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  1. #51
    lob
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    good luck simon, a question, when you say u have a lease, why are u paying rent, ongoing, should i say a fee. i lease and its just that a lease, fucked if i'd pay rent as well. a fee. cheers mate.

  2. #52
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    Good luck to you Simon, keep on with the updates.

  3. #53
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    Quote Originally Posted by lob
    good luck simon, a question, when you say u have a lease, why are u paying rent, ongoing, should i say a fee. i lease and its just that a lease, fucked if i'd pay rent as well. a fee. cheers mate.
    A lease agreement on land just means you are entitled to build on said land and rent it for at least the specified duration of the lease. You still have to pay rent on the land which is under the lease agreement.

  4. #54
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    Simon... You should make it an international franchise and aim for one at every airport in the world.

  5. #55
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    Quote Originally Posted by Simon43
    Or the other way round - you fly in to the airport from Chiang Mai at 00.50 in the middle of the night, tired and wanting your bed. Would you prefer to find an expensive taxi, endure the 1 hour trip to Patong, go to bed around 02.30am? Or would you prefer to take a free 2 minute taxi ride to your airport hotel, be able to swim in the all-night pool, get a hot meal, still have time to visit the beach bars using the free shuttle - and then awake refreshed for your onward journey at a civilised hour??

    Simon I aint here to argue with you mate ,,, non of the above would ever apply to me as I arrange flights a bit better than that ,,, especially domestic routes ,,



    If you prefer to stay in a 5-star hotel near to the airport, then take your pick of the Indigo Pearl or -- er.. that is it. About 10,000 baht starting rate per night.
    The Dewar 5 star booked through Agoda which is where I book most my thai hotel / resort is available for 2.200 per night .

    Believe me mate I aint arguing , just seeing red flag after red flag ,, I dont think I am alone here either ,,,,,,,,,,,anyway all the best with it
    I'm proud of my 38" waist , also proud I have never done drugs

  6. #56
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    Quote Originally Posted by Simon43
    you fly in to the airport from Chiang Mai at 00.50 in the middle of the night
    well, you must have a private plane as commercial flights do not go so early

  7. #57
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    Quote Originally Posted by nigelandjan
    Believe me mate I aint arguing , just seeing red flag after red flag ,, I dont think I am alone here
    yes, have to agreee that the picture painted has many imaginative touches

  8. #58
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    you fly in to the airport from Chiang Mai at 00.50 in the middle of the night

    well, you must have a private plane as commercial flights do not go so early
    AirAsia FD3977 from Chiang Mai arrives at Phuket Airport at 00.50. It is full every time, very popular flight.

    There are flights every night from Shianghai which are scheduled to arrive in Phuket at 01.05.

    In high season, charter flights from Europe and Russia arrive and depart throughout the night.

    Phuket Airport is open all night - there is no reason to restrict night flights since there is no-one living under the flightpath, not that this would stop them

    Simon

  9. #59
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    ^ So, are you going to send a driver down there to hassle the passengers with brochures?... Or have people already booked your place online?

    Do you think your ex-missus deserves a place of her own?... You should fuck her off and run the 2 places yourself.

  10. #60
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    Simon, disregard the bitching - Thailand has no shortage of bitter expats who would like nothing better than to see other people fail. A handful are hanging around on this thread.

    Like crabs in a bucket.

    Ignore them, you'll get your place built, you'll get on with your life and these sad fucks will be bitching about the next guy that want's to have a go at life.

  11. #61
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    Whilst I'm waiting to take some more photos, I'll answer the relevant comments.

    [at]rawlins, I learnt very early on with my last mini-resort that the business only has a chance of succeeding if the vast majority of guests have pre-booked online, and in most cases, fully pre-paid online. The taxi guys at the airport would not accept if any of my staff went touting for guests ==> dead or injured staff

    About 5% of customers who have pre-booked and fully pre-paid for their hotel never even arrive at my hotel! This is because some (not all) of the airport taxis will either tell the guest that my hotel is closed/burnt down, or they simply ignore the passenger's instructions and take them to another hotel where they receive commission. In these cases, often the passenger is too tired to argue and therefore has to pay again for their night of stay at the other hotel. (I still get my room revenue, but it's not a good situation).

    I refuse to use any Thai travel/booking agents, (except Sawadee which is owned by a French guy). This is because I have had too many issues with Thai travel companies who either resell my rooms at an illegal mark-up, or demand a higher commission payment from me AFTER the customer has already booked at our agreed net rates. So I decided not to waste my time with them and I only use international travel/booking web-sites, such as Agoda, Booking.com etc.

    I do receive 'walk-in' customers and some that taxi drivers bring to my hotel, if they have not yet booked at another hotel (I hope!).

    [at]lob, I use the word 'lease' to indicate a long-term land rental contract, as opposed to a short rental term. So all I'm doing is renting the land for an agreed term (15 years), and paying a monthly rent, then building on the land.

    This is not really any different from the 30 year lease contracts that many foreigners use when 'buying' a house in Thailand, except that they are paying 100% upfront for both the house and the land rental.

    In both cases, there is no legal obligation for the lessor to extend the lease contract, and he can reclaim the land and house. So, in both cases, one has to consider the cost of investment into the house or resort. For my mini-resorts, I need to ensure that the revenue that I receive from the business over the lease term (15 years), greatly exceeds the initial investment cost of constructing the buildings.

    My lease contracts allow me to remove all fixtures and fittings at the end of the lease, and the business name, goodwill etc is owned by me and therefore transferable at the end of the lease.

    So the tricky part is to design the buildings so that they collapse one day after the lease expires

    Simon

  12. #62
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    what about running costs ? ok let's assume the followings from your posts

    Key Money for land ? if there any ? let's assume no for now

    Hotel Construction with pool/garden/interior = 5M THB
    Annual Amortization over 15 years = 333,000 THB

    Monthly Land Rental = 20,000 THB
    Monthly Revenue (95%) = 10 Rooms x 1,000 THB x 30 days x 95% = 285,000 THB
    Monthly Electricity/Maintenance = 25,000 THB
    Monthly Wages (2) = 20,000 THB
    Monthly Amortization (333/12) = 28,000 THB
    Monthly Others = 20,000 THB

    Net Profit = 285,000 - 113,000 THB = 172,000 THB per month

    the key is the net room rate and the 95% occupancy rate, I am including the agent fee in the net room rate

    I am sure I underestimated costs as they might be things that I can't think of for running a small hotel

  13. #63
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    the monthly outgoing cash flow is quite significant, about 120k, so that means you need at least 6 months monthly reserve or 600,000 THB when the occupancy rate might fall or you have a catastrophic season

    that annual reserve should be discounted at the cost of risky capital, says about 15%, so you need to add another 8,000 THB per month for financial costs of your working capital, it's the capital rent provision you need to include to run the business, without it there is no business.

    So it's generating significant revenues, but the cash flow question could be an issue, above all if it's run by Thai who have no idea of responsible cash management

    Most businesses fail not because they don't have clients or have a bad product (even though that happens too) but because they run out of money to run the business.

    bottom line: looks great on paper, but could bring certain personal financial strain to run if owner is putting all his capital into it.

  14. #64
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    Perhaps Butterfly you are guilty of not 'thing too mut'

    It would be a very odd hotel that has no secondary income streams from guests.

  15. #65
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    Quote Originally Posted by Itchy
    It would be a very odd hotel that has no secondary income streams from guests.
    good point, but you can't really budget those, too variable

    you can think of it as pure profit for the owner instead, but that would be what ? another 20k NET per month at most ? each profit center has costs, never forget that. Many individuals, above all Thais and small business owners here, including farangs, make no distinction between sales and profit.

  16. #66
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    Hang on, let's hear from Simon about the Secondary Income Streams - rather than rushing to disregard income which undermines hopes that he fails.

  17. #67
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    the 285,000 THB per month is still significant, there is no fail here, and you can use that cash for costs rollover

    the point is that money is at risk, and yes it's a nice project, but there are some hidden costs and risks

    I think the secondary income details was mentioned previously in another thread,

  18. #68
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    Simon...

    Will it look something like this when it is finished?


  19. #69
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    OK, good comments from Butterfly re the revenue and expenses:

    Perhaps the most important point is that the room rate of 1,000 baht is the low season rate. In high season (November - March), the rate varies between 1,800 - 2,500 baht per night). That is quite achievable in high season (cos that's what I was getting before...)

    The monthly costs are quite low:
    Electricity - 10,000 baht (3 phase is charged at a 'wholesale' rate)
    Staff - 20,000 baht
    Cable TV - 1,400 baht
    Internet - 1,000 baht
    Car/petrol - 10,000 baht
    Loo paper/maintenance - 10,000 baht

    I'll ignore the costs of buying in food and drink that is resold at a profit to the guests

    The secondary income streams are important revenue sources:
    - restaurant, food & drink resales
    - Sending walk-ins to other hotels = 300 baht/room/night
    - Ferry tickets (to Phi-Phi etc) = 300 baht/pax
    - Hotel taxi, eg to Patong or Rassada = income but offset against vehicle depreciation costs
    - Tour ticket sales = typical 300 baht per person commission
    - Massage = 100 baht per person
    - motorbike and car rentals
    - Day-rooms (where guests only stay for a few hours whilst awaiting their outbound flights)

    I should say that this type of small business is really best-suited to being a family business, where all family members work and contribute to the venture, without necessarily demanding a formal salary. (Bit like Thai Chinese businesses where the family all works together for the general benefit of the family). It's more a lifestyle that is based upon a daily, regular income and profitable business after payment of expenses. (It seems to have worked ok for me anyway).

    If there is bad weather or disruptions at the airport, this type of business actually benefits, because stranded passengers all run to stay in the nearest hotel whilst they await their flights.

    Butterfly, my ex is typical of someone who did not differentiate between sales and profit. She has improved now in that respect, but I still manage her hotel listing and room incomes from the booking web-sites.

    [at]rawlins, yes it will look something like that photo, especially if you concentrate on the small hut at top-right.

    Simon

  20. #70
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    Simon had a similar hotel in a similar location with a similar business plan, before, and it worked, so he clearly knows best there. I'm sure his experience with the previous place has sharpened him up to the realities on the ground. I'd trust him to make it work.

    The other variables, Thais, mad Thais and fukin mad Thais, in an extremely violent location (did I read somewhere that Phuket was the most deadly holiday location, that's 'holiday location' not 'war zone' for Brits). You hear of death after death on Phuket, add in the nutter, and I wouldn't do it meself. Simon is a scotch egg short of a picnic, but as he says, he is happy, so good luck to him; I doubt he needs the luck on the business side, but when the money starts coming in and the mad Thais start upping their financial demands, fuking their side of the business and expecting Simon to compensate them from his side of the business... then, things could (Simon's past experience with the very same Thais says WILL) get messy/nasty/deadly...
    How do I post these pictures???

  21. #71
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    Quote Originally Posted by Simon43
    Perhaps the most important point is that the room rate of 1,000 baht is the low season rate. In high season (November - March), the rate varies between 1,800 - 2,500 baht per night). That is quite achievable in high season (cos that's what I was getting before...)
    I was referring to the net rate, not the announced rate. If it's booked online or through agents, I would suspect they take between 30% and 50% on small hotels like that.

    So 2,500 is achievable but how much does that agent gets from it, maybe it be online or otherwise ?

  22. #72
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    I would suspect they take between 30% and 50% on small hotels like that.
    The rate varies according to agent, but lower than your figures. I pay between 12-25% commission, typically 18% to major agents like Agoda and Booking.com. The best type of booking is either a cash walk-in or booking on my web-site where I only have to pay the Paypal fees.

    Simon

  23. #73
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    Quote Originally Posted by Itchy
    Simon, disregard the bitching - Thailand has no shortage of bitter expats who would like nothing better than to see other people fail. A handful are hanging around on this thread.
    You seem to be reading something into this other than what I can see ,, it seems to me far from what your assuming people here are trying to flag up any probs, I know I would be gratefull for pitfalls pointed out to me that I hadnt thought of before I got in too deep

  24. #74
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    Quote Originally Posted by Simon43
    AirAsia FD3977 from Chiang Mai arrives at Phuket Airport at 00.50. It is full every time, very popular flight.
    ok, my mistake, I read it as 05.00
    Last edited by DrAndy; 11-09-2011 at 01:43 PM.

  25. #75
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    Quote Originally Posted by DrAndy
    ok, my mistake
    An admission of error??? Somebody frame it for posterity...

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