tam/bas news

5 June 2006

BAS Armenia assists Yevmari hotel complex in Jermuk

Everybody in Jermuk – a small resort town 170 kilometers from Yerevan – is familiar with Arshaluys and her spouse Hayrik. In Soviet times they used to work at the biggest trade centre in Jermuk and as they recall now “we earned enough to take care of the family, socialized with thousands of tourists visiting the town … but there was something missing.” They had to kill the entrepreneurial spirit in themselves – a very random characteristic for a Soviet citizen – and do what they were asked to do day after day, everyday…

With the collapse of the system, the laid off couple thought of moving to Russia when the stream of privatization started. The momentum was used to spend the family’s entire savings plus some loans from friends for buying the trade centre building – an empty space of 750 square meters without even wall shelves.

In 1997 a small part of the large area was turned into a retail outlet. In those years people were buying on credit and the family business could not collect debts and was about to shut down when Arshaluys came up with the idea of converting the building into a guesthouse.

This was a brave idea for the time, since most of the infrastructure in the town was in a bad shape (no proper roads, no constant electricity and gas supply, no heating, etc). They had no previous experience of running such a business. Last, but not least, the family budget could not support anything but the daily expenditures on food.

However, Arshaluys and Hayrik saw the potential of economic growth in the country that would eventually bring higher numbers of tourists to their town.

The only alternative was to seek loans, since at that time it would be impossible to find another enthusiast like Hayrik that would believe in the viability of the venture and would invest funds as a partner in the business. There were no banks that would extend credit to a start-up business in the remote town of Jermuk. The family had to borrow funds from neighbours at astronomic interest rates of 10-15 per cent per month. Two units were built – each with a kitchen, bathroom, a living room and two bedrooms. These were refurbished as comfortable suits that could house a large family or a group of friends. It became the first hotel in Jermuk that had new furniture, was clean and tidy, and had a steady supply of electricity and heating.

The facilities were there but “… we had no clue what is next.” It was then that the BAS Programme Armenia office supported a training course on Bed & Breakfast with funding from EuropeAid. The novice entrepreneurs used this opportunity to learn about things such as booking processes and how to meet guests, breakfast recipes and amenity lists…

In about a year the revenue from the two rooms paid back part of the loan and gave enough confidence to start the renovation of three more units and the cafeteria by the end of 2004. They started catering not only to the guests of the hotel, but also to the visitors staying in the neighbouring B&B apartments. At the end of 2005, two more duplex units were added, thus, bringing the privatized space to a complete utilization. As of 2004, the hotel Yevmari had three employees in the cafeteria and two maids to take care of the lodging section.

In another workshop organized by the BAS Programme on ‘Effective Small Business Management Skills’ they gained the fundamental skills for managing and marketing their business already in a competitive environment as the number of privately owned lodging service providers was increasing considerably in the region.

While Hayrik is now the person to take care of the logistics and facility renovation and maintenance, Arshaluys is the one together with her three daughters to supervise the work of their five employees and to run the hotel business. The daughters – Yeva (15), Mary (12) and Arpine (5) take pride in the family business and by all means try to help their mother in running the day-to-day activities at Hotel Complex Yevmari (acronym of the names of the three daughters).

In recollection of the path the family has passed through while building their business, the most difficult hurdles they encountered they consider to be the lack of financial resources and relevant expertise that forced them to go through gradual development only; another difficulty to overcome has been the administrative hurdle caused by the tax inspectors, various local supervisory bodies, etc.

Among the positive things to remember they site their enthusiasm and the success of their business concept, that according to them was so exemplary that pushed others to replicate and contributed to the revitalization of the hotel infrastructure in the town. Another positive factor they site is the knowledge and skills that they have gained through the recent workshop on ‘Financial Controls and Accounting’ funded by the Canadian International Development Agency through the EBRD BAS Programme for Armenia. Now Arshaluys has learned how to run the accounting of their family business herself so that they do not see too much trouble from the tax inspectorate.

Both Arshaluys and Hayrik believe that BAS assistance through the three competence building sessions has laid a firm foundation for them to do the job.

But still “… there is something missing, Hayrik says, I would love to have a son as a fourth child otherwise it becomes a very female-dominated business!”