behind the counter x Aung Win Chen
Aung Win Chen is the Founder of BaobaBed Hostel and also the Co-Founder of MMHK Group. His journey of starting a hostel is not like the typical journey of most hostel owners. Aung Win was introduced to the hostel industry much later, subsequent to already establishing and running two other successful businesses.
After the initial encounter with the industry, he travelled to Bangkok and Vietnam to further experience and study the industry, and he managed to set-up and start his own hostel within the next six months! Impressive. We know! Join us as he shares his thoughts and insights on the industry and the shares with us the three important qualities that a hostel owner must-have.
What was your life like before opening a hostel?
I graduated in economics from the University of Michigan in Ann Arbor, back in 2006. I also worked in a fixed income industry for over 3 years in the United States; I mostly lived in California and Arizona. Then in 2010, I came back to Myanmar and stayed here for a while. Two years later in 2012, I co-founded a company called MMHK Group, as it took us a couple of years to create a very diverse portfolio for the company. We mainly do wholesale and retail of gasoline, imported from Singapore in a batch of ten thousand metrics at a time, which we ship into Myanmar and then distribute it to the mining areas. We also opened a few petrol stations throughout the cities.
Another business venture that I’m involved in is the real estate and property development industry, That's how I founded the WH Hotel & Service Apartment in Thanlyin, Yangon. We also invest in start-ups companies, but not the small scale companies; we invest in large-scale companies, like the insurance companies, or public companies that were just formed for the purpose of trading. So we managed to invest in one of the biggest insurance companies in Myanmar, and it’s been seven years now, and it’s grown exponentially, it’s got very good returns and very good potential.
And lastly, I was also the CFO of Myanmar Japanese Thilawa Development Limited, the first special economic zone in Myanmar and a monumental project strongly supported by the governments of Myanmar and Japan. So I already had these four main streams of business already going on before being introduced to the hostel industry.
What inspired you to start a hostel?
My interest in the hostel industry was born because of a good friend of mine, Mr Archai Lohacharoon, who is an Architect by profession. We’ve known each other for 5–6 years and he worked with us on the petrol station project too. He lives in Bangkok and one day somewhere in 2017, I went to visit him.
I went to meet him in his office, but when I got there, I saw he was running an office which was more of a cafe/hostel. It wasn’t a typical architectural firm or office. I had never seen or experienced a hostel before that! Back home I was already running a 3-star resort hotel property in Yangon for the past four years by then, which has a capacity of forty-five beds. However, that was the first time I understood the concept of a hostel, and Archai gave me a detailed tour of the hostel and explained to me how a hostel works and about the community and social aspects of hostels. And I just said to myself,
“Wow, hostels have the most refreshing outlook towards the hospitality industry!”
So when I got back home, I was excited to do my own research and started talking to different people from the hostel industry. Eventually, I took two of my managers from the hotel I was running back home and we went back to Bangkok. Archai helped me book some of the best hostels in Bangkok, so we ended up staying in a lot of different hostels; party hostels, social hostels, every kind of hostel, really! We had a great time, and it got me even more interested in the industry. After Bangkok, we also travelled to Vietnam to stay and experience the hostel culture there too. Those two trips to Bangkok and Vietnam helped me realise what kind of hostel I wanted to open back home. So this time when I got back home, I put together an excellent team and started looking for a place. Archai also helped with the designing of the hostel and by the end of September 2017, we were able to open our first hostel, BaobaBed Hostel, Yangon. This was 6 months after I first visited Bangkok.
6 months is pretty impressive! How did you spread the word, though? Were you part of any hostel or hotel associations in Myanmar?
Honestly, when we started, it really just took off organically. I was very clear in what I wanted and which direction I was heading. I wanted to provide an experience of a 4 or 5-star property; basically a luxury hostel at an extremely affordable price. Here in Myanmar, we cannot really charge exorbitant prices. However, of course, we listed our hostel on Hostelworld, booking.com and Agoda obviously, which also helped, but we first announced and launched it on Facebook. In Myanmar Facebook is a big thing and widely used.
Also, the team I put together were very fresh and young people, with not a lot of experience but who had a healthy appetite to learn more, so it was easy to train them. I’m very grateful for that because our rating has always been very high, always above nine and that’s not always easy to achieve as you know, it’s really because of my staff! So coming back to the question, we didn’t have to market the hostel a lot;
I believe it’s the service we offered and people liked it and gave us great reviews, and that’s how it really picked up truly.
Is there any particular moment or memory from all these years that stands out for you?
In the first two weeks of starting the hostel in Myanmar, there was a political event that occurred at the same time in the country. At that time, we didn’t have any international traveller’s coming in because of the political unrest. We were lucky and also unlucky at the same time, people started coming in but I didn’t have a lot of guests then, it wasn’t a full house. But luckily I had time to train my staff well and I think that helped us later. After two months of opening the hostel, we were already on a thirty-five to forty percent occupancy which was well above the average occupancy rate for all hostels during the period of political unrest.
After that period passed, people started coming in again and most of the time we were full-house! So when I first started, I’ve seen those kinds of difficulties and got through it. And to continue the ride, after opening the first hostel, we started preparing for the second and third one. My vision was to have hostels in a lot of different attractive cities of Myanmar for guests to come and live in good accommodations with very reasonable prices.
In Myanmar, we do have good accommodations, but at very high prices, and guests were not thrilled with that. So when I came in, I wanted to add value to the guest experience by providing very good accommodation at mid-range pricing. By 2018, we were able to open two more hostels, one in Bagan and one in Nyaung Shwe (Inle Lake). So within a little over a year, we opened three hostels. In 2019, we have two very big locations under renovation. Of course, due to the pandemic, we have had to put it on hold, however, we aim to open by the end of this year, if all goes well. In one of our flagship hostels in Yangon, we will be able to fit three hundred people approximately and the other one is in Mandalay, which can accommodate more than a hundred and fifty people, so we are really looking forward to that!
What were the challenges during the pandemic outbreak?
Our business was running great until you know the Pandemic outbreak which came in quite late in Myanmar compared to the rest of the world. We were full-house before that until the second week of March 2020! They announced the very first case here in the third week of March, and the Myanmar government did an excellent job with the first wave of outbreaks. It took them a few months to contain it, and by the end of June, people were travel-ready(domestic only). I was used to focusing on international tourists and guests, but because of the pandemic, we had to quickly change our strategy. So on Facebook we started promoting Myanmar cultures and traditions, I mean we already had these activities in place already, but we had to think of a way to attract local tourists and digital nomads, which we did and after a week, we were full-house again with local people only. Also, of course, because all international flights were non-operational.
In August, however, we experienced the second wave of outbreaks, which was a lot worse than the first one. With the second wave, almost everything shut down; bars, restaurants, hotels. During these times, the most important thing is to survive, you know, the cash flow is very important and we know we have to keep it healthy.
From the first wave, we knew this might be a long-term problem, so we tried to cut expenses wherever possible, like reducing all unnecessary costs in order to keep our cash flow healthy. And at the same time, at all our properties, we have been keeping small groups of employees and carry out maintenance regularly. So by the time things get back to normal, we will be ready to open our hostels again and serve our guests.
What do you think are the qualities every hostel owner must have?
I personally think a hostel owner should be passionate, patient and persistent because hostels aren’t very easy to run!
It definitely looks easy, but it’s a very tough industry. As you know, when guests come in, they have different requirements and they can be very demanding in a good way, of course. So as a hostel, you need to first have certain things in place in order to attract guests and assure them a comfortable and happy stay.
What do you find distinctive about the hostel industry?
After running a hostel, I don’t want to run a hotel anymore!
haha! The hostel industry is extremely unique and as I said before, it’s a demanding industry. I really believe that in the future, more and more young people will fall in love with the concept, which is already popular amongst them. More and more people will opt for the hostel environment over the traditional hotel stays. Someone who runs a hostel must provide exceptional services and very good common areas, as that’s where guests interact with each other, so it’s very important. Also, running a hostel in whichever city, having excellent local knowledge about the city and its surroundings is also very relevant to attracting more guests.
Coming back to services, it just has to be very good! Form a team who are passionate about the hostel and the industry. For example — everywhere I go, I also have my team, my manager and the General Manager from a specific location, I try to hire all the staff from nearby communities. Community is very important. We live in the community; we run our business by the help of the community, whatever we buy, we buy through the community. So if we have to employ people, we do so from the local community first and if we need specific requirement or skills that we can’t get the right match for, then we look to hire from other cities.
Another thing I like and find distinctive about the hostel industry is that people are eco-friendly and always ready to help. Most of the people are very helpful and have a true community spirit.
Any advice for aspiring hostel owners?
Well, it’s a very tough yet fun industry. It can be very rewarding as well, mentally and financially, if you do it right. Make sure you understand the industry really well and make sure you do your research; what type of hostel do you want to run? A lot of time, effort and money is put into opening a hostel and when the hostel doesn’t fit the crowd or your personality, you won’t be thrilled. It could become a terrible situation and very demotivating. And of course like I mentioned before, passion and patience are very important ingredients to have your hostel dream project reach its full potential.
The team you built makes all the difference too, without a strong, passionate and trusted team, one will not make it. I am lucky enough to have my best friend, Kai as my COO who has great experience in the US hospitality industry and who is truly trustworthy.
