Patong is dead.

[NamKangMan]

On 30/05/2017 at 9:31 PM, 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.

 

@  MadMitch

 

"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."

 

"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."

 

Only time will tell if the same "high season" owners reappear come October / November, but as I have stated, the many "For sale" and "For Rent" signs suggest these previous owners will not be returning. 

 

Basically, in the past, the money made during high season could keep these businesses afloat during low season.  These days, not enough money is being made during the high season, so the whole business becomes no longer viable, thus, they walk away.

[madmitch]

4 minutes ago, NamKangMan said:

 

@  MadMitch

 

"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."

 

"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."

 

Only time will tell if the same "high season" owners reappear come October / November, but as I have stated, the many "For sale" and "For Rent" signs suggest these previous owners will not be returning. 

 

Basically, in the past, the money made during high season could keep these businesses afloat during low season.  These days, not enough money is being made during the high season, so the whole business becomes no longer viable, thus, they walk away.

Wrong post! Anyway, no more comments from me on this one. I have had my say.

[NamKangMan]

19 minutes ago, stevenl 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. "

 

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

 

From XP - "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."

 

Perhaps XP can clarify. 

[NamKangMan]

3 minutes ago, madmitch said:

Wrong post! Anyway, no more comments from me on this one. I have had my say.

 

In my opinion, for your example to be viable, the rooms would have to be rented at a price way higher than 5000 per month, or, the land must be owned, or, the rent must be very cheap, or, the guest house must be considerably larger, and fully occupied. 

[LivinginKata]

1 hour ago, NamKangMan said:

 

In my opinion, for your example to be viable, the rooms would have to be rented at a price way higher than 5000 per month, or, the land must be owned, or, the rent must be very cheap, or, the guest house must be considerably larger, and fully occupied. 

 

But the sad reality is that 5 - 6,000 baht/month is the offered rate along Nanai road. There will always be a guest house along the road undercutting as they are desperate to make some income. 'Once upon a time'they made enough money in the high season to cover the losses in the low season - but the high season is no longer a big money earner.

 

Take the example of 4 rooms at 5,000 baht = 20,000 baht income.  The owner would need his wife/family looking after reception, house keeping, likely have washing machine for laundry.  Lucky if they cover water/electric/room tax/rent. Nothing left for the workers. It's a mug's game.

[happyas]

1 hour ago, NamKangMan said:

 

From XP - "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."

 

Perhaps XP can clarify. 

XP was replying to a troll comment, here;

 

[xylophone]

Good debate with some differences of opinion, however mostly along similar lines!!

 

Now have had time to look at some guesthouses for sale (have spent one week in hospital on an IV, many daily visits for the same and 3 computer crashes, but seem to be improving!) and a few that I have seen advertise 3+3+3 leases for 1 to 2 million baht PLUS monthly rent which obviously varies, but can be over 200,000 baht a month!

 

That being the case, I have to agree with those (in the majority) that not only is it unprofitable in the low season, it is doubtful that it will ever be profitable. Whether that's just because of greedy landlords or too many/and offering low prices, I'm not sure. Also there is the old debate as to whether one is actually buying a business to make a profit or to "buy themselves a job/living"".

 

 

 

[Thomas Hannah]

On 5/30/2017 at 0:31 PM, 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.

Correct.Thai,s never close for low season.Thais brought this on themselves.Its called greed.Its now expencive.Last time that i was in patong was about 7 years ago.I used to stay in Karon in low season.I could see the attitude then .So i imagine its become a lot worse now.Most people went and retired to thailand because it was cheap.You only need to look at the cheaper expat bars in pattaya now.Even they are dead.Always thought that i would fully retire in thailand.Its the last place that i would want to retire now.

[NamKangMan]

4 hours ago, LivinginKata said:

 

But the sad reality is that 5 - 6,000 baht/month is the offered rate along Nanai road. There will always be a guest house along the road undercutting as they are desperate to make some income. 'Once upon a time'they made enough money in the high season to cover the losses in the low season - but the high season is no longer a big money earner.

 

Take the example of 4 rooms at 5,000 baht = 20,000 baht income.  The owner would need his wife/family looking after reception, house keeping, likely have washing machine for laundry.  Lucky if they cover water/electric/room tax/rent. Nothing left for the workers. It's a mug's game.

 

"Once upon a time'they made enough money in the high season to cover the losses in the low season - but the high season is no longer a big money earner." - so, "high season" no longer exists on Phuket.  Right? 

 

"There will always be a guest house along the road undercutting" - these are probably the Thai owned and managed guest houses.  No rent to pay.  How can business owners, paying high rents, compete with them, especially during tough times?

 

"Nothing left for the workers" - nothing left for the owner, either.  Even if they are the ones doing all the work.

 

"It's a mug's game." - it is now.  In the past, you could turn a few baht if you ran a decent operation.  Not these days.  As mentioned, the ground on Phuket has shifted beneath the feet of these owners, and they will soon be left carrying the can, if they are not already.

[LivinginKata]

3 minutes ago, NamKangMan said:

 

"Once upon a time'they made enough money in the high season to cover the losses in the low season - but the high season is no longer a big money earner." - so, "high season" no longer exists on Phuket.  Right? 

 

"There will always be a guest house along the road undercutting" - these are probably the Thai owned and managed guest houses.  No rent to pay.  How can business owners, paying high rents, compete with them, especially during tough times?

 

"Nothing left for the workers" - nothing left for the owner, either.  Even if they are the ones doing all the work.

 

"It's a mug's game." - it is now.  In the past, you could turn a few baht if you ran a decent operation.  Not these days.  As mentioned, the ground on Phuket has shifted beneath the feet of these owners, and they will soon be left carrying the can, if they are not already.

 

There is still a high season but shorter and less pickings.

 

I have no direct evidence but I do not see many Thai guest house operators unless they own the land/building. Most owners of land/building can make more renting on 3 year contract with big front end key money. They expect the business to fail in the first few months then wait for the next renting 'victim'. More money to be made that way.

 

Sure, nothing left for the operator (you can't call them owners as they rent the building and own nothing except maybe the furnishings).

 

10 years ago you might be able to turn a few baht to live cheaply in Phuket, but not now. Although I do know a handful of operators in Patong that still seem to be making a good living. For sure takings are down for everyone (include myself). I cannot imagine it will ever come back, I predict it will flat line and remain.

 

 

 

 

[NamKangMan]

3 minutes ago, LivinginKata said:

 

There is still a high season but shorter and less pickings.

 

I have no direct evidence but I do not see many Thai guest house operators unless they own the land/building. Most owners of land/building can make more renting on 3 year contract with big front end key money. They expect the business to fail in the first few months then wait for the next renting 'victim'. More money to be made that way.

 

Sure, nothing left for the operator (you can't call them owners as they rent the building and own nothing except maybe the furnishings).

 

10 years ago you might be able to turn a few baht to live cheaply in Phuket, but not now. Although I do know a handful of operators in Patong that still seem to be making a good living. For sure takings are down for everyone (include myself). I cannot imagine it will ever come back, I predict it will flat line and remain.

 

 

 

 

 

"There is still a high season but shorter and less pickings." - ok, so just how short will it become, and just how slim will the pickings be here, in the future?  Then, what will / should this "season" be called, it could hardly be be called "high" anymore.

 

"I do not see many Thai guest house operators unless they own the land/building." - true.  However, I notice some Thai owners keep the doors open, using cheap Thai labor, whilst trying to sell the lease.  It makes the place look more like a going concern.  In many cases, these are the guest houses with cheap nightly rates, and rent paying operators have to compete against them.

 

"Most owners of land/building can make more renting on 3 year contract with big front end key money." - true, but the "victims" are short in supply here now, therefore, we are seeing Thai operated guest houses with "For Sale" signs on them, or closed guest houses with "For Sale" signs on them. 

 

"Sure, nothing left for the operator" - correct.  Hardly a good business proposition, is it?

 

"10 years ago you might be able to turn a few baht to live cheaply in Phuket, but not now." - ahhh, those pesky high rents by greedy Thai landlords designed to make the leaseholder fail.

 

"For sure takings are down for everyone (include myself). I cannot imagine it will ever come back, I predict it will flat line and remain." - I agree.  The question is, just how low will that "flat line" go?  Many Phuket businesses seem to be in a competition for a race to the bottom here now. 

 

 

[xylophone]

6 hours ago, stevenl 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. "

 

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

Yes you are quite right Stevenl as it was related to the low season, but having said that and now looking at the key money and monthly rent being charged/asked for some of these guesthouses/ "boutique hotels" for 3 year plus leases I have to agree with LIK when he said it was ä mugs game".

 

I look at it from a slightly different viewpoint to some inasmuch as I take the key money and amortise it over the term of the lease, then take the monthly rental and they are my fixed costs (low or high season); then add variables such as staff, elect, and all the other items mentioned and they are my outgoings. 

 

Back of the envelope stuff, but what with the lo-rent tourists here now, cost cutting out of desperation, oversupply of these "businesses" and lower low seasons (and high seasons) I really can't see why anyone would even entertain this?

 

As if to prove a point, I notice a small guesthouse/hotel has closed up on Soi Banzaan; a small restaurant is now up for sale on Nanai and Urban Food (Jungceylon restaurant alley") has closed for a few days whilst new owners "revamp" it. From the notices pinned on the windows/doors it would seem as if bills were unpaid, however I could be wrong on this.
 

[KarenBravo]

Bluefin Mexican restaurant in Kata/Karon always closes for low season every year.

[LivinginKata]

2 minutes ago, KarenBravo said:

Bluefin Mexican restaurant in Kata/Karon always closes for low season every year.

20 years ago it did not close for high season. Close high season started maybe 4 years ago. Is this place still operating given the sullen face of the lady manager/operator.  The staff seemed more interested in playing cards. I gave up eating them 2 years ago after 19 years being a loyal customer.

[KarenBravo]

16 minutes ago, LivinginKata said:

20 years ago it did not close for high season. Close high season started maybe 4 years ago. Is this place still operating given the sullen face of the lady manager/operator.  The staff seemed more interested in playing cards. I gave up eating them 2 years ago after 19 years being a loyal customer.

Me too. Gave up going when they started charging me 150 Bt for a vodka and orange juice. That was around two years ago.

[Boiled Frog]

Ah... It's good to be back.

 

Interesting that, as usual here on TV, when someone is discussing business or property ownership they always fail to include the opportunity cost upon the capital they have tied up in the business or real estate.

 

In recent months I have seen some suckers trying to onsell their guest house leases in Patong for as low as 250, 000.  A few short years back they were selling for 2,500,000 or more (notice the extra zeros?).

 

So whether or not someone can scrape by with 4 renters at 5,000 a room per month is only discussing part of the picture.  What about the loss of return on the tied up capital.

 

And to continue on with the theme of the property crash, this week the flood of small land parcels for sale on Thai websites has intensified.   In all my years here I have never seen so many small parcels of land for sale.

 

 

Edited June 3, 2017 by Boiled Frog

[metisdead]

Troll posts and replies have been removed. 

[GiantFan]

Went by the old Montes a few weeks ago and it looks open again.  Sign was coming down off the roof, so rebranded.  Anybody try it out?

[fatdrunkandstupid]

38 minutes ago, GiantFan said:

Went by the old Montes a few weeks ago and it looks open again.  Sign was coming down off the roof, so rebranded.  Anybody try it out?

Yep.

 

Was in there last night.  Ice cold service.  Luke warm beers at 180 THB a pop.

 

New owner is an Iranian.

[Thomas Hannah]

On 6/2/2017 at 10:53 AM, 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...............

He is right 5000 a month is fine for low season.Only 4 rooms.No sky tv.No need of staff.20000 is better than nothing.Like many places.

[NamKangMan]

1 hour ago, Thomas Hannah said:

He is right 5000 a month is fine for low season.Only 4 rooms.No sky tv.No need of staff.20000 is better than nothing.Like many places.

 

So, after rent, water, laundry, electric (common area electric) internet, tea money, maintenance etc has been taken out of the 20,000 baht - how much do you think is left for the lease holder?

 

Not to mention, the rent is probably 20,000 baht a month, or more, and he's still got to try to get back his key money and lease purchase money at the end of his term.

[simon43]

Quote

 

Not to mention, the rent is probably 20,000 baht a month, or more,
 

 

 

From experience some years ago, I would definitely agree with 'more'.  A building that is built as a guesthouse, ie every bedroom has an ensuite toilet/bathroom, typically demands a monthly rent of at least 30,000 baht.

 

20,000 baht income in low season is a viable business?  You're having a laugh.....

 

 

Edited June 5, 2017 by simon43

[fatdrunkandstupid]

9 minutes ago, simon43 said:

 

From experience some years ago, I would definitely agree with 'more'.  A building that is built as a guesthouse, ie every bedroom has an ensuite toilet/bathroom, typically demands a monthly rent of at least 30,000 baht.

 

20,000 baht income in low season is a viable business?  You're having a laugh.....

 

 

Simon

 

Wait for him to post back to accuse you of never having lived in Phuket and knowing nothing about hotels...

[NamKangMan]

56 minutes ago, simon43 said:

 

From experience some years ago, I would definitely agree with 'more'.  A building that is built as a guesthouse, ie every bedroom has an ensuite toilet/bathroom, typically demands a monthly rent of at least 30,000 baht.

 

20,000 baht income in low season is a viable business?  You're having a laugh.....

 

 

 

"You're having a laugh....." - why do you think I call them "slaves" to greedy Thai landlords? 

 

Not only do they work for nothing, but also lose their start up capital as well. 

[madmax2]

11 hours ago, simon43 said:

 

From experience some years ago, I would definitely agree with 'more'.  A building that is built as a guesthouse, ie every bedroom has an ensuite toilet/bathroom, typically demands a monthly rent of at least 30,000 baht.

 

20,000 baht income in low season is a viable business?  You're having a laugh.....

 

 

You can rent a 2 bedroom 2 bathroom furnished house with internet and cable TV in Chalong for 12 to 15K baht a month, has parking as well, walking distance to the bars and restaurants near chalong circle

There is a sign near the circle for a furnished room with ensuite, cable and internet for 4K baht a month

30k for a room with ensuite, or even 4 rooms you cannot be serious, especially in a guesthouse in Nakon nowhere

[xylophone]

11 hours ago, simon43 said:

 

From experience some years ago, I would definitely agree with 'more'.  A building that is built as a guesthouse, ie every bedroom has an ensuite toilet/bathroom, typically demands a monthly rent of at least 30,000 baht.

 

20,000 baht income in low season is a viable business?  You're having a laugh.....

 

 

At least 30k pm rent,  and some............and now that the low season seems to last for about 7.5 months and the high season for 4.5 months the poor soul thinks he is going to make up the deficit in that short period of time and this when occupancy rates in theses sort of establishments are now lower than ever!

 

As others have said.....it is a mugs game and all the time these mugs keep on coming here, the Thai landlords are laughing all the way to the bank.

[madmax2]

Who said the guesthouse that rents out 4 of its rooms for 5000k each a month only has 4 rooms

They rent them out at that rate to cover their basic costs  

It could have up to 15 rooms and the rest would still be rented out on a daily  basis when they can get walk in customers for them to make a decent profit

I have seen flats and rooms sitting empty because the owner wanted to much rent for them, surely dropping your rent to get guests/tenants is better than having the rooms/ flats sitting empty for months at a time with no income at all  

[fatdrunkandstupid]

3 hours ago, madmax2 said:

You can rent a 2 bedroom 2 bathroom furnished house with internet and cable TV in Chalong for 12 to 15K baht a month, has parking as well, walking distance to the bars and restaurants near chalong circle

There is a sign near the circle for a furnished room with ensuite, cable and internet for 4K baht a month

30k for a room with ensuite, or even 4 rooms you cannot be serious, especially in a guesthouse in Nakon nowhere

Simon was referring to the rental for the whole hotel property, not just an individual room.

[fatdrunkandstupid]

2 hours ago, madmax2 said:

Who said the guesthouse that rents out 4 of its rooms for 5000k each a month only has 4 rooms

They rent them out at that rate to cover their basic costs  

It could have up to 15 rooms and the rest would still be rented out on a daily  basis when they can get walk in customers for them to make a decent profit

I have seen flats and rooms sitting empty because the owner wanted to much rent for them, surely dropping your rent to get guests/tenants is better than having the rooms/ flats sitting empty for months at a time with no income at all  

Well it depends on the fixed and variable costs and your break even point.  If the variable costs are more than the return on the room rental then the more you rent out the more you loose.  So in some instances, it would be better to leave the room empty.

 

Remember that a component of your variable costs is the wear and tear on your property, which in my experience is always higher when dealing with low rent customers.

Edited June 6, 2017 by fatdrunkandstupid

[KarenBravo]

2 hours ago, fatdrunkandstupid said:

Well it depends on the fixed and variable costs and your break even point.  If the variable costs are more than the return on the room rental then the more you rent out the more you loose.  So in some instances, it would be better to leave the room empty.

 

Remember that a component of your variable costs is the wear and tear on your property, which in my experience is always higher when dealing with low rent customers.

Don't agree. There is no product that has a shorter shelf-life than accommodation. If a room stays empty, you can never get that time back. Better to get something; anything rather than nothing. Wear and tear over a few nights is negligible.

Edited June 6, 2017 by KarenBravo