Dragon Hill’s operating costs high in expensive South Korea
October 15, 2006
SEOUL — Running a resort hotel overseas in one of the world’s most expensive cities means plenty of financial pressures, Dragon Hill Lodge officials say.
The military’s hotel in Seoul requires more money and more planning than its peers elsewhere when it comes to delivering everyday services, according to Richard Gorman, the chief operating officer for the U.S. Army’s Community and Family Support Center.
“We have to think about it,” he said. “We’re competing for people’s time and their ability to pay. If the soldier doesn’t think it’s fair, then we have to rethink.”
Gorman says the Dragon’s staff already had made some adjustments, such as cross-training workers and mass-ordering certain foods.
In South Korea, for example, all produce, meats, staples and dairy come only once a week and must be ordered almost six weeks in advance. The food staff orders slabs of beef to carve into steaks and 55-gallon drums of barbecue sauce, all to cut down on costs, hotel workers said.
The falling dollar hurts as well, Gorman said.
In the past five years, the dollar’s value against the won has dropped 27 percent. The Dragon pays two-thirds of its 475 workers in won, but its income is all in dollars.
That means a worker making 30 million won annually in 2001 cost the hotel $22,918. That same worker now costs $31,678, a 38 percent increase.
“That’s before annual raises,” Gorman said, adding that pay increases were fixed at 10 percent annually in recent years.
That growing cost means each plate of food served at the Dragon costs, on average, $8.60, and that’s before paying for the food, he said.
Other money pressures come in less obvious ways.
In the past year, the Army has switched from battle dress uniforms, which needed ironing, to wrinkle-free Army combat uniforms. That change over the year sank receipts at the Dragon’s dry cleaners by 43 percent, or $45,000, Gorman said. And the new cloth boots took shoe-shining revenues from $8,000 a month to $1,000 a month.
None of which changes the fact that, come checkout time, it can be considerably cheaper to fly a group of soldiers for a weeklong meeting to The New Sanno hotel in Tokyo than to the Dragon Hill Lodge. It’s not the soldiers’ money but the unit’s travel budget that can take the hit.
“That’s probably true,” Gorman said.
Nevertheless, the Dragon’s rooms remain full. The occupancy rate for the past 12 months was 92.9 percent, down from a high of 96 percent in 2004, Gorman said. That’s a difference of almost 4,500 rooms a year.
But it will get harder to fill rooms as the military relocates further south of Seoul and decreases to 25,000 servicemembers in South Korea, he acknowledged.