Building a mini resort business in Thailand

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).

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.

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

You built a "mini" resort, got burnt by the then wife (now ex) and now your going to build 2 more (1 for you 1 for her)................

What could possibly go wrong, your on a winner there for sure.

Looking forward to it! From one businessman to another, I wish you luck and prosperity!

Could something like this be as successful in say Korat???

So here are the details of the land plots where I'm going to build these 2 mini-resorts.

Let's call them City Resort and Nature Resort, because that's the style of location.

City Resort:

https://teakdoor.com/Gallery/albums/u...ITY_RESORT.jpg

Land size = 1/3 rai (about 550 square metres)
Lease period = 15 years
Location = 260 metres from Phuket International Airport, 1km from Nai Yang Beach
Monthly rent = 20,000 baht (increasing by 8% every 3 years)
Locality = suburban, within easy walking distance of the airport terminal, and 3 minutes by shuttle to the beach

Nature Resort:

https://teakdoor.com/Gallery/albums/u...URE_RESORT.jpg

Land size = 1/2 rai (about 800 square metres)
Lease period = 15 years
Location = 900 metres from Phuket International Airport, 1km from Nai Yang Beach
Monthly rent = 18,000 baht (increasing by 10% every 3 years)
Locality = rural, right amongst the rubber trees and pineapple plantations, but still only a few minutes by shuttle to the beach and airport.


These 2 plots are very different to each other. The City Resort plot is set amongst houses and rented rooms for airport staff. It's ready to build on. The Nature Resort looks to be in the middle of nowhere(!), but is actually very close to the airport. In the photo, the old rubber trees have been removed from the land plot, and I'm waiting for the dead branches to be removed.

I'm going to be building these 2 mini-resorts at the same time, so I'll try to post photos of construction progress as I go.

Simon

you seem to have it sussed in legal terms,but this is thailand and going into biz again with ex/wife who as you say/ total fkin nutter/ would make me think, some of her traits has rubbed off on too you/llf/.. good luck with your new project....

Hi Chitown, I have never lived in Korat, so can't really comment. But I have found that probably the most important skills to have in this type of business are internet knowledge, SEO skills and being able to provide good customer service to all customers, even those who make your job difficult

Simon

[at]Spikebs4, actually I am not going into business with my ex. The Nature Resort is 100% her business. I just advise her about the construction project and operation of the business, in return for a share of the profits.

Simon

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Originally Posted by Simon43

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).

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Good god, Simon. I do believe you have finally lost your sanity.

I'm in Ao Nang this weekend (at a guesthouse business I run), but will return to Phuket on Monday when the guys come to build the well at the Nature Resort. In north Phuket, the land is quite rocky, which apparently helps to ensure that water wells never run dry. (The well at my previous resort never ran dry).

The well is dug by hand, and lined with concrete rings. The diggers stand inside the first ring, which is placed on the ground. Then then start to remove soil from inside the ring area and the weight of the ring makes it sink into the ground. Further rings are placed atop the first ring, and so the whole ring assembly gradually sinks into the ground under its ever-increasing weight. The diggers are protected from soil cave-in because they are inside the concrete rings. This is a skilled job, to ensure that the rings sink into the ground correctly and not at a slant.

The charge to build this well is 3,000 baht per 1 metre height ring. How many rings are needed? The well at my old resort was 14 metres in depth ==> 14 rings ==> 42,000 baht. So I'm hoping the well diggers hit water at a similar depth.

Simon

Quote:

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Originally Posted by Simon43

[at]Spikebs4, actually I am not going into business with my ex. The Nature Resort is 100% her business. I just advise her about the construction project and operation of the business, in return for a share of the profits.

Simon

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...good for you mate, like i said hope it goes well for you, and good luck in getting your share of the profits from your ex/wife../llf/..ps.. did you ever drink in a bar in soi khataloa/s/y..franks/..

BTW, there is another good reason for building a resort with no more than 10 guest rooms. My OrBorTor (local government office), who must sign off the project plans, have decreed that if a project has more than 10 guest rooms, then it is classified as a 'hotel' and not only is liable to pay a 1% hotel tax on room revenues, but must also submit much more extensive project plans and regular operational reports. But any project with 10 rooms or less is defined as a 'guesthouse', (regardless of whether the business includes the word hotel in it's trading name), and is exempt from hotel tax and heavy paperwork.

Additionally, if the project is only single storey, then the OrBorTor is not interested to inspect the construction site at any time. Basically, once the project plans are signed off by them, you are on your own and free to build how you want :)

Simon

interesting stuff mate - thanks for sharing.

i'd be very interested to know your designs/building materials/price costs for each bungalow and the pool design /costs.

cheers.

400,000 thb a month after expenses?

400,000 a month / 10 rooms = 40,000 per room per month

40,000/30 days a month = 1,333thb per day per room

To make 400,000 a month gross, every single room (10) would need to be leased out (30 days each per month) at 1,333 baht per night

A complete sellout in that location seems highly impossible mathematically for 4 months in a row (high season) or any month for that fact. I do believe you will have vacancies and more than you anticipate.

In only takes a few events, 1996-1997 financial crisis, SARS, Coup, Airport Blockage to ensure you wont have any where near 100% occupancy

This is without any expenses including lot rent, salaries, utilities, etc

Now factor is the cost of building, amortized over 15 years and add that as an a monthly expense?

The reality of your financial claims are not remotely close to realistic

Rooms for rent might be a better title than resort after looking at the locations (1/3 rai and 1/2 rai) are not mini-resorts or anything else resortish.

If you are figuring financial occupancy rates on anymore than 30% a month, you are asking for big trouble.

One problem that I'm facing with the Nature Resort is lack of electricity. Well, there is some, but not enough to fart around with. Prior to signing the land lease, my ex visited the electricity offices, to determine how good (or not), the electricity supply would be.

For a 10-room resort, it's important that the electricity supply is 3-phase, and can supply enough current to power 10-12 air-con units.

I doubted that the existing supply was up to this, and an on-site inspection revealed that extra cables could be run to the land from a nearby supply, but that this would only be sufficient for about 6 air-cons, AND the voltage could drop in the evenings from 220 volts down to 200 volts, due to the long distance from the nearest step-down transformer. Power cuts would be unlikely.

Based on this info, my ex decided to go ahead with the project, and my project plans provide for 5 air-con rooms and 5 fan rooms. For the latter, the room design needs to encourage cooling air-flows. But we are confident that the 'natural' location/style of the resort will successfully lend itself to renting out of fan rooms, as well as air-con rooms.

Right now, I'm checking out LED lighting for the Nature Resort, since I need to minimise the overall current demand of the resort, and to use lighting types which will not go dimmer if (when) the voltage drops down by 20 volts.

Simon

When are you opening?.. I fancy sleeping on an airport runway and this might be the closest I will get to my dream.

[at]livinlos, you seem to forget that I have operated a similar resort in a similar location for the past 6 years. I'm fully aware of published, average room occupancy rates in Phuket for the different months of the year, which are hideously lower than what I have achieved.

Let me tell you the room occupancy rates for the past 12 months when I was managing my last resort.

January - 100%+
February - 100%+
March - 100%+
April - 100%+
May - 97%
June - 97%
July - 97%
August - 97%
September 90%
October - 95%
November - 100%+
December - 100%+

Now, you can call me a liar and/or a twat, but I am good at my job, and I would not risk my meagre funds if I did not have total confidence in my own abilities to obtain similar figures for these new resorts, given their specific locations.

BTW, I have not assumed such high occupancy figures in my project forecasts, and bear in mind that I have only mentioned room revenues. There is additional revenue from food & drink sales, taxi fees, massage fees, tour commissions etc etc.

Simon

[at]rawlins

The City Resort will be about 450 meters from the runway (parallel to it). Of course, I've checked out the noise levels when bigger planes are landing and taking off, and the level is very acceptable.

I imagine some plane spotters would be keen to book rooms..

It should take me about 6 months to build each resort. I'm not concerned about opening in low season, based upon my experience of low season occupancy rates at my previous resort.

It's important to understand the type of customer who will stay in these mini-resorts. I target the single-night, transit customer who is arriving/departing/transiting from the nearby airport. All these guests want is a clean bed, a hot shower, free wi-fi, free airport shuttle, a hot breakfast, and a hotel manager who speaks mother-tongue English.

Based on those criteria, I do not need to waste funds on renting larger land areas for the project. Nor do I need to construct/employ spa/massage services, (which are available locally). I do not even need to provide a restaurant/cook because there is a wide choice of local restaurants who will deliver to my door at a 'net' price.

Simon

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Originally Posted by Simon43

Phuket.

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Quote:

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Originally Posted by Simon43

taxi fees

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You getting in on that too then, Simon?:rofl:

Quote:

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You getting in on that too then, Simon?

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:) ,No, I meant if a guest wants to go to Patong etc, then we can send them in our hotel taxi and receive that taxi fee.

But we cannot go and pick up guests from Patong, because our driver would be beaten to a pulp by the local taxi mafia....

Simon

5555. Good luck with it all anyway.

well, 97% occupancy in most months is wonderful, and if you are charging B2000 a night, you will makle a fortune

where do we sign up to put our money where your mouth is?

Quote:

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Originally Posted by Simon43

December - 100%+

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This is an interesting one 100%+ ? Plus what ? do the rooms have awnings on the side,s like caravan,s ?

Quote:

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Originally Posted by Simon43

massage fees,

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Oh dear ,,,,,,,, spose it had to happen sooner or later :)

100%+ occupancy means that all guest rooms were fully occupied, and then additional 'walk-in' guests arrived who were then sent onto other hotels nearby, and we received a commission from those hotels for those guests, (typically 300 baht per guest).

Massage fees are for traditional massage (honest), and those services are provided by the nearby massage shop who send someone to the hotel when a guest wants a massage in the sala in the garden.

Typical room rates are 1,100 baht per night for low season and 2,500 baht per night in high season. Those are the rates that resulted in the very high occupancy rates at my previous hotel.

I've certainly had well-documented issues with my ex some years ago. Must have been a major hormonal thing cos she calmed down after her tubes were snipped.

Despite those problems, my previous hotel was very profitable, as is my guest house in Ao Nang now, and as is the guesthouse that she owns near to the airport. So it sure sounds like some sour grapes being aired.

My dick size looks ok to me, never had any complains. But then I do not go around comparing my penis with other men. Perhaps some of you do :)

As for those calling me a twat etc, I've realised that TD has some members whose calling in live seems to be nothing more than throwing abuse at other members. I've learnt to ignore those sad people and I'll do so in this thread.

I should say that this is not a post about how a rich guy is throwing his money about. On the contrary, I am far from rich, and these projects are an example of how a small business can be established with very limited funds. I'm not naming my budget right now, but I'll list the various expenses as the projects proceed.

Simon

Right, let's talk about poo...

In any hotel, it's important that the toilet and sewage systems work correctly. guests do not like to take a sh*t and then see their logs floating in the garden....

Both of these land plots do not benefit from a mains sewerage system, so I'll have to install my own.

The system has to process the black water (waste from the toilet) and grey water (waste from the shower and basin).

The solution is to install plastic septic tanks which will contain the solid black water waste, and which will need to be emptied about once per year. The liquid black water is then piped from the septic tank into a soakaway area, which could either be a vertical dry well, or could be a horizontal leach field.

The grey water is piped directly to the soakaway via a grease trap. The grease trap catches all the hairs and soap which would otherwise eventually block up the soakaway area and render it useless.

When building the soakaway area, it also has to be physically distant from the water well, since you do not want to contaminate that water supply.

A properly-built waste system as I've described should operate for many years without issues. That means that it should be properly built in the first place! Vitally important, (and one might think common-sense), is the need to ensure that all pipework is installed with the correct slope, to encourage the waste water to travel in the correct direction. I've learnt from experience that some construction workers seem to think that water will flow uphill - so I'll need to check all pipe levels before the installation is complete.

Simon

Good luck on you Simon!

Glad follow further info about the ventures...