Considering buying a hotel in Thailand

[rathoz31]

I've been shopping for an investment for some time and recently discovered the hotel leasing option in Thailand. I see examples of hotels that state $140K to purchase the business with a net of $90K per year. Does anyone here have experience with this type of opportunity? That's a pretty aggressive ROI. Are these returns realistic? Me and my wife are willing to run the hotel. We wouldn't be financing anything to get started, but we'd probably exhaust most of our savings. I'd love to link up with someone who has experience in this field or just hear about some experiences. 

[tonray]

Simon...are you out there...Simon has hotel ownership experience....

 

But given the times we are in....do you really think this is a good time to be exhausting your life savings in the hospitality business ?

[SteveK]

1 minute ago, tonray said:

 But given the times we are in....do you really think this is a good time to be exhausting your life savings in the hospitality business ?

If he can pick up a decent business at a very depressed price, and if tourism recovers quickly, then it could prove to be a very good move. 

 

But we all know that Thais hate selling anything at a loss and factor in this government, it's a hell of a big risk.  Lots of better ways to earn a return on a big chunk of cash.

 

Plus if the business starts doing really well, people will notice and start making life more difficult/expensive as happened to a buddy of mine on Samui.

[Olmate]

Soi 6. Come on down!

Edited April 28, 2020 by Olmate

[jadee]

Don't buy and try to run a hotel unless you are trained in hospitality or are willing hire staff who are. If you want to see what happens when people exhaust their savings to buy and run hotels without experience - watch any episode of 'Hotel Hell' on YouTube - people who have no clue what they're doing end up running places into the ground and wind up broke. If you watch one of those and still feel like taking the plunge, at least get trained in hotel management first. 
As for the 'claimed' figures, is that net revenue or net income? For a hotel at that price, my feeling is its net revenue, - to calculate your actual ROI (net income) you need to know the total revenue and then subtract operating expenses, depreciation, taxes and other expenses.

[worgeordie]

21 minutes ago, rathoz31 said:

business with a net of $90K per year

Not at this time, and how long it will take to bounce back,

is anyone's guess,why not open a coffee shop,there's a real

shortage of them????

regards Worgeordie

[tonray]

4 minutes ago, SteveK said:

If he can pick up a decent business at a very depressed price

 

4 minutes ago, SteveK said:

and if tourism recovers quickly

Lots of ifs is not the thing to exhaust you life savings on...

[taninthai]

As we are in Thailand let’s talk prices in bht not dollars.....factor in business/company set up costs ,visa,work permits,repairs and maintenance yes you are liable for repairs and maintenance ,a lot of out goings in hotel business ,long hours and generally it works your making good money 3 months ,breaking even or small profit for 3 months and then 6 months if you have a lot of staff and don’t control your outgoings you start to lose money,it’s obviously not a year round business.

if you want a different lifestyle and can survive the low season with virtually no income it’s ok ,,,if you think your gonna make huge profits forget it.

[CharlieH]

In the current situation and climate imho you'd be making a huge mistake.

 

Search youtube and seek Simon43 on here for comment. He has owned hotels and no longer does.

[donnacha]

37 minutes ago, rathoz31 said:

$140K to purchase the business with a net of $90K per year.

Before the pandemic, the vast majority of hotels were dependent on the online booking giants such as Booking, Expedia, and Agoda. Their cut can be around 20% of each booking, and more if you participate in schemes to feature your property at the top of the page etc. Did the figures you were shown reflect that?

All those corporations are now under massive pressure from investors to justify their insane multi-billion dollar valuations, so, there is a good chance they will all try to increase their take on each booking. We saw this happen when Expedia was very dominant after the dotcom crash.

The only circumstances in which I would buy a hotel now would be if I had some angle or niche to generate full occupancy without needing the online booking sites at all. Marketing is everything in the hotel business, good service is a subset of that.

In any case, the lockdown will not be ending as soon as the Thai government are suggesting. They are currently saying end of May because, just like the European governments, they know they need to dripfeed the bad news. There would be uproar if the public understood how long they will be trapped like this.

Also, even after the lockdown ends, it will be a long time before mass tourism resumes or, even, before people will want to go on exotic vacations. People accustomed to paying €500 for a return ticket will balk at paying over a thousand for the same economy seat. The economics of air travel are going to be a mess for a long time.

Anecdotally, ecommerce is booming in Thailand at the moment. A surprisingly large number of Thais are discovering it for the first time and taking to it like ducks to water.

[CharlieH]

Nonsense off topic posts removed.

[Vigilante]

Troll post

[4MyEgo]

2 hours ago, rathoz31 said:

but we'd probably exhaust most of our savings

What is that old saying ?

[tonray]

This isn't trolling or trying to be negative...but this is starting to sound more like "my wife is interested in buying into the hotel business". If you personally are not 100% committed to being in the hotel business (meaning it's been your lifelong dream) do not even think about it. You'll regret the day you ever got roped in.

Edited April 28, 2020 by tonray

[Pilotman]

Never ceases to amaze me how many ways people find to lose money. It will be many months, if not years until the hospitality and hotel trade in all countries, but especially here, recovers,  Buying a hotel at a reduced price may be possible now, but can the OP stand the inevitable losses, perhaps for years, until and if it becomes profitable? If he can, fine, but do the numbers realistically would be my advice, then reduce your projected income for 5 years by 20% and up your cost base by the same amount. Then see what it looks like. 

[OneeyedJohn]

A friend and his wife I know took over a small 11 room hotel nearby,  perfect location and nicely maintained. It was generally full most of the time but after two years they had enough as it was too time consuming.

[OneMoreFarang]

In the moment lots of hotels are closed and I am sure lots of hotel managers are bored at home.

Why don't you hire one of those professionals to look at the details and explain to you what you can expect.

 

One thing is for sure: Long hours every day. 24/7 366 days a year.

[poohy]

Cant help with leasing but i have client who wishes to sell an actual  18 room beachfront hotel/resort located approx 150km  south of Hua hin

Hotel comes with all licences company paperwork and financials 

It s trading successfully and has fully trained manager and  staff 

 

Price is around 41 million THB

Pm me if you need anymore details

[kwak250]

1 hour ago, poohy said:

Cant help with leasing but i have client who wishes to sell an actual  18 room beachfront hotel/resort located approx 150km  south of Hua hin

Hotel comes with all licences company paperwork and financials 

It s trading successfully and has fully trained manager and  staff 

 

Price is around 41 million THB

Pm me if you need anymore details

Is that bang Saphan area?

[Led Lolly Yellow Lolly]

5 hours ago, CharlieH said:

In the current situation and climate imho you'd be making a huge mistake.

Can't say I agree with that. I am running a large ~180 room property. Presently we are in complete shutdown, all staff dismissed, pool drained, you name it, all in mothballs. However, our property is fully liquid, and we have no debt. So, we will survive. . . . . and crucially, our competitors won't. They can't service their debts and they will just evaporate due to this crisis. Ultimately, this crisis will put our business in a very strong position, the weaker players culled. So, for the savvy investor, this could be a good time to invest.

 

A word of warning though. In my experience, the only hotels in Thailand that are successful in the long term are foreign owned, multinational chain managed. Thailand is awash with mediocre hotels, with p:#$ poor Thai management and the properties are run into the ground. If you don't have the location, profile, and clout to invest in maintenance to reach full or near full occupancy ongoing, just stay out of the business.

 

 

 

 

 

 

Edited April 28, 2020 by NilSS

[robertson468]

6 hours ago, jadee said:

Don't buy and try to run a hotel unless you are trained in hospitality or are willing hire staff who are. If you want to see what happens when people exhaust their savings to buy and run hotels without experience - watch any episode of 'Hotel Hell' on YouTube - people who have no clue what they're doing end up running places into the ground and wind up broke. If you watch one of those and still feel like taking the plunge, at least get trained in hotel management first. 
As for the 'claimed' figures, is that net revenue or net income? For a hotel at that price, my feeling is its net revenue, - to calculate your actual ROI (net income) you need to know the total revenue and then subtract operating expenses, depreciation, taxes and other expenses.

First you need to ask to see the last three years of accounts that have been certified by an Accountant.  There are many people in Thailand, who are a little less than honest and will inflate both the Net Profit and the occupancy of the Hotel, to make it look much more attractive.  Whilst it would be beneficial to do some sort of course in the hospitality business, more important would be to know how to calculate YOUR profit and be able to keep simple accounts.  Profit is the be all and end all to a continued business.  No profit........go broke! 

 

I had some experience in hospitality and built my own small Resort on Koh Samui some 15 years ago.  Despite the lock-down, we still have Guests and have many returning Guests (ranging from 6 month to several months stay at a time) as well as being on International Booking Platforms. 

 

I would suggest that you identify possible purchases and then obtain the accounts from the Owner.  Then carefully study them.  Also the old adage of location, location, location is very important.

 

If you would like more advice/info, please pm me and I would be delighted to advise you further.

[sanuk711]

17 minutes ago, NilSS said:

However, our property is fully liquid, and we have no debt. So, we will survive. . . . . and crucially, our competitors won't. They can't service their debts and they will just evaporate due to this crisis. Ultimately, this crisis will put our business in a very strong position, the weaker players culled.

Their hotels wont go away will they NilSS, they may go broke and as you say a savvey investor will prob take them over, maybe make a better fist of it, so your competition will still be around.

 

And I hope you do well with yours......

[Led Lolly Yellow Lolly]

Sorry but again I don't agree. Thailand is littered with shells of former hotels, either abandoned or converted for some other use.

[TheFishman1]

Best advice you’re going to get don’t do it this is Thailand

[NiwPix]

Couldn't agree more with NilSS ( Post #20 ). It is turning into a buyers market. It is survival of the fittest now.

Most businesses that survive this "pandemic" will thrive afterwards, because quite a few won't be able to wait it out. They live / work day by day. In turn there may also be a good selection of talent / workers as well.

 

[UbonThani]

3 hours ago, poohy said:

Cant help with leasing but i have client who wishes to sell an actual  18 room beachfront hotel/resort located approx 150km  south of Hua hin

Hotel comes with all licences company paperwork and financials 

It s trading successfully and has fully trained manager and  staff 

 

Price is around 41 million THB

Pm me if you need anymore details

spunds expensive for a quiet spot

[Led Lolly Yellow Lolly]

Quote

In turn there may also be a good selection of talent / workers as well.

 

Local hotel closures are a boon for me, I get to suck up redundant but experienced staff.

 

 

 

 

Edited April 28, 2020 by NilSS

[NiwPix]

Oh, and to answer your question,

90k ROI on 140k investment does sound wrong. I -assume- it is 90k Sales/Income....NOT profit.

[spidermike007]

This insane economic shutdown is going to cripple millions financially. There will be alot of opportunities. A hotel is a risky one. Tourism could take years to rebound here, and there is a good chance it will never return to it's former levels. Wait. Many other opportunities will present themselves. 

 

And at a minimum, you would need a very good CPA to go over the books. And a private detective to research the background of the seller would not be a bad idea either. 

 

There are alot of scams out there. They are countless. You cannot be too careful with your hard earned savings. It is called self respect!

[SteveK]

2 minutes ago, NiwPix said:

Oh, and to answer your question,

90k ROI on 140k investment does sound wrong. I -assume- it is 90k Sales/Income....NOT profit.

ofc - they mean 90k turnover. So that figure means nothing.

 

Plus, it doesn't matter how well you're holed up financially right now with a hotel business, surely if the customers don't come back for 12 months+ almost everyone is going to be screwed?

Edited April 28, 2020 by SteveK