Building a mini resort business in Thailand

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Originally Posted by palexxxx

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Originally Posted by Fondles

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Originally Posted by hillbilly

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Originally Posted by Thetyim

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Originally Posted by DrAndy

It may be a good idea to have two seperate threads

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Yes, good idea

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Excellent idea!

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Superb idea !!

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Brilliant idea !!!

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Shit idea!

^
Agreed! :)

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Originally Posted by Thetyim

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Originally Posted by Fondles

how do they dig it deeper to fit another 2

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They dig out underneath the fitted rings so that they drop down.
It would be too dangerous to stand at the bottom of a well with no rings to prevent a cave in

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You'll recall Thetyim that our place has a red brick lined well (no cement) - Perhaps life was even cheaper back in the day when it was dug.

I believe the real danger is suffocation or asphyxiation from gas or bad air. When we had our well cleaned the guy who went down the well came back up again looking really ill.

I later tossed a burning piece of paper down expecting it to die-out due to no Oxygen - the result was a blue flame flashing in the bottom of the well - Ground Methane!!!

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Originally Posted by Simon43

OK - I'm starting a thread about the building of 2 'mini-resorts' that I'm about to undertake here in Phuket.

This starter post will be all about the background, reasons etc, but I'll then start posting photos as construction gets underway.

Before anyone thinks I've lost the plot when thinking about building not one but two new 'hotels' in Phuket, let me give some background info.

About 6 years ago, I built a 'mini-resort' on leased land close to Phuket Airport. What's a mini-resort you ask? I define it as a small piece of land, with guest rooms/bungalows, swimming pool, restaurant, reception etc. It's a size of business that is manageable with just a few staff or family members, but is able to generate a decent level of income for living in Thailand.

Although that business was very good, I had a lot of issues with my Thai wife, (see previous posts, keywords = nutter, mad, fcuking mad, totally fcuking mad etc).

Happily, after a quickie divorce some years ago, my ex returned to sanity and we remain good friends, (which suggests it was actually me that was sending her mad ...)

Recently, both me and my ex sold our half-shares in our mini-resort. Based upon the business success of that venture, we have decided to built 2 new mini-resorts, (one for her and one for me).

Why is owning a mini-resort such a good business idea? There are several good reasons why I like this type of business, as listed below (in no particular order):

- Regular, daily income (from walk-in and cash-paying guests)
- Regular monthly income payments (from the major travel websites for guest bookings)
- Zero marketing budget required (just list the hotel with travel websites and wait for the bookings to come in)
- The business can be operated with only 3-4 staff (room cleaner, reception, driver/handyman and night manager)
- The business is not usually perceived by Thais as a competing business, (they recognise that hotels for non-Thais are best managed by non-Thais and their own taxi/car-rental/massage businesses etc benefit from hotel guests buying their services).
- The business is easy to supply, (Macro, Supercheap etc)
- The business can also be a home to live in
- The tax liability can be very low, (use your imagination on this one!)

Based upon my experience over the past 6 years, there are a few important dos and donts which will help to ensure a profitable mini-resort business:

-Never sign a 3 year (renewable) rent contract for the business premises. It's 3 years because the landlord is not required to register this rental contract at the government land office. You have no security of tenure after the initial 3 year period, and the landlord can throw you out or increase the rent as he sees fit.
- I go for leased land contracts, and I build the mini-resort on the land. The lease is for at least 15 years, with the monthly rental amount over that period detailed in the lease, (including any rental increases etc). My name is put on the land Chanote document as the lessee. My tenure is secure for the length of the lease.
- If you rent land on which to build your mini-resort, the land lease contract should specifically state that the land owner has no claim of ownership over the business that is constructed on the land, and that you are allowed to sublet or sell the business. (The land owner can claim the physical buildings at the end of the lease, but not the furnishings etc, and the business can be transferred as a going concern to a new land plot+buildings).

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So how much money will this little mini-resort make for you?

The bottom line, (you can believe me or not, but this is why I am keen to build new mini-resorts), is that a 10-room mini-resort can generate a profit (after expenses) of at least 200,000 baht per month in low season (May-October), and at least 400,000 baht per month in high season.

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To achieve that level of profit requires that the outgoing expenses are minimised and the income is (of course) maximised - and it does not automatically follow that everyone is smart or hard-working enough to pull it off.

In my case, I had absolutely zero previous experience of running a guesthouse or hotel, so I ran my business according to good business practices and common sense. It seemed to work OK!

Enough background info - I'll post initial photos in the next post

Simon

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OK to generate that amount how much do u need to spend??
reason I ask is i am in the final deal with landlords and lawyers for doing this although with 20 rooms) on Koh Rong in Cambodia.
land costs us NO KEY MONEY
20 year lease ( land area is about 2 1/2 rai)
$5,000/year with yearly increase of 10%
investment under $500,000 ( which includes. 20 deluxe bungalows, reception, restaurant, Pool and landscaping

Simon..Looks good ..
Re the Pipework ..we tried the drop method but our place has too much sub surface /strata rock so we now just get our local friendly "cat man" in for a day and he goes like the clappers.Already sunk about 10 bunkers but idea is to connect all together and ring main the land with permanant water supply.Hopefuly will spud in a new fresh water deep well in dry season..presently get supply from local dam.(somewhere behind our mountain):)

Those 2 gin joints you had down on Suk Rd seem a lo...nnng time ago.

Must find out how to attach pics??

Am baffled that anybody would choose to stay in a resort right on top of the airport . Who`s your target market , plane spotters, people who don`t trust themselves to get out of bed for an eary flight.
Suggest you will only attract the insane

Maybe you should read the thread?

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Originally Posted by Simon43

I had the occasional cobra at the old hotel - on one instance, 2 rather 'large' Australian women were having a traditional Thai massage in our wooden Thai sala when a cobra snake fell from the roof rafters and landed in between them..

You could have heard their screams all the way back to Sydney.

Laugh? I almost died trying to hide my hysterical laughter - Basil Fawlty would have loved it :)

Simon

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I just started at the start of your thread. I admire your get up and go, do it now attitude. Almost two years since you started and I have no doubt you will succeed.

Ota

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Originally Posted by rawlins

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Originally Posted by palexxxx

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Originally Posted by Fondles

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Originally Posted by Thetyim

Yes, good idea

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Excellent idea!

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Superb idea !!

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Brilliant idea !!!

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Shit idea!

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I thought it was OK

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Originally Posted by Phuketrichard

$5,000/year with yearly increase of 10%

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slightly off topic but wow! have you calculated the cost in 10 years time?

+1 5500
+2 6050
+3 6655
+4 7320....

Sorry for not posting/starting the separate threads yet - it has been raining all week and I have webbed feet. In spite of that, the well diggers are working (with face-mask and air tank!), and the builders have been busy building a boundary wall.

Once the rain clears up, I hope the pace of work can pick up.

[at]phuketrichard, as Dr Andy pointed out, beware of the % increase in rent - it compounds up to a high figure very rapidly. The land lease contract I finally signed has NO rent increase after the 3rd year. Do you get a 'solid' land lease in Cambodia, or is it worth less than the paper it is written on?

[at]Maeon - jeez, I had almost forgotten about those 2 bars in Suk 1 Plaza! The salsa bar made money but the other one was just a headache!

[at]Sunderlandstephen, you need to read the whole thread - then you'll understand why it's not only the insane who want to stay next to the airport :)

[at]Ota, what was 2 years since I started??? I built the last mini-resort about 6 years ago and have just started this one. My Ao Nang hotel was opened 10 months ago. I'm confused...

Simon

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Originally Posted by DrAndy

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Originally Posted by Phuketrichard

$5,000/year with yearly increase of 10%

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slightly off topic but wow! have you calculated the cost in 10 years time?

+1 5500
+2 6050
+3 6655
+4 7320....

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Solid lease with very high officials and the main company developing the whole island. WE have been at wokr on this for over 6 months and stil not signed.


its not much, as we will be adding 20 additional bungalows, ( nightly will be over $75 with increase every 2 years) over the first 5 years and by 2015 Koh Rong will have it on airport, ( plus the one in Shianoukville will be open) casino and Marina!!!and we have over 200 metres beach front and lots of ideas.
Bungalows now on the island are all low key and are full 90%

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Originally Posted by Phuketrichard

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Originally Posted by DrAndy

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Originally Posted by Phuketrichard

$5,000/year with yearly increase of 10%

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slightly off topic but wow! have you calculated the cost in 10 years time?

+1 5500
+2 6050
+3 6655
+4 7320....

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Solid lease with very high officials and the main company developing the whole island. WE have been at wokr on this for over 6 months and stil not signed.


its not much, as we will be adding 20 additional bungalows, ( nightly will be over $75 with increase every 2 years) over the first 5 years and by 2015 Koh Rong will have it on airport, ( plus the one in Shianoukville will be open) casino and Marina!!!and we have over 200 metres beach front and lots of ideas.
Bungalows now on the island are all low key and are full 90%

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Have to admit that I had never heard of Koh Rong before so I just googled it...looks amazing!

I suppose geologically, it is all part of the same bunch as Koh Chang on the Thai side

that too was a beautiful island until it got developed

what are the bungalow prices on Koh Rong? and are there all types of resorts there?

$15-..... its new so there are not any Luxury resorts YET. This is the island that Old MR T was in talks with with PM HE. Any invesment in Cambpdia now will see a repayment of much higher % than Thailand but it might take a few more years

They plan on doing major work and making it environmentally friendly ( i don't know how with an airport and casino ) but....

The majority of leases on the island are 1 year and that's why ours is more as we don't want short term but we want to build very nice bungalows.
Unlike Thailand u can own 100% of the business

Koh Rong

Cost for a same size resort on the beach ?


Hi,


Thank you so much for your report, but can you estimate what would be the cost for the same resort on the beach ?

For example do you know what is the minimum rent for a front beach land, or selling price ?

And also, why don't you buy lands on which you build your resorts, aren't you interested to keep it for long term or do you really believe in Thai courts when the owner will ask you to leave or triple the price ?

I know that you are smart and know exactly what you are doing, but can you explain more ?


Thanks a lot.

Phuket Richard, I admire your entrepreneurial skills, I tried it way back many moons ago and did well for 2 years then island jealousy took over. My one question comes from the Koh Rang website, it looks like its a total government deal and we know the government there.

Where is you resort to be located


https://teakdoor.com/images/smilies1/You_Rock_Emoticon.gif

Another spot of heaven about to be fucking ruined by the same greedy bastards that have ruined most everything else in the region.

[at]buycondojomtien - I think your questions were directed at me?

I would not even consider renting beach land in Phuket, for a couple of reasons. The availability of beach land - either to rent or to buy is extremely limited. Beach land in my location in north Phuket (away from the more popular beaches) is typically $1 million per rai to purchase, (compared with the $666 per month that I pay to rent my land right next to the airport.

Beach land is usually only available for purchase - I cannot recall seeing any decent land for long-term rent.

Beach land is very valuable (see above), and experience tells me that corrupt officials and greedy locals may attempt to obtain possession of your property by devious or lethal means, (the Thai architect on my last build was shot dead a few weeks after completing my project over a dispute with some beach land).

Beach land does not meet my project aims - my mini-resorts cater only to transit passengers from the airport, not for those seeking a longer-term (1-2 week) holiday hotel.

I do not buy land because I am a foreigner and am not allowed to buy land. Even if I had the funds, I am not interested to enter into any contrivance that circumvents Thai property law, (call it what you want, but control of a Thai company by a foreigner is breaking the law). By renting the land, my name (and only my name) has been written on the Chanote land title deed. The land owner cannot use the land as security for a loan and cannot remove me from the land for 15 years - unless I default on the rent payments.

The land owner will no doubt ask me to leave my property after 15 years - my project financial calculations assume that. The land owner will obtain possession of some empty and aging buildings, and I will simply transfer my existing business, furniture and goodwill to a new piece of rented land.

Simon

OK, as suggested I have started separate threads for each of these projects:

Building a mini-resort in Phuket - The City Resort

and

Building a mini-resort in Phuket - The Country Resort

I'll add further photos and progress reports to those new threads, not to this thread, (unless it's discussion of issues that apply to both)

Simon

South, the right hand point on section 13 that sticks out facing west
all of the investors already live an do business in SHK an have the right connections.

PS its the Russians that have done most construction recently ( snake island and their own private bridge)

Yes, thank you Simon, questions are for you :-)

Buying land is ok with reliable and already rich Thai family on my side.

I just cannot imagine developing a resort project for 15 years and then just loose it ? This is where I would like to retire later...

If Thai are involved and visible it should be ok to have a business on the beach ?

Actually I would never consider Phuket an option for business or not even vacation after having spent 6 months there, but I think the best choice is KOH PHANGAN, being for the location or the people, but also because I hope that there will never have an airport there.

Can you tell me how much you think would cost a beach land to build 10 small bungalows ?

I will also remember about mafia and troubles about having beach business, thank you.


Cheers.

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Originally Posted by Simon43

[at]buycondojomtien - I think your questions were directed at me?

I would not even consider renting beach land in Phuket, for a couple of reasons. The availability of beach land - either to rent or to buy is extremely limited. Beach land in my location in north Phuket (away from the more popular beaches) is typically $1 million per rai to purchase, (compared with the $666 per month that I pay to rent my land right next to the airport.

Beach land is usually only available for purchase - I cannot recall seeing any decent land for long-term rent.

Beach land is very valuable (see above), and experience tells me that corrupt officials and greedy locals may attempt to obtain possession of your property by devious or lethal means, (the Thai architect on my last build was shot dead a few weeks after completing my project over a dispute with some beach land).

Beach land does not meet my project aims - my mini-resorts cater only to transit passengers from the airport, not for those seeking a longer-term (1-2 week) holiday hotel.

I do not buy land because I am a foreigner and am not allowed to buy land. Even if I had the funds, I am not interested to enter into any contrivance that circumvents Thai property law, (call it what you want, but control of a Thai company by a foreigner is breaking the law). By renting the land, my name (and only my name) has been written on the Chanote land title deed. The land owner cannot use the land as security for a loan and cannot remove me from the land for 15 years - unless I default on the rent payments.

The land owner will no doubt ask me to leave my property after 15 years - my project financial calculations assume that. The land owner will obtain possession of some empty and aging buildings, and I will simply transfer my existing business, furniture and goodwill to a new piece of rented land.

Simon

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I just cannot imagine developing a resort project for 15 years and then just loose it ? This is where I would like to retire later...

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My plan is actually to open the rented land resort, save some money in the bank for a few years, and then buy a small piece of land near to the airport and build another resort which will then remain in the family after I'm dead and gone. But 15 years is long enough and I've no plans to retire anyway.

Good luck to you with a beach resort in KPN. However, I will say again that valuable beach land can attract the lowest scum (Thai and foreign) who will want to cheat you out of your hard-earned investment. Over the past 10 years, attempts to cheat me out of what I've worked very hard for have been made by expensive lawyers (Thai and foreign), senior land office officials, my ex and others. That's all for some minor little business or land. Now think what corrupt and ruthless people/family/'friends' will do if your business is on valuable beach land...

I've learnt now to keep my head down and not to attract too much attention, - difficult to do that if you own an expensive bit of beach on KPN with a striving business :)

Simon

I'd be interested to hear about some of those devious tricks to get control of your business if you have the time, or indeed mood to share.

OK, how about signing a land lease contract at the land office. They produce the paperwork (in Thai) with 2 extra photocopies. Your Thai speaker carefully reads every word of the original contract and all looks good and you sign them. The 2 photocopies of course look exactly the same and those are signed as well. Your lawyer says all is ok...

It's only several weeks later when your Thai friend is perusing the photocopies that they discover (buried deep in the contract), a single word difference between these so-called copies and the original, but a difference which will mean that you will lose out by several 100,000 baht if it's not corrected immediately.

That happened to me a few years ago, when the land office officials worked with a bent lawyer to try to steal this money from me. If I bluntly challenged the land office about this, they would lose face big time (oh dear), and I would not be able to resolve the situation. The solution - me and my Thai friend advised the land office that their photocopier was 'broken', because it had copied a single word incorrectly. 'Oh so it did' said the land officer with a thin smile, and corrected our so-called photocopies...

The moral is - if you think you SHOULD trust them, then it's likely that you SHOULD NOT trust them!!

Simon