Are Many Guesthouses Full During High Season ?

[dmax]

some of you may have read my last thread, sorry to post a similar thread but i need some advice , ive went and put deposit down on guesthouse at bottom end soi bukaew near tuesday and friday market, across from marin place hotel , newly renovated with 12 rentals, decent sized rooms with balconies, kitchen needs fitted out, rooms need fitted out, i need to invest 1.4 before i make any money , i know it was rash but the wife was on my back too to buy it, she thought it was a great buy, i get a 3-3-3 year lease, 70-000 rent per mth.

very high rent i know !!!

was thinking 700 per night hi season as rooms are all brand new with dvd players and dvd library plus free internet. ok we can all get rooms on soi bukaew for 700 a night but no dvds or brand new furnishings , tea/ coffee making facilities, table and chairs on balconies , nice clean surroundings , new aircon systems, will have food also and maybe 5-6 girls working at night,

me and wife will take 1 room leaving 11 for rent at 700 x 30 = 231.000 b. less 70.000 b rent plus 12000 electric plus water. leaves 149.000 b. 6 bar girls i imagine will pay their own wages per mth if not then not far off it unless they are ugly and lazy. 2 full time staff for reception and cooking 6.000 x 2 = 12.000 leaves me with 137.000 b or there abouts.

drinks say at 50 b each . if i sell say 40 beers per day thats a profit of 800 x 30 = 24.000 per mth plus i,ll make some money on food but i imagine not a big lot as everyone on soi bukaew has theyre favourite eating places .

so 137.000 plus 24.000 = 161.000 baht per mth . theres no other overheads that i can think of . only cable tv + internet connection wifi.

last year i couldnt find anywhere on soi bukaew at xmas and ended up renting a dump of a place on soi chyapoon ( wont mention a name ) but place was filthy and old furnishings etc.

Edited November 29, 2010 by dmax

[morphious]

Dont forget the tea money for the BIB

[puuchai299]

Seriously,are you permanently drunk dmax??????

[dmax]

Dont forget the tea money for the BIB

oops !! forgot that one

[dmax]

i would also be interested to hear, would you be prepared to pay 700 per night for a new room with all facilities , dvds, kettle ,coffee facilities, mini bar plus kitchen downstairs and ladies etc if you want some company, or pay 700 for a hotel with a pool but rooms not as nice ?

all the cheap charlies in soi bukaew do indeed look for 6k a month rentals but they are shtholes and only fan rooms. to be honest i wouldnt want their money, soi bukaew is not !! only cheap charlies !! yes a lot of xpats there on pensions but also a lot of mongers with money to spend and a lot of them do not care how they spend it either.

[rgs2001uk]

Think this guesthouse belongs in the another day another scam thread.

The only person likely to make money is the landlord who owns the place.

Its a bit like watching the movie Titanic, I dont need to watch it to know how it ends.

What happens for the other 10 months of the year after Jan is over?

[JAM1E]

Hi Dmax,

Have read your post's hope all goes well with the new Guesthouse. You seem to be getting a bit of stick about buying this Guesthouse from the other poster's.

You have already said in one of your post you will give it a go if it fails you will go back to the uk and work and earn the money again. If it does not work out you will have had a couple of more years in the sun away from the U.K. and the recession. When we are all here looking for work freezing cold, You will be sat in a nice bar looking at the Ladies in the sunshine. Know where i would like to be....

If nobody bought bars or guesthouses where would we all Drink and stay when we come to Patts. I for one will call in for a beer when I am in Patts. I do hope other TV members will do the same.

Good luck

Jam1e

[BB1950]

Dont forget the tea money for the BIB

Don't forget the employee theft!

[loong]

First of all, you are basing your calculations on 100% occupation all year round.

Secondly, 700 Baht per night.

12,000 Baht per month for electricity?? 12 rooms with air conditioning plus bar plus kitchen - get real.

I think that the place you are referring to used to be a mini-mart with rooms above and been on the market for about 3 years. Rooms used to be 500 Baht per night for air con rooms

Opposite this place and about 100 metres North is a place called Thai-Isaan that rents rooms and has a restaurant on the ground floor. Also the laundry next door. I think that they are about 500 Baht per night or 8,000 per month plus electricity. Go and look there and see the standard of rooms and ask how often they would get full occupancy if relying on daily rentals.

You don't mention how much you paid for the lease and key money, this all has to be taken into account.

Run away as quickly as you can.

[surayu]

DMax, this is a link that take you to a blog written by a gentleman that decided to make a similar choice, it's in dutch language but you can very easily translate it using one of the many online tools (i like to use Google Translate), read carefully because i believe it's really an eye opener and an honest insight, cheers http://pinocchiosoipostoffice.blogspot.com/

[FarangBuddha]

i would also be interested to hear, would you be prepared to pay 700 per night for a new room with all facilities , dvds, kettle ,coffee facilities, mini bar plus kitchen downstairs and ladies etc if you want some company, or pay 700 for a hotel with a pool but rooms not as nice ?

all the cheap charlies in soi bukaew do indeed look for 6k a month rentals but they are shtholes and only fan rooms. to be honest i wouldnt want their money, soi bukaew is not !! only cheap charlies !! yes a lot of xpats there on pensions but also a lot of mongers with money to spend and a lot of them do not care how they spend it either.

If it is such a good business proposition...why was it for sale

[loong]

i would also be interested to hear, would you be prepared to pay 700 per night for a new room with all facilities , dvds, kettle ,coffee facilities, mini bar plus kitchen downstairs and ladies etc if you want some company, or pay 700 for a hotel with a pool but rooms not as nice ?

all the cheap charlies in soi bukaew do indeed look for 6k a month rentals but they are shtholes and only fan rooms. to be honest i wouldnt want their money, soi bukaew is not !! only cheap charlies !! yes a lot of xpats there on pensions but also a lot of mongers with money to spend and a lot of them do not care how they spend it either.

You keep mentioning about the new rooms. In a year or so they will not be new rooms.

As for mongers and the attraction of having ladies available downstairs. Only a total newbie would make the mistake of taking company from the bar below his room because he will never get rid of her. Imagine having a mad cow screaming "butterfly" at you everytime you walk out the door Even worse if you bring a different girl back

[rgs2001uk]

First of all, you are basing your calculations on 100% occupation all year round.

Secondly, 700 Baht per night.

12,000 Baht per month for electricity?? 12 rooms with air conditioning plus bar plus kitchen - get real.

I think that the place you are referring to used to be a mini-mart with rooms above and been on the market for about 3 years. Rooms used to be 500 Baht per night for air con rooms

Opposite this place and about 100 metres North is a place called Thai-Isaan that rents rooms and has a restaurant on the ground floor. Also the laundry next door. I think that they are about 500 Baht per night or 8,000 per month plus electricity. Go and look there and see the standard of rooms and ask how often they would get full occupancy if relying on daily rentals.

You don't mention how much you paid for the lease and key money, this all has to be taken into account.

Run away as quickly as you can.

He hasnt even mentioned insurance.

I doubt if he can answer this question, for every room that is empty each night how many beers at 30 baht profit do I need to sell to cover the shortfall?

Lets assume he can rent out 6 rooms per night,

6 x 700 x 30 = 126 000 baht

Using the OPs figures or 82 000 per month for costs,

He needs 4 x 700 x 30 = 84 000 thats just to break even.

No mention of key money.

Why go to all the hassle of making less than an English teacher, at least they work less hours and have less hassle.

[dmax]

let me ask any of you this , have any of you owned a bar or business in thailand before ? all im getting is shit and negitive flaming comments !!! apart from jamie and sarayu . and as jamie says if everyone thought the same as you lot then where would you all drink in thailand ?

the reason for sale is because the landowner renovated it to rent out, key money per year 120-000 plus 70-000 pm rent . how can a fking beer bar make money and still pay 40-50 k per mth rent ?

how does canterbury arms survive ? how does crazy daves survive ? murphys law ? you want me to go on ? lets here your answers on this quetion i ask you all ( the experts ) now !!!

[puuchai299]

Probably the reason your getting many negative comments is because you don't seem to have a clue about running a business,and most of the questions your asking on this thread and the other one you had running are all things you could easily find out just by going around Soi Bohkao and asking for yourself.If youve got any chance of making this work then you'll have to do a lot more work than just asking on an internet forum.Many posters have given you some very sound advice but it seems to be falling on deaf ears,i'm sure nobody means to be nasty towards you,but if your not prepared to listen then so be it.

As regards the other bars/restaurants you mention,have you considered that they may already own thebuildings and not be renting/paying key money for them?,thus making it that bit easier to survive in this already tough market.

[JUDAS]

Ok, I'll have a go dmax. I'm not in the guesthouse game but am a tourist related business owner.

Firstly, 100% occupancy at all times is just not achievable, especially with current economic situation. Google has thrown up 50-60% rates for Pataya guesthouses though those figures are 1-2 years out of date. Optimistically let says you rent 6 rooms at all times at 700 Baht per night x 30= 126k Baht, if my maths is right. But, you'll have to occasionally discount for weekly rate etc, let's say 10% overall, probably more. Now your looking at 113K

113K ( being optimistic ) minus rent of 70k per month, minus key money @ 10k per month. Let's say you now have 23k in your hand. If I run aircon in one of my offices for around 10 hours per day my eccentricity bill is around 1500 bpm. So, 6 rooms x aircon is around 9k per month plus electricity for rest of building, I'd be looking at 15k per month. Your 23k after pay electricity becomes 8k whick will be easily eaten up with water bills, maintenance , 'phone bills and a hundred other smaller items.

IMO there is zero profit in your proposed business from the room letting point of view and, more likely a loss as I've been probably generous in average rental rates under current conditions. Any profit lies in the proposed bar and food side of things which, whilst I don't know Pattaya seems extremely competitive and over supplied at the minute, from what I read on TV.

P.S. Forget to even mention staff salaries, depreciation and replacement of fittings etc......

Edited November 29, 2010 by JUDAS

[Farma]

Dmax I’ve read your threads over the past few months and from the replies you’ve had on this and your last thread I can’t see negative flaming comments.

In fact I see replies where helpful people have spent their time to number crunch for you and give honest opinions. Something you don’t appear to have done realistically yourself.

Oh yeah, I’ve been and still am involved in a number of successful small businesses, a couple of failed ones too but we had the smarts to fold before a small loss turned big. (Something you should look at)

You’ve had some good advice and I personally see a train wreck coming.

[Spoonman]

some of you may have read my last thread, i need some advice <snip>i need to invest 1.4 before i make any money

Your last thread you said you invested 1.5 mill....... are you cutting corners now ??

theres no other overheads that i can think of....<snip> dvd library <snip>

You have the licence for broadcasting copywrite material ??

drinks say at 50 b each . if i sell say 40 beers per day thats a profit of 800 x 30 = 24.000 per mth

deduct from this profit the electric to run the fridges, plus their maintanance

12000 electric

The Rockhouse with less rooms eats more than double this figure for electric.... im sure most others do as well, how is yours ging to be so cheap ??

Edited November 29, 2010 by Spoonman

[SOMCHAISBROTHER]

key money per year 120-000 plus 70-000 pm rent . how can a fking beer bar make money and still pay 40-50 k per mth rent ?

It gets worse

Key Money is a con. Since moving to Thailand I had never heard of paying key money EVERY YEAR. Maybe a one time payment but every god dam year? FOR WHAT????

So its not 70,000 Baht a month rent, it is in fact 80,000 Baht a month rent.

Are you insane?

[Ulysses G.]

I have never paid Key Money, even in excellent locations back in the good times. Anyone who would do it now is

Edited November 29, 2010 by Ulysses G.

[thaibeachlovers]

i would also be interested to hear, would you be prepared to pay 700 per night for a new room with all facilities , dvds, kettle ,coffee facilities, mini bar plus kitchen downstairs and ladies etc if you want some company, or pay 700 for a hotel with a pool but rooms not as nice ?

all the cheap charlies in soi bukaew do indeed look for 6k a month rentals but they are shtholes and only fan rooms. to be honest i wouldnt want their money, soi bukaew is not !! only cheap charlies !! yes a lot of xpats there on pensions but also a lot of mongers with money to spend and a lot of them do not care how they spend it either.

Correction!!!! I pay 5,000 including cable tv, hot water shower and AC. While the decor isn't much, it's a very large room with balcony for cooker, and there is covered bike space. The only things I'd like extra would be a sink to wash the dishes and a bum gun.

To answer your query, I wouldn't pay 700 a night, with or without a pool, as places like some of the Sawasdee hotels are cheaper. As for taking ladies that work in the same place as you're staying- big mistake. Any monger knows that you don't do that!

[wobblyjohn]

I'm going to put a positive slant on this

700 baht is too much, best to keep the rooms at 500, Advertise well, make yourself available in the bar to welcome customers, serve ice cold beer at 49 baht and less for local beers, have younger girls who can speak a bit of English or maybe freelancers, but most of all get active on ALL the Pattaya forums

If you come across as a nice guy people will come to your bar (a crowd draws a crowd) if your serving food put on a different 99 baht special everyday day and live the dream (at least until your money runs out)

It's hard work but some do make a living

Good luck

ooopps I forgot the original question "Are Many Guesthouses Full During High Season"

yes they are, been out with a mate this afternoon and Robins Nest for one doesn't have any rooms at all (once you get known for quality and price people will return (btw Robins food is rubbish IMO, maybe you can do better)

Edited November 29, 2010 by wobblyjohn

[JUDAS]

I have never paid Key Money, even in excellent locations back in the good times. Anyone who would do it now is

It's most upsetting you think I'm :wacko: but I did pay 50k key money for my initial 3 year lease on one of my shops, though in our 4th year there now and wasn't asked for again Anyway, why call it key money, just charge more per month on rent, same thing.

I do agree to a degree ( that rythmes )though, I wouldn't be inclined to make a larger KM payment but would never say never ....

[pipo1000]

Let me see,as far as I could read so far there is no money calculated for licenses(there are a lot these days),taxes,vat,accountant,tea money,laundry,living costs of the owner and his wife,work permit if he want to entertain his customers and visa costs.I assume all these will come for free in this case.

If he can have full time occupancy of 6 rooms year round he may be lucky as this is 60% which I guess not many hotels or guesthouses nation wide can achieve.Even then he will need longstay customers which don't pay 700 baht a night of course because they can stay in any guesthouse in that area at 8000 a month.So let's say 3 rooms for longstay brings in 24.000 baht a month and 3 rooms at full rate is 63.000 Baht.Grand total 87.000 Baht,quiet a difference with the 231.000 Baht projected by the OP.And then he even might call himself lucky.

I should say,run forrest run.

[changnaam]

dmax,

As has been said a few times you have been looking for a quick fix for a while now. I would suggest (and I am trying to be constructive here, as are many others so please take the advice as it is intended) asking yourself a few questions.

i) If your best friend / brother was asking such questions to you, how would you advise him?

ii) Are you properly equipped in terms of business knowledge, understanding of profit and loss to be in COMPLETE control of this business?

iii) How long can you continue this business if you do not make ANY profit in the first 2 years?

iv) ..... and most important...... How will the success / failure of this thing you are doing affect your children? stress on you, being brought up in what in effect is a who**house, relationship between its parents, alcohol, education etc etc

Now as useful as this is to ask complete strangers on the internet do you not have any REAL friends here who would sit down and talk through this in a lot of detail and cover every angle of this idea. It seems your wife will not consider the negatives but you need someone who you will listen to who may make you see sense, rather than a load of strangers (who give great advice I might add) you think are knocking you.

Best of luck, but my 2 penneth would be to walk away and consider it the best mistake you ever made....... I wish I had taken my own advice many years ago, I learned the hard way.

[actiondell4]

Dmax,You asked how Canterbury Tales is making a profit,truthfully i dont know if he the owner is making a huge profit or not,but i do know that whatever he makes he works bloody hard for.

He dAVEO is on every internet forum including the gay pattaya forums to promote himself and his business.

He seems to be up at around 5am each morning on internet forums and then marketing his bookshop and replying to emails etc etc.

He calls people by their first names,and knows how to get along with people,this takes real skill,i heard he was a cab driver so he has experience in how talk to drunk people.

Secondly he owns the building opposite not renting it.

Not sure about crazy daves,he s open 24 hrs,but im sure the owners over 60 so i imagine he may also live on a retirement income,as with Murphy s Law,i dont know how they survive on their income.

Maybe Murphys Law make better money in pattaya than in Ireland right now ?

But guys please let s help Dmax out rather than slag him, he' s having go ,and that s the main thing,have a go and at least try instead of sitting and whining

.

Dmax, your room prices are too high,cut down to 550 baht a night,at least until you can get a stream of customers.480 baht a night if they stay 7 nights or more.

You need to be competiive my friend,very very competetive,which means,you need to be different from everyone else.

You have entered a cut throat business,and the more experienced ones are like sharks.

To cut electrcity,try to have the shut off room key swithch installed,so they can only have the electrcity on when their key tag is in the power switch.

You may be better not having girls or any prostitution,maybe be better having a 24 hour cafe.

If you are wanting to go into bar girls,do something DIFFEREnt,not the same as others,younger girls,etc,BUT this means more money to BIB,so maybe better to have a 24 hour Cafe downstairs .

.

[pipo1000]

let me ask any of you this , have any of you owned a bar or business in thailand before ? all im getting is shit and negitive flaming comments !!! apart from jamie and sarayu . and as jamie says if everyone thought the same as you lot then where would you all drink in thailand ?

the reason for sale is because the landowner renovated it to rent out, key money per year 120-000 plus 70-000 pm rent . how can a fking beer bar make money and still pay 40-50 k per mth rent ?

how does canterbury arms survive ? how does crazy daves survive ? murphys law ? you want me to go on ? lets here your answers on this quetion i ask you all ( the experts ) now !!!

Uhmm to answer your questions,I think you get what you asked for.Maybe you should have written in the OP,please positive answers only,but what you expect from an anonymous forum.

Of course the reason for sale is because the landowner renovated it to rent out,I know hundreds of business' that have been renovated with that purposes.I also know almost as many that are still empty after been renovated a few years ago.

You want to know how a beer bar can make money?Quick answer...........majority of them don't.You think that so many are for sale because the owner doesn't know anymore how to spend the profit?

Edited November 29, 2010 by pipo1000

[simon43]

Dmax, I do not run a hotel in Pattaya, but I have run, (and continue to run) a very successful 10-room hotel in Phuket.

In my location there are other similar hotels which are not as successful as mine. Why is that? The primary reason is down to how I market the business. I rely almost totally on prebooked, prepaid, online bookings, as opposed to 'walk-in' customers. My occupancy rate is about 90% averaged throughout the year, compared to maybe 50% for my competitors.

You need to create a good website for your hotel, with an online room-booking facility where customers can book and pay for their room by Paypal or Thaiepay (the Thai credit-card payment processor). Since I'm in Phuket and your business does not compete with mine, I am happy to give you the website booking scripts and applications that will enable you to accept and process online payments/bookings on your website. (I'm a software guy and wrote these scripts myself - they work!).

Next, do not rely only on your website to attract bookings. You need to register your hotel with the major booking agents such as agoda.com, sawadee.com, wotif.com, ratestogo.com, asiarooms.com. You pay nothing to get your hotel listed - you only pay the agent commission when you get a guaranteed booking.

You cannot charge too much for your rooms - you will be uncompetitive with your competitors. So try to offer 'value-adds' that encourages each of your guests to pay more for their total bill. So this bill could be made up of room charge plus restaurant plus drink plus tour commissions etc etc. (I assume that in Pattaya you get a commission when you 'sell' a tour to one of your guest).

Make sure you have free wifi and advertise this fact!

Promote your hotel on the internet - contiinually. This does not mean paid advertising. You should join travel forums (using your hotel name as your user name), and provide useful comment about Pattaya and Thailand, not just self-promotion. It's a slow process, but will pay dividends in the long run.

Encourage your guests to provide hotel review feedback on TripAdvisor.com. If there is negative feedback, then make sure you respond to this and provide a positive response to correct the reason for the complaints.

Simon

[thrilled]

ta definitely need to do your homework.Remember don't invest more than you can afford to lose.If ya do go that route,make sure you advertise heavy.

Good luck.Remember location is everything.

[mark45y]

The BIB and other quasi NGO's are busting businesses that employ bar girls in Pattaya on Soi six and LK Metro. If you are on the premises you will go to jail. That gets a bit expensive to buy your way out.

You get busted if you take any business away from another local business or look too busy among other reasons.

So watch yourself if you meet and greet people.

I agree with the other posters about your electricity bills and don't forget maintenance when the plumbing, electrical and refrigeration goes down. There are also water shortages in Pattaya and you may have to buy water. Sabotage too. A competitor gets upset and a dried sponge can cause havoc. Room damage also must be reckoned with. Remember the tax man will cometh and you can't debate his estimate. There are those guys who will collect for the music you play in the bar.

One case of food poisoning publicized on the web could also cause problems and sanitation is a major problem in this climate. Fire insurance? Kitchens have lots of fires. Will you have a fire suppression system? I worked in hotels and restaurants 30 years. Minimum 12 hours a day 7 days a week when things are running well. The first year only a few hours of sleep each night. First year occupancy will be significantly lower than your third year occupancy even if you do everything perfectly.

People are going to pee on your mattresses daily. And women will permanently color your sheets. Be prepared for this. Theft? What percent? Food, china, bedding, anything that can be moved. Unless you or your wife work the front desk you will have problems. In the bar unless you or your wife work the cash register you will have problems. Kitchen, unless you or your wife cook you will have problems.

How are you at AC repair? What do you do with the food when the power goes out? Fights? Don't be surprised and don't call the cops. I remember a hotel I took over in the South of the US. It was a mess. I asked the head cook what happened. He said, “well boss the 10 ton AC unit fell through the roof just before the tornado hit.” Don't forget about the Pattaya floods.

I used to live three blocks away from your hotel is. I lived there for three years. I like the area. Recalculate on 50% occupancy and no bar. Lease out the bar and food to make up the difference in your rent. Now is a good time to find bar buyers and don't forget the key money. Let someone else do the brothel side of the business and get your self a good lawyer on retainer. Or lease out the hotel and you do the bar and food side. I think you have bitten off a bit much. Maybe you could lease the bar as a small go go. I seem to remember a ladyboy shoot out there a few years and I would not go that way.

And don't forget keys. Lock up everything and only keys for yourself and wife. Remember if you do any work and someone sees you, you may be in for trouble if you have upset any of the competition.

Edited November 29, 2010 by mark45y