Right time to invest in Phuket?

[khounteen]

I have noticed a few hotel business for sale in Phuket. What are the trends on the island at the moment? Are there many visitors still or has business been affected by the coup, visa situation and the clearing up of the beaches. The official tourist sites shows that there is an increase in tourist arrivals but I am seeing discounts of 50% or more for some hotels right up to December.

[stevenl]

Visitor numbers I down, I think because of the unrest in Thailand before the coup. The coup has had effect on the number of visitors from China though, but that seems to be correcting itself already.

The demography of the visitors has changed in recent years, with more visitors from China and Russia. Personally I see that changing again, with less from Russia and more western tourists again, and China keeping up the present growth.

But for my opinion 10 others.

[LivinginKata]

You must have wondered why these hotels are for sale ? I personally think it's getting tougher for independent business owners. The big companies will be Ok.

[stuarty]

If you can open a bar or a restaurant at the back of, but not on, a major beach then you will be quids in. Where are 50,000 tourists to Bangtao/Laypang beach now going to get a drink outside of a hotel? Go for it now_ find a good spot.

[NamKangMan]

You must have wondered why these hotels are for sale ? I personally think it's getting tougher for independent business owners. The big companies will be Ok.

"The big companies will be Ok" - and that's because the majority of tourists here now are package holiday makers from emerging economies, particularly Russia and China.

I think small operators will be in for some tough times in the future, if not already.

[Jimi007]

The right time to invest in Phuket was at least 10 years ago! Now… Roll of the dice. Good luck!

[khounteen]

If you can open a bar or a restaurant at the back of, but not on, a major beach then you will be quids in. Where are 50,000 tourists to Bangtao/Laypang beach now going to get a drink outside of a hotel? Go for it now_ find a good spot.

Very true, but few months down the road, with a new government, the vendors may spring back.

[LeungKen]

I will pass on the advice given to me when I thought about investing in Thailand.

"Never invest more than you are prepared to walk away from"

Anything can happen in Thailand - So far I have lived through a tsunami, a SARS epidemic, bird flu, a global financial crisis & a couple of coup de'tats.

Luck comes in many form from mega-good to catastrophic.

Be very careful - Chok dii khrap.

[ezzra]

The right time to invest in Phuket is 1990-2000 or in the next Tsunami...

[shirtless]

Phuket seems to be waning as a tourist destination, Just remember people do not sell profitable businesses.

[N47HAN]

Agree with shirtless for the vast majority of time.

However there are viable and profitable buisinesses for sale , just a case of due dillagence really.

Sent from my GT-N7100 using Thaivisa Connect Thailand mobile app

[Craig351]

I think if you have the right plan and have the ability to run a business you can make money in any economic climate

My friend bought a bar in Phuket that was no where and everyone said don't do it you will only lose money

But i thought his ideas and plan were good and said to him do it so did others

He has made a very good bar and is busy every night , so if you can do it with a bar you can do it with anything else

[PattayaPhom]

Dont forget Agoda and he like always offer upto 70% discounts, are you really seeing discounts on top of the normal discount price...If someone told me I could get a booking at an Amari,Marriott or the like for THB 750 then I would believe there are real discounts, otherwise its normal marketing.

[simon43]

Businesses can be successful. But you need to understand your market, customers, competitors etc.

My small hotels are fully booked right now, but only because I realize that my potential customers are no longer 'Western' but Asian, especially Chinese.

So now we offer Chinese breakfast, and (joking) have renumbered our guest rooms to all start with '888', (no '4' allowed!).

Business is the same in every country. Go in blind and you'll lose money. Fail to manage your business on a daily basis and you'll lose money. Failure to change your business model with changing trends and you'll lose money.

[bearpolar]

Its still time to invest in cheaper housing. People are going completely nuts for 2-5million b houses.

a lot of the good ones are doubling in value and actually selling when the owners want to get rid of it 2-3 years later. My neighbor sold his 2.6 for 4.2 and an other one sold his 3.7 for 5.8

[CNXTim]

Re investment, i strongly suggest you study the Law of Thailand as it applies to foreigners, rather than listen to anecdotal and bar chat.

One thing that is patently obvious, this government is applying the actual law and not the popular "workarounds".

[xylophone]

You must have wondered why these hotels are for sale ? I personally think it's getting tougher for independent business owners. The big companies will be Ok.

"The big companies will be Ok" - and that's because the majority of tourists here now are package holiday makers from emerging economies, particularly Russia and China.

I think small operators will be in for some tough times in the future, if not already.

Agree with the above, and I know many small operators who are experiencing really tough times.

I live in Patong and have seen some changes over the past 10 years and I would not invest here now, even though I did purchase two properties and renovate and sell them for a profit a few years ago. Now the same style houses in the same small soi have been on the market for five years or more even though they have dropped the prices by 20 to 25%, and I wouldn't take that chance again.

Now I see more empty bars than ever, many small restaurants for sale and small guesthouses/hotels for sale. In fact three of them in a road near me have recently been vacated and are now undergoing renovations by somebody else who has decided to invest in them........and I wonder why when I know that two previous owners walked away when business was bad.

I remember when I first arrived here a real estate agent friend said to me that, "there is always some fool getting off an aeroplane with lots of money and little sense and these are the people you want to find in the selling business". This has again been ably demonstrated in the sale of a side street bar, nowhere near the nightlife and hidden away, which has not made a baht from the day it was leased, which has now been sold to a person from the previous owners country.

IMO, and knowing quite a few folk here in the bar, restaurant, small hotel businesses, times are tough and are going to get tougher.

[uli65]

wait until the bubble burst. stay far away with your money. this place is for holidays not for business

cheers

[nedkellylives]

Phuket seems to be waning as a tourist destination, Just remember people do not sell profitable businesses.

People do and always have sold profitable businesses with audited books

Have a break and do it over and over again

The problem in Phuket is people claiming their business is profitable and using

cooked books to prove this, the same as was done to them when buying the business

BUYER BEWARE

Edited July 22, 2014 by nedkellylives

[PattayaPhom]

Be nice to see the 50% and more discounts the OP is talking about........many threads on here purporting 50% discounted flights to UK, yet when I look, same same price as last year and previous years. Lets see some proof OP

[JacChang]

While they say, invest when most people are scared. Now is indeed a better opportunity than before with the discounts you mentioned.

However, as of current time, not only small businesses are having trouble. Heck, even large ones, 5 star resorts and so on, are having difficulty paying their lease. I have quite a healthy number of property funds, so I get a chance to look at the hotels. For the current year, starting from Jan 2014, hotels with big brand names are having difficulties in paying the funds for the lease of the land. They simply are not making enough profit. Occupancy rates are around 50-60%. What has happened is, another agreement had to be signed up, where the hotel gets to pay in installments with interest rate, can you believe that? Haha.

This applies to Bangkok and Phuket, both are still having troubles. However, the recent few months, I have seen improvements, but still not like "regular season". They are climbing up bit by bit though.

[steelepulse]

To the OP, there is an oversupply of shophouse "hotels" and "guesthouses". These are the types of properties I've seen listed, and most of them aren't even available to purchase, merely a few year lease involving key money and rent. It's tough to be viable with low occupancy rates and 500 baht rooms. The only winners are those owning the land and the buildings that are renting out these "hotels". Original lessee then tries to make a go of it, find it's not worth it, then subleases, releases or abandons the property forfeiting his substantial deposit, then the cycle continues................

[winstonc]

forget phuket if buying property i would go to phang-nga next province its the overflow place to be kokkloi is up and coming..

[khounteen]

Be nice to see the 50% and more discounts the OP is talking about........many threads on here purporting 50% discounted flights to UK, yet when I look, same same price as last year and previous years. Lets see some proof OP

Look at Agoda or Tripadvisor, you can see discounts up to 75% for hotels. The hotel that I stayed 3 years ago is offering and even lower price now, prices are supposed to rise with inflation not go down.

[Bulldozer Dawn]

I see difficult times ahead for Phuket businesses.

The beer bar model is now in tatters. Don't believe me, have a walk down Bangla any night this week.

The white trash is being flushed from Phuket as we speak.

It will be replaced by Chinese mass tourism.

These people do not go to bars, do not go to street side restaurants and sure as hell don't go to the beach.

Some think that the high end tourist will return now that the beaches have been cleaned up.

I disagreed wholeheartedly with this proposition. Once a market segment has been lost, it is generally lost forever.

Sure they beaches have had a make over, but they are still sh_t holes compared to those now coming online in alternative destinations such as Myanmar.

Small business in Phuket is now in tatters. The beach vendors have lost their income, the taxis and tuk tuks have lost their income, anyone relying on the income from visa runners and other chancers have lost their income. I often hang out in a bar in Chalong that has a half dozen or so girls working there. Five of the girls have not had a single fare for over a month. Two have headed back to the village. The others asked me if they can borrow money to send back home to feed the kids.

In my opinion there will be no high season this year.

There will just be bus loadeds of Chinese shopping bots. The ONLY business that benefit from these tourists are big hotels, Central and the other major shopping outlets, and the bus companies. Small businesses, Thai and Farang alike, make nothing (with the exception of some rare niche businesses such as Simons).

Like Elvis, Patong has become a Parody of itself. The people walking down bangla nowadays have no interest in parking on a stool or buying drink or a girl. They are there purely to gawk at the singing fat man in the white jumpsuit.

[Shazdeb]

I have been looking for a small resort/hotel/guesthouse and from looking at a lot ( and I mean a lot ) of offerings one thing is clear a lot of them have been built and run poorly, in bad areas, in out of the way areas and Soi's where there is no way if I was a tourist, I would stay.

I am also concerned with the reports that in August/October there is to be a tightening of regulations for hotels, most of them here are un-licensed and after this time is your not licensed you will be found and fined.

Im wondering if this is the reason a lot are selling ?? The thing im having trouble finding out is this ... If you buy an unlicensed hotel ( and I would get it licensed but it's a long processes ) do any fines and problems stay with the hotel and become the new owners problem while the real instigator walks away clean ?

I cant get an answer because every owner I ask repeats the same " wont happen no problem don't need license buy my hotel " Im afraid I think they are wrong, just don't know if they also think this and just want to get out of a coming problem

[stevenl]

I have been looking for a small resort/hotel/guesthouse and from looking at a lot ( and I mean a lot ) of offerings one thing is clear a lot of them have been built and run poorly, in bad areas, in out of the way areas and Soi's where there is no way if I was a tourist, I would stay.

I am also concerned with the reports that in August/October there is to be a tightening of regulations for hotels, most of them here are un-licensed and after this time is your not licensed you will be found and fined.

Im wondering if this is the reason a lot are selling ?? The thing im having trouble finding out is this ... If you buy an unlicensed hotel ( and I would get it licensed but it's a long processes ) do any fines and problems stay with the hotel and become the new owners problem while the real instigator walks away clean ?

I cant get an answer because every owner I ask repeats the same " wont happen no problem don't need license buy my hotel " Im afraid I think they are wrong, just don't know if they also think this and just want to get out of a coming problem

That's new to me, what hotel license are you talking about?

[Peterocket]

I have been looking for a small resort/hotel/guesthouse and from looking at a lot ( and I mean a lot ) of offerings one thing is clear a lot of them have been built and run poorly, in bad areas, in out of the way areas and Soi's where there is no way if I was a tourist, I would stay.

I am also concerned with the reports that in August/October there is to be a tightening of regulations for hotels, most of them here are un-licensed and after this time is your not licensed you will be found and fined.

Im wondering if this is the reason a lot are selling ?? The thing im having trouble finding out is this ... If you buy an unlicensed hotel ( and I would get it licensed but it's a long processes ) do any fines and problems stay with the hotel and become the new owners problem while the real instigator walks away clean ?

I cant get an answer because every owner I ask repeats the same " wont happen no problem don't need license buy my hotel " Im afraid I think they are wrong, just don't know if they also think this and just want to get out of a coming problem

If your hotel/guest house meets the requirements then invite the inspectors to the launch party and ensure that everything is in order.

Following that you will get the licence.

Some examples of things to do are here:

1. Fix Fire Hydrants to wall

2. Install stainless cabinets in the kitchen and tiled floor

3. A record of the PH level of the pool

4. A Report for fire system usage

5. Fire signs inc exits

6. Map for on the doors for fire exits

7. Signs for how deep swimming pool is (around the pool)

8. 2 life saver rings for pool

9. Sign for opening hours of the pool

10. Hand rail for the steps in the pool

11. A grand opening which the inspectors are invited to once all is done.

[simon43]

Shazdeb, here is how it works re hotels - according to a little elf who told me all this.

First, you need to understand that there are different licencing requirements, depending on whether the business is a hotel, guesthouse or homestay. The classification is generally (but not excludsively) dependant on how many letting rooms you have.

For a 'hotel', one is required to complete an EIA (environmental impact assessment) and other stringent checks/inspections. For a major hotel chain, that is either not an issue (squeaky clean business), or there's enough $$$ in the kitty to pay off the government guy who signs off the planning permission in the local OrBorTor office.

But for smaller hotels, where $$$ bribes are not feasible, the OrBorTor does not like to put their signature to a planning approval, in case they are held accountable some years later. So they ask those new businesses to state that they are not hotels but guesthouses, by classifying some guest rooms as staff rooms or other buildings. The planning application gets signed off without the need for an EIA or on-site inspections etc.

This is all fine unless investigations are made. The OrBorTor will be unwilling to 'upgrade' the guesthouse to a hotel because their original 'collusion' will become evident. Yet this same OrBorTor guy is happy to demand and receive biannual business taxes (receipts given) for that same business.

So many of these hotels are not licenced hotels, but do at least (I hope) have planning permission as a guesthouse or homestay. How they get upgraded to hotel status? Perhaps an inspection of their fire escape etc facilities and sewage treatment etc might help.

Out of the 4 hotels/guesthouses that I have built, 1 has hotel status (due to the number of letting rooms), 2 are registered correctly as guesthouses and 1 is still to go 'live'.

so to add - if you are considering to buy a guesthouse or hotel, ask to see the original, approved planning permission documents and plans. Check if the planning permission was for a hotel, guesthouse, homestay or private house.

If approved plans do not exist, or have not been signed off by the OrBorTor, stay well away!

Edited July 23, 2014 by simon43

[KarenBravo]

If I had listened to people from the mid-eighties onwards about buying property, it's never been a good time to invest.

Yet, these same people remark that I was "lucky" when I sold for twice the amount I'd paid.

I just smiled and agreed.