Short rental cycles resulting in 'hit-and-run' business practices, says IndoChine boss

Singapore

MICHAEL Ma, founder of the IndoChine group of hotels, eateries and clubs, has been vocal about his dismay at the decision made by Gardens by the Bay not to renew the IndoChine Supertree lease.

The terms on the lease agreement signed was what is known in the industry as "three-plus-three". IndoChine was given an initial lease of three years in 2012, which was then renewed for another three years in 2015.

A spokesman for Gardens by the Bay said in an email response: "We thank Indochine for offering visitors a unique dining experience over the years. The official tenancy period for Indochine was for a 3+3 year period, starting 24 September 2012. On a goodwill basis, we had earlier granted a lease extension by seven months."

What Mr Ma takes umbrage at is that he had entered negotiations wanting a three-plus-three-plus-three. It was not until they were fairly deep into negotiations that Gardens by the Bay said they were only willing to offer three-plus-three.

"I said, where's the other three? They said if you do a good job, if you do well, we don't mind doing another three-plus-three. So, I signed. I was optimistic," said Mr Ma.

Much of his unhappiness stems from the fact that he has, in his words, "obeyed everything they wanted".

This has included outperforming the expected sales figures by three times, and investing more than initially expected into the site - from re-installing the solar panels which were located too near to the tree itself and as a result were shrouded in shadow and were at risk of being damaged by party-goers dropping items on them - to installing a large lightning conductor in the middle of the tree.

"The first time we came here, the road wasn't even finished. It was a huge risk but I thought it should work, you know?" said Mr Ma rhetorically. The fusion restaurant is one of the park's earliest tenants. The garden's 18 Supertrees are all located in Bay South, which was officially opened to the public in 2012.

"Nobody would have taken this because operationally, it's very tough to operate for the staff."

The gamble he took was based on the expectation that he would be granted an extension as long as he played by the rules, thus allowing him to recoup the investment.

As highlighted by other restaurateurs, short rental cycles encourage what Mr Ma terms a "hit-and-run strategy". Because businesses are unable to take a long-term view on things, most do not bother to invest in quality materials or staff training, he said.

"In Hamburg, Germany, my staff don't serve a customer until they spend three years doing legwork as a runner at my high-end restaurants . . . my staff can look after 25 seats and he doesn't use a pad. He recognises each person and their order. It's part of the showmanship," he said.

In Singapore, he said, with a slight shake of his head, they use an iPad.

"Labour and rental pains go hand in hand . . . when the rental function is so high that nobody invests, you resort to cheapness to survive."

The spokesman for Gardens by the Bay said it was looking to convert the space into a public observation deck to allow "greater accessibility and enable more visitors to enjoy the panoramic views".

Gardens by the Bay is also exploring letting visitors try out digital augmented reality or virtual reality technologies at the new observatory.

READ MORE: Singapore business body pushing for fair rent terms from private landlords