Patong is dead.

[phuketjock]

4 hours ago, xylophone said:

Don't waste your time as he cannot understand what you are saying, just the same as he thought I had $2 million.........grey matter failure I'm afraid, oh, and childish misuse of my forum name, but then what can one expect!

 

Back on track, came out of hospital on Friday after a 5 day stay and was surprised to see a few more small shop closures (all Thai) and I feel sorry for these guys because as you mentioned in another post the world has changed around them and they are powerless to do anything about it (or words to that effect).

 

Also saw a new "low" with a guest-house offering a room for 5000 a month, but who can live running a business on 167 baht a night.

 

As if to add weight to the state of Patong at the moment please see the pics (at around lunchtime) that I took on Saturday in and around Jungceylon......

 

An empty Starbucks, empty fast food kiosks, empty restaurants (plenty of seats available!) and no-one poring over the sales items in Jungceylon.

 

Being a realist and seeing how things really are enables one to adapt............

You are joking right 

It is common knowledge that many of the Thais close up for the low season, see it every year.

If a guest house can fill just four rooms for 5000 a month that is quite a good earner for low season.

As for the pics it is low season you know don't you. I know when I am on holiday I usually don't

venture out until well past midday.

So really just a normal snapshot of low season in Phuket no?                

 

 

 

[xylophone]

Quote: "So really just a normal snapshot of low season in Phuket no?"

 

In a word…..NO

 When a low season is followed by a lower one and so on, then people suffer as they are doing now.

[Jai Dee]

OK... enough of the personal attacks (flames) thank you.

[xylophone]

6 minutes ago, chrisandsu said:

This is by no means a dig at you but here is where I find Americans /Europeans /Australians differ . Americans are very good at self promotion , capitalism was built on selling so if you can't sell

yourself ........Europeans still live in a caste/class system it's unseen but the rules still apply . Self promotion is what those toffs do ...! Nothing to do with anything but here is where culture clashes .

Yes, quite probably right there, but the post was not about self promotion, it was about stating my business nous/experience to show that I was capable of understanding how businesses worked and that I had run a very large one.........simply that, but as always a few folk get it wrong (not you).

[schlog]

Isn't life too short to spend time for bickering and personal attacks?

 

Better each here spend this week 10.000 Baht in Patong having whatever kind of fun and doing something that Patong isn't death.

I will take my part and start right now.

Rock n rolla!

[Rimmer]

More off topic stuff removed

[xylophone]

There is a comment on business closures here which really does need mentioning, this when a poster said, "It is common knowledge that many of the Thais close up for the low season" and this really doesn't ring true to me.

 

Think about this for a while............... the Thai owners of small businesses here have been battling their way through high seasons which have not been as high as in many times previous so when low season comes around they just pull down the blinds and leave??

 

I don't think so.............. So they shut up shop and leave, knowing full well that they still have to pay the monthly rent and whatever other outgoings they may for the place (electricity for some appliances, for example). Then there is the potential problem with stock of whatever nature it may be and whether it will be okay locked up in a dark and damp room for the next five months or so.

 

I know Thai owners of pharmacies, beauty salons, a restaurant, high-class bona fide massage spas (and some not so bona fide!) and of course a bar or two and have never known them close for the low season, or even to consider it, unless of course they had gone bust and were just walking away.

 

On the subject of closing businesses, I notice that Amigo bar and restaurant seems to have closed again and I also noticed that the long-time small Italian restaurant just past the top of Soi Banzaan is up for sale and a small guesthouse some 200 m past this has been for sale now for nine months or more and has never moved.

 

The signs are not good for the low season for many and whereas in the past they may have earned enough in the high season to see them through, I can't see that being the case now.

[happyas]

1 hour ago, xylophone said:

There is a comment on business closures here which really does need mentioning, this when a poster said, "It is common knowledge that many of the Thais close up for the low season" and this really doesn't ring true to me.

 

Think about this for a while............... the Thai owners of small businesses here have been battling their way through high seasons which have not been as high as in many times previous so when low season comes around they just pull down the blinds and leave??

 

I don't think so.............. So they shut up shop and leave, knowing full well that they still have to pay the monthly rent and whatever other outgoings they may for the place (electricity for some appliances, for example). Then there is the potential problem with stock of whatever nature it may be and whether it will be okay locked up in a dark and damp room for the next five months or so.

 

I know Thai owners of pharmacies, beauty salons, a restaurant, high-class bona fide massage spas (and some not so bona fide!) and of course a bar or two and have never known them close for the low season, or even to consider it, unless of course they had gone bust and were just walking away.

 

On the subject of closing businesses, I notice that Amigo bar and restaurant seems to have closed again and I also noticed that the long-time small Italian restaurant just past the top of Soi Banzaan is up for sale and a small guesthouse some 200 m past this has been for sale now for nine months or more and has never moved.

 

The signs are not good for the low season for many and whereas in the past they may have earned enough in the high season to see them through, I can't see that being the case now.

You are, as usual right on with what you say here.

I had Thai relations living /working there for a good fifteen years until last year when then sold their small business's for what the could get and moved back to Chiang Mai.

I never, ever saw them closed and especially in low season, often trading just to pay the rent etc, hoping to get through to the next high season.

With constantly rising rents and other costs they just gave up in the end, the high season profits didn't cover the whole year.

The guy that said  "It is common knowledge that many of the Thais close up for the low season"  is talking utter nonsense.

Your  posts are interesting and factual mate, i enjoy reading about the place i once called home albeit many years ago.

Don't lower yourself to his low standards.

Most readers know which of the two is the better person, so ignore him.

[madmitch]

I'm not sure about Patong, which is of course the subject of the thread if anyone's forgotten,  but it's quite common for businesses in Karon and Kata to completely close for low season. Several guesthouses and restaurants in particular shut up shop, some Thai-owned, some faring, where the owner simply goes home for the summer. One nearby 60 room hotel has been closing for low season every year since I've been here. 

 

But that's not Patong and there are differences: Karon is all but dead after Songkran whereas Patong does attract a year-round trade, albeit a seemingly diminishing one as far as Western tourism goes. Rents aren't generally as expensive in Karon and it's also the case that the oversupply of rooms isn't as prevalent as in Patong, meaning that businesses possibly can make enough in high season to see them through. If anything, it's been the business model for some time in certain parts of Kata and Karon and more actually stay open now than in the past.

[xylophone]

14 hours ago, madmitch said:

But that's not Patong and there are differences: Karon is all but dead after Songkran whereas Patong does attract a year-round trade, albeit a seemingly diminishing one as far as Western tourism goes.

Thought I'd posted something on this but is has gone!! Poss to do with my many computer crashes??

 

Yes, have a friend who lives in Karon and he has said it is like a ghost town in the low season. Not seen it like that in Patong though as small business operators try to hang on to get every bit of business they can. Not much point in paying the higher rents (than Karon) and not being there.

[Boiled Frog]

On 5/29/2017 at 9:25 AM, LivinginKata said:

 

My understanding  is that it goes to Chalong. Might never happen and anyway I think this rail link will be a commercial disaster.  After a long flight you just want to jump in a taxi and be dropped of at the door of your hotel or home.  

What an egotistical post.  Why would they be building this public transport infrastructure for the likes of you rich expats.  Surely they are targeting workaday Thais so that they have another option to commute to and from work other than risking their lives in the traffic of death island.

Edited May 31, 2017 by Boiled Frog

[madmax2]

It would be interesting to know how many people who actually own and run businesses here are posting on this topic and how many do not and are just posting second hand information

Business is quite because there are far to many of the same businesses now compared to 10 years ago

I know of one guest house that had all the local business to itself until two others were built right next door to it with more modern and better facilities, the owner of the guest house complains about lack of business, his rooms are very basic and instead of upgrading them from no stars to 2 stars he just increased his prices for 2 years in a row at 100 baht a night , went from 400 to 600 baht a night for a room that was only worth 400 a night in my opinion compared we what we have seen and rented all over Thailand and now his rooms are usually empty

Accommodation, restaurants, massage shops, bike and car rental, bars you name it , there are to many of all of them  and not enough business to go around, a lot of new business owners here do not have a clue what they are doing and deserve to go under

There are a few business owners who post on this forum who are successful and know what they are doing but they are few and far between   

[chrisandsu]

4 minutes ago, madmax2 said:

It would be interesting to know how many people who actually own and run businesses here are posting on this topic and how many do not and are just posting second hand information

Business is quite because there are far to many of the same businesses now compared to 10 years ago

I know of one guest house that had all the local business to itself until two others were built right next door to it with more modern and better facilities, the owner of the guest house complains about lack of business, his rooms are very basic and instead of upgrading them from no stars to 2 stars he just increased his prices for 2 years in a row at 100 baht a night , went from 400 to 600 baht a night for a room that was only worth 400 a night in my opinion compared we what we have seen and rented all over Thailand and now his rooms are usually empty

Accommodation, restaurants, massage shops, bike and car rental, bars you name it , there are to many of all of them  and not enough business to go around, a lot of new business owners here do not have a clue what they are doing and deserve to go under

There are a few business owners who post on this forum who are successful and know what they are doing but they are few and far between   

The reality is many businesses would be successful if they didn't have to employ Thais . Work in recruitment and you will never be out of business here?

[xylophone]

5 minutes ago, madmax2 said:

It would be interesting to know how many people who actually own and run businesses here are posting on this topic and how many do not and are just posting second hand information

Business is quite because there are far to many of the same businesses now compared to 10 years ago

I know of one guest house that had all the local business to itself until two others were built right next door to it with more modern and better facilities, the owner of the guest house complains about lack of business, his rooms are very basic and instead of upgrading them from no stars to 2 stars he just increased his prices for 2 years in a row at 100 baht a night , went from 400 to 600 baht a night for a room that was only worth 400 a night in my opinion compared we what we have seen and rented all over Thailand and now his rooms are usually empty

Accommodation, restaurants, massage shops, bike and car rental, bars you name it , there are to many of all of them  and not enough business to go around, a lot of new business owners here do not have a clue what they are doing and deserve to go under

There are a few business owners who post on this forum who are successful and know what they are doing but they are few and far between   

Have to agree with a lot of what you have said and one thing I've mentioned many times is the proliferation of small businesses in a small area. Once a business seems to be doing well another starts up almost next door........in the new "middle road" at one time it seemed like there was a pharmacy every 50 meters.

 

Your point about the guesthouse was relevant although there is a dilemma here.........when there is oversupply many lower their prices to attract business and it becomes a game of the lowest wins, but even then that's debatable. Agree that offering good value works in many businesses, but for the lo-rent tourist Patong now seems to be attracting, low cost is a priority and as long as the room is "reasonable", so for many owners it is a no win situation.

 

As for owners who don't have a clue.........the bar which advertises ''áll day breakfasts' and doesn't open until after 1pm; the bar/restaurant which advertises 'open 9 am til late' and rarely opens before 12.30 and sometimes doesn't open at all; the small shop which is tucked away in a place which has no foot traffic or residences nearby and a restaurant which tries to compete on price by using old vegetables and cheap meat thereby ensuring no return business.............the list is endless.

 

[madmitch]

1 hour ago, madmax2 said:

It would be interesting to know how many people who actually own and run businesses here are posting on this topic and how many do not and are just posting second hand information

Business is quite because there are far to many of the same businesses now compared to 10 years ago

I know of one guest house that had all the local business to itself until two others were built right next door to it with more modern and better facilities, the owner of the guest house complains about lack of business, his rooms are very basic and instead of upgrading them from no stars to 2 stars he just increased his prices for 2 years in a row at 100 baht a night , went from 400 to 600 baht a night for a room that was only worth 400 a night in my opinion compared we what we have seen and rented all over Thailand and now his rooms are usually empty

Accommodation, restaurants, massage shops, bike and car rental, bars you name it , there are to many of all of them  and not enough business to go around, a lot of new business owners here do not have a clue what they are doing and deserve to go under

There are a few business owners who post on this forum who are successful and know what they are doing but they are few and far between   

Your comment on the guesthouse is typical of what happens in Thailand. But the original guesthouse owners were selling rooms at 400 baht a night. How much profit are they making on that? Not a lot, even if they own the building, sowhere do they find the money to upgrade his rooms to 2 star status? And if they do they're only offering the same as their neighbours.

 

Typically Thai, they raised the price when they should probably have held or even reduced it in order to attract a different customer base to the neighbours. There are plenty of low-budget travellers out there, simply after the cheapest bed they can find, hence the growth in the number of backpacker hostels in Phuket and Thailand in general.

 

Quiet simply, in the accommodation business, if you don't react you may not survive, and reaction doesn't necessarily mean upgrading to keep up with the neighbours.

 

PS In response to your first sentence I do run a profitable guesthouse, though not in Patong, so I vaguely know what I'm talking about. 

[madmax2]

1 hour ago, chrisandsu said:

The reality is many businesses would be successful if they didn't have to employ Thais . Work in recruitment and you will never be out of business here?

I have never owned a business here and never intend to, i looked in to recreation vehicles at one stage but soon worked out it would be a waste of time owning a few of them in Thailand because of the cheap price of accommodation here and the lack of caravan parks and facilities for them, they are a excellent money making business in a lot of countries but not cheap to get into and that stops a lot of people from going into the RV business

 

But a few people i have met that treat their Thai employees well, pay them a decent livable wage and do not sack them when business is quite when they have promised to keep them on in the low season never have a problem keeping good, reliable, hard working and honest employees and if one leaves have plenty of other people who would like to replace him/her , and they do not need or use recruitment agents

Its the business owners who promise to keep their employees on in the low season so they will work for them in the high season and then sack them that are always desperate for decent Thai employees in the high season

[madmax2]

6 minutes ago, madmitch said:

Your comment on the guesthouse is typical of what happens in Thailand. But the original guesthouse owners were selling rooms at 400 baht a night. How much profit are they making on that? Not a lot, even if they own the building, sowhere do they find the money to upgrade his rooms to 2 star status? And if they do they're only offering the same as their neighbours.

 

Typically Thai, they raised the price when they should probably have held or even reduced it in order to attract a different customer base to the neighbours. There are plenty of low-budget travellers out there, simply after the cheapest bed they can find, hence the growth in the number of backpacker hostels in Phuket and Thailand in general.

 

Quiet simply, in the accommodation business, if you don't react you may not survive, and reaction doesn't necessarily mean upgrading to keep up with the neighbours.

 

PS In response to your first sentence I do run a profitable guesthouse, though not in Patong, so I vaguely know what I'm talking about. 

I know you run a successful guest house business and know how to keep your regular customers and attract new ones, you are one of the few successful business people that post here

I take it you do not supply old lumpy pillows and old bedding to your customers and keep your facilities up to date, clean and working properly

The guest house i am talking about is not in Patong but a near by popular tourist destination, i was just using it as a example of how businesses should not be run in Thailand

It was relying on backpackers and low budget travellers and has now lost the majority of them

they had a very busy restaurant as well (had)

[xylophone]

1 hour ago, madmax2 said:

It would be interesting to know how many people who actually own and run businesses here are posting on this topic

Not exactly, but when I split with the ex a few years back I gave her a lump sum of money to help her with her future, so she bought a laundry with some of it and it was 'just ok', so with her I set about getting more business through the door. We designed fliers in both Thai and English, included a small kickback to the business owners for certain volumes and included a fast pick up service.

 

We then visited all of the small/med sized guesthouses in the vicinity where she discussed it with the Thai folk and I with the Farangs........you get the picture. Within months she had to employ 3 full time staff and one part timer and business was thriving. So much so that she couldn't handle it and got stressed out as she was one of those people who was unable to delegate or handle staff, so sold it (for a small profit)!!!

 

She (we) made a success of it in a place where there are abundant laundries, but it was hard work and I don't envy anyone in that position now.

[xylophone]

On 5/29/2017 at 1:30 PM, phuketjock said:

If a guest house can fill just four rooms for 5000 a month that is quite a good earner for low season.

 

On 6/1/2017 at 9:39 AM, madmitch said:

PS In response to your first sentence I do run a profitable guesthouse, though not in Patong, so I vaguely know what I'm talking about. 

Madmitch, a question for you............the first quote states that if a guesthouse can rent out four rooms for 5000 a month (20,000 baht pm) then that is quite a good earner for low season.

 

However I just cannot see that working, however please correct me if I am wrong as always keen to know more. First up, surely the monthly rent would be that and poss more, then other outgoings such as staff salary, elec, water, wi-fi, tv , laundry and so on would mean that it is running at a loss OR are my calcs out?

 

Just off that subject and relevant to a previous post; Amigos opened up for a day then appears to have closed again and got no idea what is going on there, and a long time icon of Nanai Road has closed.........Dirty Nellies has been here much longer than I have and is now no more. Used to be a watering hole for Brits mainly and John was always a genial host, but business had dropped off markedly over the past few years and I thought Scott would take it over, but seems not.

 

A sign of the times...............

[GiantFan]

John is great, but needs to keep his shirt on!  LOL

[sekmet]

Madmitch, a question for you............the first quote states that if a guesthouse can rent out four rooms for 5000 a month (20,000 baht pm) then that is quite a good earner for low season.
 
However I just cannot see that working, however please correct me if I am wrong as always keen to know more. First up, surely the monthly rent would be that and poss more, then other outgoings such as staff salary, elec, water, wi-fi, tv , laundry and so on would mean that it is running at a loss OR are my calcs out?
 

I thought Thai minimum wage was 300 baht per day, so assuming someone worked all month that would take half. If owner did all the work, then reasonable.

Sent from my SM-T530NU using Tapatalk

[simon43]

As Xylophone has commented, an income of 5,000 baht per month per room is simply too low to make any profit or even break even. (I know from running 4 different small hotels in Phuket and also a guesthouse in Ao Nang).

 

One has to take into account:

 

- Laundry costs to clean the towels and all bed linen.  Even if these were only changed every 3 days, a typical laundry cost would be at least 200 baht ==> 2,000 baht per month.

- Electricity costs for air-con, (less for fridge, TV, electric shower)

- Staffing costs, even if there is only 1 staff to look after the guesthouse

- Rental costs of the guesthouse or land etc

- Maintenance and improvement costs (something which maybe is not done by many guesthouses!).

 

Edit:

 

I'll also add that what is the point in running a GH which makes zero profit in the low season and only a small profit in the high season?  

 

Is that really 'living the dream'?  

 

Edited June 2, 2017 by simon43

[LivinginKata]

I agree with Simon.  Impossible to run a smaller gust house and stay afloat. I have been in business along Nanai Patong for 19 years now and have had casual conversations with a number of operators. The smaller guest houses go out of business soon as they cannot make lease payment. I know a few larger scale mid range private owned resorts that do well by virtue of good marketing and agents in Europe. Plus they either own their land or have a 30 year lease.

[madmitch]

3 hours ago, xylophone said:

 

Madmitch, a question for you............the first quote states that if a guesthouse can rent out four rooms for 5000 a month (20,000 baht pm) then that is quite a good earner for low season.

 

However I just cannot see that working, however please correct me if I am wrong as always keen to know more. First up, surely the monthly rent would be that and poss more, then other outgoings such as staff salary, elec, water, wi-fi, tv , laundry and so on would mean that it is running at a loss OR are my calcs out?

 

Just off that subject and relevant to a previous post; Amigos opened up for a day then appears to have closed again and got no idea what is going on there, and a long time icon of Nanai Road has closed.........Dirty Nellies has been here much longer than I have and is now no more. Used to be a watering hole for Brits mainly and John was always a genial host, but business had dropped off markedly over the past few years and I thought Scott would take it over, but seems not.

 

A sign of the times...............

Others have beaten me to the answer but what they've said is generally correct but you can effectively ignore the rental cost as that has to be paid whether the guesthouse is open or not.

 

If it's a owner-operator with no staff then the something's better than nothing theory could just about apply.

 

4 small rooms: estimated monthly costs:

 

Electricity  4000 baht

Water  1000 baht unless they have a well

Laundry 1000 baht assuming done on-site and not sent out

Cable TV and internet 1000 baht

Add to that wear and tear, other miscellaneous items, maybe 2000 baht.

 

That's 9,000 baht estimated expenses, leaving a profit of around 11,000 baht per month, which isn't much more than the 300 baht minimum wage. 

 

Provided the rent and other expenses are covered from high season profits then for someone that isn't bothered about working the hours needed to run a guesthouse to earn a little pocket money then it's better than nothing. Would I do it? Not a chance!

 

 

 

 

 

[NamKangMan]

3 hours ago, madmitch said:

Others have beaten me to the answer but what they've said is generally correct but you can effectively ignore the rental cost as that has to be paid whether the guesthouse is open or not.

 

If it's a owner-operator with no staff then the something's better than nothing theory could just about apply.

 

4 small rooms: estimated monthly costs:

 

Electricity  4000 baht

Water  1000 baht unless they have a well

Laundry 1000 baht assuming done on-site and not sent out

Cable TV and internet 1000 baht

Add to that wear and tear, other miscellaneous items, maybe 2000 baht.

 

That's 9,000 baht estimated expenses, leaving a profit of around 11,000 baht per month, which isn't much more than the 300 baht minimum wage. 

 

Provided the rent and other expenses are covered from high season profits then for someone that isn't bothered about working the hours needed to run a guesthouse to earn a little pocket money then it's better than nothing. Would I do it? Not a chance!

 

 

 

 

 

 

 

"but you can effectively ignore the rental cost as that has to be paid whether the guesthouse is open or not." - so, just "ignore the rental cost."  Serious????  It's the biggest expense of the business. 

 

Has anyone considered the initial purchase cost in ANY of these figures????????

 

So, Stupid Farang pays X millions of baht to purchase the lease on the guesthouse, and somehow, out of this pittance of "little pocket money" he's supposed to not only survive, but have his initial outlay returned to him.  Impossible.

 

Ahhh, but high season is profitable, I hear you say. 

 

Even if this small 4 room guest house was fully rented during high season at 500 baht a night, that's still only 60,000 baht turn over, and laundry would have to be done everyday, so apart from increased laundry costs, there would probably have to be a dedicated room cleaner, at 300 baht a day, because with people constantly checking in and checking out there would have to be a receptionist, probably the owner's Thai wife or girlfriend.  So, that's 9000 baht a month for a staff member.  Not to mention the added water and electric costs.

 

There will be no more "high season" on Phuket.  In its place will just be a constant stream of Chinese package holiday tourists.  This is why many of these small operations are closing?

 

Your example high lights why I say a lot of farang become slaves to the greedy Thai landlords here.

 

 

Edited June 2, 2017 by NamKangMan

[madmax2]

People who know what they are doing in business either own or have a long term lease on their premises, that's if they want to survive and have a profitable business

People who except a short term lease that is 3 years or less and it's not registered with the govt have no hope of surviving in business and can forget about ever making a profit, landlords are the same anywhere in the world they are successful business people, they want the maximum return on their investment, that's business and why they survive and make a decent living 

[madmitch]

9 hours ago, NamKangMan said:

 

 

"but you can effectively ignore the rental cost as that has to be paid whether the guesthouse is open or not." - so, just "ignore the rental cost."  Serious????  It's the biggest expense of the business. 

 

Has anyone considered the initial purchase cost in ANY of these figures????????

 

So, Stupid Farang pays X millions of baht to purchase the lease on the guesthouse, and somehow, out of this pittance of "little pocket money" he's supposed to not only survive, but have his initial outlay returned to him.  Impossible.

 

Ahhh, but high season is profitable, I hear you say. 

 

Even if this small 4 room guest house was fully rented during high season at 500 baht a night, that's still only 60,000 baht turn over, and laundry would have to be done everyday, so apart from increased laundry costs, there would probably have to be a dedicated room cleaner, at 300 baht a day, because with people constantly checking in and checking out there would have to be a receptionist, probably the owner's Thai wife or girlfriend.  So, that's 9000 baht a month for a staff member.  Not to mention the added water and electric costs.

 

There will be no more "high season" on Phuket.  In its place will just be a constant stream of Chinese package holiday tourists.  This is why many of these small operations are closing?

 

Your example high lights why I say a lot of farang become slaves to the greedy Thai landlords here.

 

 

The question relates to whether it's worth opening in low season or not. The rent has to be paid regardless. The key money, if any, has already been paid. These are not ongoing expenses, and that's why they can be ignored for the purposes of this exercise i.e. low season profitability.

 

You've assumed farang ownership. I don't know why. Most small businesses are still Thai owned. You've also assumed it's a four room guesthouse when the actual size has not been mentioned, purely the number of rooms let out on a monthly basis in low season. Additional rooms could also be occupied on a nightly basis. We don't know.

 

Finally, your point about no "high season" on Phuket is very premature. There's still a distinct low/high season and this will continue as long as the rainy season and unswimmable sea remain. Europeans are dropping off but the numbers are still high and Russians (who are dominating my bookings for next season) like to spend all day on the beach. We've still got a few years, I think!

 

In the long term, however, you're probably right.

 

[NamKangMan]

28 minutes ago, madmitch said:

The question relates to whether it's worth opening in low season or not. The rent has to be paid regardless. The key money, if any, has already been paid. These are not ongoing expenses, and that's why they can be ignored for the purposes of this exercise i.e. low season profitability.

 

You've assumed farang ownership. I don't know why. Most small businesses are still Thai owned. You've also assumed it's a four room guesthouse when the actual size has not been mentioned, purely the number of rooms let out on a monthly basis in low season. Additional rooms could also be occupied on a nightly basis. We don't know.

 

Finally, your point about no "high season" on Phuket is very premature. There's still a distinct low/high season and this will continue as long as the rainy season and unswimmable sea remain. Europeans are dropping off but the numbers are still high and Russians (who are dominating my bookings for next season) like to spend all day on the beach. We've still got a few years, I think!

 

In the long term, however, you're probably right.

 

 

"The question relates to whether it's worth opening in low season or not." - the question relates to whether it's worth opening at all.  As mentioned by XP, many walking away now are walking away for good, not walking away from "low season."

 

"The key money, if any, has already been paid." - obviously.

 

"that's why they can be ignored for the purposes of this exercise i.e. low season profitability." - but they should not be ignored on the balance sheet.  Right?  If there is not 1 baht of profit during the low season, due to closure, that "key money" and initial purchase capital, plus any modifications / upgrades further pressures the "high season" profits for a return on the whole venture, does it not?

 

"You've assumed farang ownership. I don't know why." - you are the one who said, "The rent has to be paid regardless."  This implies non-ownership of the entire property, so not much difference between a Thai or Foreign lease holder.

 

"Most small businesses are still Thai owned." - Thai's own the land, and the bricks and mortar, and rent it out.  I would suggest most small guest houses are leased. 

 

"You've also assumed it's a four room guesthouse when the actual size has not been mentioned" - true, but I was being kind, using your 4 rooms being fully occupied for a full 30 days at 5000 baht a month for each room.

 

"Additional rooms could also be occupied on a nightly basis." - sure.  So now you are talking about a bigger guest house with even more "key money" and purchase capital, possibly more staff and definitely higher overheads.  In theory, my example remains the same.  Not to mention, the bigger the guest house, the harder it is to be fully occupied for a full 30 days.

 

"Finally, your point about no "high season" on Phuket is very premature." - yet, you agree Phuket is heading in that general direction, as shown by your final comment, "In the long term, however, you're probably right."  So, for those who have long leases here, or for those few that own their land, what future do they have?

 

"Europeans are dropping off but the numbers are still high" - sure, but you can see the trend.  What is being done here to turn this around?  The answer is, nothing.  So little wonder why businesses are closing here, and not just due to low season, as can be seen by the many "For Sale / Rent" signs. 

[madmitch]

2 minutes ago, NamKangMan said:

 

"The question relates to whether it's worth opening in low season or not." - the question relates to whether it's worth opening at all.  As mentioned by XP, many walking away now are walking away for good, not walking away from "low season."

 

"The key money, if any, has already been paid." - obviously.

 

"that's why they can be ignored for the purposes of this exercise i.e. low season profitability." - but they should not be ignored on the balance sheet.  Right?  If there is not 1 baht of profit during the low season, due to closure, that "key money" and initial purchase capital, plus any modifications / upgrades further pressures the "high season" profits for a return on the whole venture, does it not?

 

"You've assumed farang ownership. I don't know why." - you are the one who said, "The rent has to be paid regardless."  This implies non-ownership of the entire property, so not much difference between a Thai or Foreign lease holder.

 

"Most small businesses are still Thai owned." - Thai's own the land, and the bricks and mortar, and rent it out.  I would suggest most small guest houses are leased. 

 

"You've also assumed it's a four room guesthouse when the actual size has not been mentioned" - true, but I was being kind, using your 4 rooms being fully occupied for a full 30 days at 5000 baht a month for each room.

 

"Additional rooms could also be occupied on a nightly basis." - sure.  So now you are talking about a bigger guest house with even more "key money" and purchase capital, possibly more staff and definitely higher overheads.  In theory, my example remains the same.  Not to mention, the bigger the guest house, the harder it is to be fully occupied for a full 30 days.

 

"Finally, your point about no "high season" on Phuket is very premature." - yet, you agree Phuket is heading in that general direction, as shown by your final comment, "In the long term, however, you're probably right."  So, for those who have long leases here, or for those few that own their land, what future do they have?

 

"Europeans are dropping off but the numbers are still high" - sure, but you can see the trend.  What is being done here to turn this around?  The answer is, nothing.  So little wonder why businesses are closing here, and not just due to low season, as can be seen by the many "For Sale / Rent" signs. 

I won't bother with individual responses. I'm purely answering the original question posed by Xylophone as somebody in the business. You are expanding upon this and looking at the bigger picture. 

 

First rule of examinations: read the question!

[stevenl]

9 minutes ago, NamKangMan said:

 

"The question relates to whether it's worth opening in low season or not." - the question relates to whether it's worth opening at all.  <snip>

" Madmitch, a question for you............the first quote states that if a guesthouse can rent out four rooms for 5000 a month (20,000 baht pm) then that is quite a good earner for low season. "

 

That was the question. So yes, it relates to low season.