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Nihi Sumba in Indonesia has so far survived the Covid-19 pandemic. Photo: Nihi Sumba/Jason Childs

Indonesian Instagram influencers swimming with horses gave remote luxury resort hope amid the coronavirus lockdown. With travel ban it’s back to survival mode

  • The US$1,500-a-night Nihi Sumba resort on a remote island lost its customers when Indonesia closed its borders early last year
  • Nihi Sumba cut back staff, increased recycling and efficiency, and was surviving on a quarter of its usual income until new Covid-19 curbs came in
Asia travel

With investments in property, building supplies, phone gadgets, dotcom start-ups, city hotels, fashion and celebrity lifestyle brands, Miami-based financier Chris Burch enjoyed a winning streak in business that earned him a seat at the billionaires’ club in 2012.

But when he bought Nihiwatu, a high-end surf resort on Sumba Island, 800km east of Bali, for US$30 million in the same year and began sinking millions more into expanding it into a family-friendly ultra-luxury hotel, the consensus was that Burch had finally misstepped, with an irrational, emotionally driven investment.

“I bought it to spend quality time with my sons,” he tellingly said at the time.

Anyone who’s stayed at the property, now called Nihi Sumba, can relate to those sentiments. With 17,000 islands, Indonesia has no shortage of beaches, but the 2.5km arc of sand the resort has exclusive access to is something else, backdropped by a ridge of impenetrable jungle, with endless barrelling waves and statuesque rock formations resembling giant discarded chess pieces.

Miami-based financier Chris Burch, who bought Nihiwatu and turned it into Nihi Sumba. Photo: Getty Images

“You can feel it when you come here. It’s a sacred place,” says the property’s founder, Claude Graves, who still lives close by.

Comprising 22 hectares of manicured gardens that conceal 33 pool villas, Nihi Sumba is a tropical maze scented by frangipani blossoms. Add a small army of butlers, a chocolate factory for the children, a stable of Sumbanese horses, jet-skis to chauffeur surfers out to reef breaks and nature-based experiences such as kayaking down a gin-clear river and riding horses in the surf, and one begins to understand how the property, which is nowhere near as fancy as a Ritz-Carlton or the like, was able to charge an average room rate of US$1,500 per night.

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Some of that income was put into the property’s charity, The Sumba Founda­tion, which, it claims, has saved the lives of 4,000 children through nutrition and anti-malaria programmes, as well as building wells that provide drinking water for 30,000 people and health clinics in which more than 40,000 patients have received treatment.

It didn’t take long for the accolades to roll in, most notably in 2016 and 2017, when the resort was named the “world’s best hotel” in Travel + Leisure magazine’s annual readers poll. Burch, it seemed, really did have the Midas touch.

But early last year the party came to an abrupt end when Indonesia closed its borders to international tourists to stop the spread of Covid-19.

Guests paddle-board along the Wanakaka river in Sumba. Photo: Nihi Sumba/Jason Childs

“When you live in Sumba, you live in a bubble and don’t pay much attention to what’s going on in the rest of the world,” says resort manager Madlen Ernest, who is from Austria and is among the last of half a dozen foreign staff members still working there. “The pandemic didn’t hit us until March [2020], when cancellations started coming in. By the end of the month our last guest had checked out. We closed in April.”

Over the next few months, Ernest tried to keep Nihi’s 410 staff members busy. “When you have a property this close to the sea, you can’t just lock it up and come back once the situation improves. The place would fall apart in a matter of months,” she says. “So we focused on doing all the renovations we never had time for or could not do because the noise would disturb our guests. We built wave breakers for the sea wall, refurbished a few villas, reupholstered every couch, sofa and pillow and planted a fruit forest.”

But push soon came to shove and a third of the staff had to be let go while those who remained had their salaries cut by half. Yet, like millions of other businesses hit by the pandemic, the black swan event helped the property identify and cure inefficiencies.

The Sumba Founda­tion has donated money for nutrition and anti-malaria programmes, as well as building wells for drinking water. Photo: Shutterstock

“We learned we were not that productive in the past,” says garden supervisor Agustinus Yanto Kulla. “For example, we used to assign two gardeners to each villa. Now it’s one. Three people used to clean our pathways, which require endless upkeep in the tropics. Now it’s one. At first it was hard for us with the working conditions but we’ve adjusted by working smarter and improving communication with front-of-house staff. The pandemic has also helped me become a better motivator and leader.”

Executive chef Sakirun Acharad says Covid-19 has forced his kitchen to be not just leaner but greener. “To reduce costs, we started recycling and finding uses for food scraps, like using the trimming of bones instead of buying bones for soups, and using the tops of tomatoes that are usually thrown away for sauces and stock. It may sound immaterial but when you add up thousands and thousands of tomatoes, it makes a difference.

“We also made it our mission to massively cut down on ingredients we used to fly in from Bali and source things locally. And we hired a consultant to help us get more serious about our organic garden. Today, a third of our fruit and vegetables are grown on site. Eventually we will double that.”

At one point there were three private jets parked at the airport. It looked like Vail
Madlen Ernest, resort manager

But the biggest change, again, was the number of staff in the kitchen: cut from 40 full-timers to only 10. “Before, the philosophy was to employ as many people as possible,” says food and beverage manager Satria Fery. “Now it’s the other way around.”

Bill Barnett, founder of C9 Hotelworks, a consultancy in Phuket, says the same kinds of changes have occurred at luxury hotels across Southeast Asia.

“The biggest expenditures for hotels are energy costs and staff,” he says. “In the West, having one extra waiter on the roster can mean the difference between making a profit or loss, while in Asia the solution to every problem has always been to throw more staff at it. But Covid-19 has been an accelerator of trends. Hotels in Asia can no longer afford to have five people standing around to pick up a handkerchief in case it falls. They’re catching up with the West.”

A traditional Sumbanese village near the resort. Photo: Shutterstock

When all was said and done, operating costs had been cut by 40 per cent at the resort. But every business needs profit to survive – a hard task for Nihi given its target market had been locked out.

When the resort reopened last August after a four-month hiatus, management pinned their hopes on three new market niches, the first being high-net-worth individuals from overseas who could enter Indonesia on business visas in private jets.

“The founder of one of the world’s big­gest tech companies and his family stayed with us,” Ernest says. “We got permission for them to clear immigration at Bali without leaving their plane and to quarantine at our private five-bedroom estate.”

Nihi Sumba is a luxury family resort on Sumba island in Indonesia. Photo: Nihi Sumba Alexandre Ribeiro

Others followed. “At one point there were three private jets parked at the airport. It looked like Vail,” says Graves, referring to the top-shelf ski resort in the United States.

The second market niche was expats, typically middle-aged American surfers and rich Russian millennials riding out the pandemic in Bali. A promotional visit by 11-time world surfing champion Kelly Slater helped generate some traction with this demographic.

But as both these niches were small, attracting wealthy Indonesians who normally holiday overseas was the key. “Before, the domestic market was very small for us because Indonesians who can afford to stay here prefer to holiday abroad,” Ernest says. “But we said, ‘Let’s give it a go,’ and we got good results very fast when Indonesian Instagram influencers who stayed with us posted photos of our horses swimming in the surf. That started a trend of people in Indonesia talking about Sumba. Being in such a remote place where social distancing is easy added to the allure.”

Nihi Sumba attracted wealthy Indonesians and influencers after posting photos of horses swimming in the surf. Photo: Nihi Sumba/Tania Araujo

Major changes had to be made. “We cut our room rates by 50 per cent and offered experiences we used to charge for, like massages, chocolate making and swimming with horses, for free.”

Nihi’s strategy is sound, says Gary Bowerman, an analyst of Asian travel and consumer trends based in Kuala Lumpur. “They did the right thing, I mean, they really had no choice, did they? Closing a property is a bad signal to the market, it suggests the brand cannot survive. And if you shut down, you lose your staff – you will have a very hard time rehiring.”

Barnett says focusing on the domestic market is not a sustainable strategy in developing countries such as Thailand and Indonesia, though. “Resorts that are now dependent on domestic markets are struggling because demand is patchy and focused on weekends, public holidays and school breaks,” he says.

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Also, as many are discovering, they are still at the mercy of new waves of Covid-19 infection. “And there’s going to be fierce competition in the region with so many new luxury resorts that were planned years ago now being finished and getting ready to open,” Barnett says.

“Hotel operators across the region are warning that without the return of international travellers, there will be more bankruptcies in coming months. And small properties like Nihi, with unique selling propositions that have been on the cutting edge, need to do more than just survive. They need to develop new services and activities to keep consumers interested. And you can’t do that when your rates are so low. They’re going to have to increase them sooner or later.”

Until international travel bans are rolled back, Nihi Sumba is determined to keep muddling through with whatever occupancy it can muster. That stood at 33 per cent in June, before travel within Indonesia was halted by emergency measures designed to contain sky­rocketing coronavirus case numbers, half of what it had before the pandemic. And since it was charging half price, the resort was generating no more than a quarter of the money it once did.

Sumba’s sandalwood ponies, also known as the Sea Horses of Sumba. Photo: Getty Images

“Some months we lose money, other months we break even, but our whole concept right now is just to keep our people employed,” Ernest says. “Not every hotel can do that.”

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