effects. Good leadership and a good network with
local suppliers, politicians and authorities are a necessity, whether one like it or not. Several
local laws have been passed which are clearly disfavorable for business owners, but since
most of those directly impacted are foreign investors, locals have little incentives to
discontinue such practices. This force a steady rise in prices tourist has to pay, and a strong
belief in a never ending flow of profits to the municipality.

There is a steady flow of new offerings for tourists on the beach, with hundreds of
entrepreneurs trying their luck every year, most of them packing up and leaving once rainy
season starts and tourist inflow decline. Many complain this is due to the steep fees placed
on non-local business owners or people without “network” or “deep pockets”, a problem

1
http://en.wikipedia.org/wiki/Boracay
that many foreign investors have been complaining to the authorities for a long time, yet
there seems to be a resistance to do anything about it.

Logistics is also a challenge. Any and all resources have to be boated to the island, as it’s
unreachable by land transport. A new jetty for larger ship was created in late 2009, and has
eased the problems access to logistics, but still cost of transport is an economic issue for
everyone, local as well as foreign.

Many resorts have their own in-house activity offerings like scuba-diving, sailing, boat-trips
and a variety of others activities. Some are included as an all-in package; most offers it at an
added price. For the hotels and resorts who do not have in-house activities, there are a
number of individual operators who have formal and informal links to the accommodations
industry of the beach. Some resorts have cooperations which net them a certain referral fee
per paying customers, some do it for free, and some again do not appear to prefer any
specific activity operator, but instead refer their guests to the nearest tourist information.
Azzurro have no in-house activities, and few formal links to the local activity providers.
However, Gio know of all providers, their locations and their offerings.

Boracay being an island has several smaller and larger beaches)

holds several areas of interest to a broad range of tourists; from
luxury resorts with all possible kinds of offerings to their high-
end clientele, to areas specialized to suit the needs of a certain
group of tourists. Example is the beach opposite to Boracay
beach, on the north part of the island. This is a windier beach,
catching more of movement surf and currents from the ocean,
and has become a favourite spot for windsurfing, kite surfing,
wave surfing and similar sports, catering to enthusiast from all
over the world.

Then there are the local tourist attractions like the famous underwater walk, a concept
where one is fitted with a glass type diver’s helmet, giving the ability to walk on the ocean
floor along the reefs, fish, and other aquatic life. The helmet has none of the restrictions that
regular diving masks have, and an overpressure of air remove the need for regulators in ones
mouth. All this give a whole different feeling enabling people who can’t enjoy normal diving,
the opportunity to still enjoy the underwater wonders.

For Nature lovers there are treks and jungle walks, natural hideaways and a multitude of
boat trips to enjoy. Also, there is a local chapter of the “Hash Harrier House” club .. a local
chapter of a walking-club found all over the world.
“Other clubs boosts to be running or walking clubs with lots of funny, drinking and partying
members.... we are not. We are a drinking club with a nasty habit of going for walks in the
jungle or any walkable area nearby!!” – Anonymous HHH member

The Restaurant and bar Scene of Boracay is

world famous, with parties being thrown
nearly every evening. This attracts a sizeable
amount of party interested tourists, and
tourists who are there for the more adult and
illegal side of party. It is an integral even
though in many areas unwanted part of
Boracay, but it also generates sizeable profits
for both its operators, suppliers and local
government.
More of the discotheques and bar scene is found between Station 1 and 2, rather than
between 2 and 3, which tends to be more on the quiet part of the beach.
Stretched across the beach there are hundreds of small and large bars, discos, and other
establishments designed to give tourists an eventful evening out. The attractions range from
the “hole-in –the wall” bar to large establishments with themes, shows and entertainment
as a major attraction of clientele. Others are the typical beach bars, with native style and
design more designed to serve the passerby a drink or two, before they move on to
something else. A returning problem with open bars is the adult entertainment industry
which can be an irritational issue, especially for single men.

There are over 200 restaurants2 on the 4 km long beach stretch, offering a world off choices,
and inducing a hefty competition between each other. Every thinkable and plausible cuisine
is present, from the English kitchen of fish and chips, to French fine dining, and all the way
down to the sidebar Hamburger machine kiosk. This give ample opportunity for people to
taste anything their palates are craving, and also give good opportunity for entrepreneurs
offering new and unique taste concepts. Every month( except for the rainy season) brings
new and exciting openings, offers and concepts, along with the natural closing of
establishments who have tried but failed in their quest for sustainable business.

1.9 STATISTICAL & ECONOMICAL DATA

Visitor nationalities

Nationality Budgeted for 2011 % 2010 Estimate % 2009%

Filipino 10 10 60
Russian 10 10

2
http://www.boracayrestaurants.com/
 Italian 40 40
Scandi ( Nor,Swe,Dk) 30 30
Other EU 5 5 15 ( all euro )
Other 5 5 20
Total

Room Sales/budgets3

Month Budgeted for 2011 2010 Estimate 2009

January 720 580 375
February 720 420 315
March 570 423 315
April 570 550 420
May 570 490 280
June 460 420 302
July 420 390 272
August 375 350 65
September 350 320 80
October 350 320 70
November 450 400 180
December 720 720 536
Total 6275 4700 3120

Sources:

Wikipedia.com
Azzurro-boracay.com
boracayrestaurants.com

3
Interview with Giordano Galante, Some numbers have been altered to protect the business.