Owning/running a guest house in Thailand

[Andrew65]

I have plans to potentially own a guest house in Thailand in the future.

Has anyone done so?

If so any tips on pros/cons of doing so would be appreciated.

[robblok]

If your not an American, you can't own 100% of your company. 51% should be held by Thais this means if your company is worth something they could potentially sell it without your consent.

[CharlieH]

MOVED to Business forum

[simon43]

I've done this for more than 10 years, leasing land for 20 years in my name only, then self-building the rooms/amenities. I've done this 4 times, but a couple of warnings:

- Do not lease an existing guest-house if the lease term is less than 3 years. Short leases do not have to be registered at the land-office ==> no security of tenure. The landlord avoids paying tax on the property and can double the rent if he/she wantsafter 3 years ==> end of your business?

- Whilst a foreigner can lease land without involving a Thai national, ownership of the business (unless you are a US citizen - see above), has to be majority Thai. This is a risk if you do not know a Thai person that you can trust 100%. You can structure the company ownership of the business so that you 'control' the business, but this is a more expensive (lawyers!) route to go down.

- Running a GH is hard-work, open all hours.

- Running a GH is fun if you have customers and hell if you do not (no income). Right now, there must be hundreds of GHs for sale or not making any profit due to lack of customers (eg oversupply of GHs in the area ==> Patong etc).

- To be successful, you need to be skilled in marketing and internet, (managing booking website configurations).

- You really need to speak Thai in order to avoid being ripped off by staff, suppliers, girlfriends etc.

Apart from that, its a bundle of fun

[Andrew65]

I've done this for more than 10 years, leasing land for 20 years in my name only, then self-building the rooms/amenities. I've done this 4 times, but a couple of warnings:

- Do not lease an existing guest-house if the lease term is less than 3 years. Short leases do not have to be registered at the land-office ==> no security of tenure. The landlord avoids paying tax on the property and can double the rent if he/she wantsafter 3 years ==> end of your business?

- Whilst a foreigner can lease land without involving a Thai national, ownership of the business (unless you are a US citizen - see above), has to be majority Thai. This is a risk if you do not know a Thai person that you can trust 100%. You can structure the company ownership of the business so that you 'control' the business, but this is a more expensive (lawyers!) route to go down.

- Running a GH is hard-work, open all hours.

- Running a GH is fun if you have customers and hell if you do not (no income). Right now, there must be hundreds of GHs for sale or not making any profit due to lack of customers (eg oversupply of GHs in the area ==> Patong etc).

- To be successful, you need to be skilled in marketing and internet, (managing booking website configurations).

- You really need to speak Thai in order to avoid being ripped off by staff, suppliers, girlfriends etc.

Apart from that, its a bundle of fun

Thanks for that.

[TheFishman1]

Two Americans I know both had Thai wife's/GF both where lucky enough to get out alive better to really think how Big. A head ache you really want

[everett kendall]

P;ease explain why you think American's have a special privilege in this matter.

[robertson468]

Just a thought, why not build several houses for rent. Still same issues of land ownership, but one can get over that with long leased land and it is as sure as hell a lot less hassle. Also, you can opt for short/long rentals and if only a couple of houses are occupied, at least you are getting an income from them. Have been doing that for over 10 years now and have achieved over 85% occupancy with a very high rate of return customers. The latter of course depend on what you offer, not forgetting your charm!! Good luck.

[NickJ]

Under The Treaty of Amity. Americans can own 100% of there company here. Known as Treaty companies, they are a bit more expensive to set up and there are the issues of keeping in regulation with rules stateside as well. This treaty is decades old.

Also if a 49/51 thai company is sold the 49% can have preferential voting rights so the thai counterpart cannot sell the business out from under you.

[pbonline]

Your personal charm is probably 80% of the success or fail.
Are you extremely good with people even if they are angry guests who complains about nothing then you can be really successful.
Of Course you must have a reasonable price for your services so there will not be a huge profit but might be enough to living.
But don´t count your earnings in hourly rate...

[mogo51]

I've done this for more than 10 years, leasing land for 20 years in my name only, then self-building the rooms/amenities. I've done this 4 times, but a couple of warnings:

- Do not lease an existing guest-house if the lease term is less than 3 years. Short leases do not have to be registered at the land-office ==> no security of tenure. The landlord avoids paying tax on the property and can double the rent if he/she wantsafter 3 years ==> end of your business?

- Whilst a foreigner can lease land without involving a Thai national, ownership of the business (unless you are a US citizen - see above), has to be majority Thai. This is a risk if you do not know a Thai person that you can trust 100%. You can structure the company ownership of the business so that you 'control' the business, but this is a more expensive (lawyers!) route to go down.

- Running a GH is hard-work, open all hours.

- Running a GH is fun if you have customers and hell if you do not (no income). Right now, there must be hundreds of GHs for sale or not making any profit due to lack of customers (eg oversupply of GHs in the area ==> Patong etc).

- To be successful, you need to be skilled in marketing and internet, (managing booking website configurations).

- You really need to speak Thai in order to avoid being ripped off by staff, suppliers, girlfriends etc.

Apart from that, its a bundle of fun

My advicre to you is DONT DO IT. It doesnt matter where you are thinking of doing this, it is a nightmare and constant harassment from the Police, councils etc. You are always

behind the pace.

[NickJ]

I toyed with the idea years ago....but a person asked me if I really wanted to be in charge or responsible for peoples holidays. When anything goes wrong from air cons to bad weather you get blamed. There are a lot of jackasses out there.

[pbonline]

The biggest issue here about running an official business is all this shit with authorities and bureaucracy that you don't count with.

It´s all a big mess.

[lpwhite]

I owned /leased the Phuket Tropical Inn in Patong for over 3 years for all those who say it is hard work I would agree 100%

I purchased the business from a LIAR & a cheat ( who eventually went to Jail ) KARMA FEELS SO GOOD

all the promises & information given to me was totally false including that the owner was a "beautiful Soul" & loved her buildings and would help & assist if required

The building at first glance was excellent as was the meeting with the owner all that changed as soon as I paid my lease & 1.5M purchase price

The promise of ongoing training ended on that same day TRUST IS SUCH A HARD THING TO FIND IN THAILAND

the business had a very bad internet presence and it took me a few months to realize why & how to fix the problem

I spent my whole time advertising & contacting agencies & after 8 months I was 100% full & had brought my hotel up to No1 on tripadvisor

but as the building was ageing & constantly in need of repairs from original problems with sewerage from the day it was built cost me every Baht I ever made

by the time I had sold the lease I had spent over 3M doing all the repairs and fixing all the original faults the owner paid 0 Baht

& I would have continued running it when all the problems were fixed but the owner was just so greedy and selfish & when she presented me with a tax bill (that she is supposed to pay) I had just had enough & sold the lease within 4 weeks

You think that after all that hard work and such deception I would never want to run a Hotel/B&B again but you would be wrong

I loved the interaction with guests & although a challenge the booking sites as well

I left Thailand as many do with a bitter taste in my mouth & nothing to show for 3 years very hard work but I cant wait to get back & have put an add in employment section of ThaiVisa hoping to find such a position so I can return to the country & industry that I love

To someone who has never run a Hotel/B&B in Thailand before my suggestions would be simple

JUST HAVING A BUILDING MEANS NOTHING THERE IS HUGE ONGOING WORK TO BE DONE TO BUILD & MAINTAIN A SUCCESSFUL BUSINESS

FIND & EMPLOY A TRUST WORTHY MANAGER WITH FIRST HAND KNOWLEDGE OF THIS INDUSTRY

There is a lot of B&Bs in Phuket but with the right team in place who are trustworthy & guest relation trained your bushiness will stand out above the rest

I wish you well & if you are totally serious answer my employment add & maybe we could talk more

[bureaucrazy]

Pros

• Live in Thailand with possible income
• Social interaction

Cons

• No income security. There's so many threats to your income which you have no control over.
• No asset security. I don't mean just getting ripped off by your Thai GF, I mean the value of the land and buildings is subject to fluctuations.
• Constantly having to pay off police and other officials
• Significant threats from business partners regarding asset protection (you have very little protection from the actions of your business partners).
• Significant threats from staff to your cash, and good will.
• Very little opportunity to delegate responsibilities. You have to constantly oversee your staff to maintain adequate standards of service. No chance of delegating management of online activities.
• Significant costs of entry / sunk costs.

I'm an accountant in Australia, my Mrs is Thai and we regularly holiday in Thailand. I often look at foreigners trying to battle it out in hospitality going toe to toe with Thai's, and I think the odds are really stacked against them.

That said, hospitality in any country is about passion more than it is about money I think. Sure, if you're passionate enough about what you do then you'll be successful. But I really think that if you're looking to make some money, there must be easier ways.

[1FinickyOne]

A friend had a GH at a beach and when he told me of a guest returning drunk at midnight, insulting his nationality and generally looking for a fist fight - it stopped sounding like fun to me...

[konying]

Do not unless you wiling to give up your life.

Putting aside never ending staff issues, you also have cheap skates tourists who brake things but hardly ever admit to it or willing to pay for it.

They rent 500 baht rooms, price for a pack of cigs back home but demand and expect 5 star rooms with 5 star service.

So headache from staff,headache from guests, headache from technicians and its 24 hour headache

[sikishrory]

I owned /leased the Phuket Tropical Inn in Patong for over 3 years for all those who say it is hard work I would agree 100%

I purchased the business from a LIAR & a cheat ( who eventually went to Jail ) KARMA FEELS SO GOOD

all the promises & information given to me was totally false including that the owner was a "beautiful Soul" & loved her buildings and would help & assist if required

The building at first glance was excellent as was the meeting with the owner all that changed as soon as I paid my lease & 1.5M purchase price

The promise of ongoing training ended on that same day TRUST IS SUCH A HARD THING TO FIND IN THAILAND

the business had a very bad internet presence and it took me a few months to realize why & how to fix the problem

I spent my whole time advertising & contacting agencies & after 8 months I was 100% full & had brought my hotel up to No1 on tripadvisor

but as the building was ageing & constantly in need of repairs from original problems with sewerage from the day it was built cost me every Baht I ever made

by the time I had sold the lease I had spent over 3M doing all the repairs and fixing all the original faults the owner paid 0 Baht

& I would have continued running it when all the problems were fixed but the owner was just so greedy and selfish & when she presented me with a tax bill (that she is supposed to pay) I had just had enough & sold the lease within 4 weeks

You think that after all that hard work and such deception I would never want to run a Hotel/B&B again but you would be wrong

I loved the interaction with guests & although a challenge the booking sites as well

I left Thailand as many do with a bitter taste in my mouth & nothing to show for 3 years very hard work but I cant wait to get back & have put an add in employment section of ThaiVisa hoping to find such a position so I can return to the country & industry that I love

To someone who has never run a Hotel/B&B in Thailand before my suggestions would be simple

JUST HAVING A BUILDING MEANS NOTHING THERE IS HUGE ONGOING WORK TO BE DONE TO BUILD & MAINTAIN A SUCCESSFUL BUSINESS

FIND & EMPLOY A TRUST WORTHY MANAGER WITH FIRST HAND KNOWLEDGE OF THIS INDUSTRY

There is a lot of B&Bs in Phuket but with the right team in place who are trustworthy & guest relation trained your bushiness will stand out above the rest

I wish you well & if you are totally serious answer my employment add & maybe we could talk more

Why did you sell the lease if it was going so well?

what does the owner presenting you with tax bills have to do with you? If it was her responsibility to pay then just tell her that?

Sounded like a good operation considering the huge amount of average guesthouses that patong is FULL of.

[Benmart]

I toyed with the idea years ago....but a person asked me if I really wanted to be in charge or responsible for peoples holidays. When anything goes wrong from air cons to bad weather you get blamed. There are a lot of jackasses out there.

There seems to be a good supply of "jacks" elsewhere. The last sentence soured the preceding two.

[ggt]

Are you now...or have you ever been diagnosed as a person who is prone to become a glutton for punishment...is so then owning a guesthouse in Thailand is likely a good deal for you...

[dotpoom]

While the majority shareholding must be Thai, I wouldn't like you to get the idea that is can easily be sold over your head. Foe example ...you can own 49%, your wife or somebody you can trust could own 48% and a total stranger to both of you could own the remaining 3%. Or the 51% could be owned by Thai's unknown to each other....so no way of them getting together to plan against you, leaving you in full control in either situations.

That's been my experience so far without any problems.

[F4UCorsair]

Pros

• Live in Thailand with possible income
• Social interaction

Cons

• No income security. There's so many threats to your income which you have no control over.
• No asset security. I don't mean just getting ripped off by your Thai GF, I mean the value of the land and buildings is subject to fluctuations.
• Constantly having to pay off police and other officials
• Significant threats from business partners regarding asset protection (you have very little protection from the actions of your business partners).
• Significant threats from staff to your cash, and good will.
• Very little opportunity to delegate responsibilities. You have to constantly oversee your staff to maintain adequate standards of service. No chance of delegating management of online activities.
• Significant costs of entry / sunk costs.

I'm an accountant in Australia, my Mrs is Thai and we regularly holiday in Thailand. I often look at foreigners trying to battle it out in hospitality going toe to toe with Thai's, and I think the odds are really stacked against them.

That said, hospitality in any country is about passion more than it is about money I think. Sure, if you're passionate enough about what you do then you'll be successful. But I really think that if you're looking to make some money, there must be easier ways.

Good advice Anthony.

[bureaucrazy]

Pros

• Live in Thailand with possible income
• Social interaction

Cons

• No income security. There's so many threats to your income which you have no control over.
• No asset security. I don't mean just getting ripped off by your Thai GF, I mean the value of the land and buildings is subject to fluctuations.
• Constantly having to pay off police and other officials
• Significant threats from business partners regarding asset protection (you have very little protection from the actions of your business partners).
• Significant threats from staff to your cash, and good will.
• Very little opportunity to delegate responsibilities. You have to constantly oversee your staff to maintain adequate standards of service. No chance of delegating management of online activities.
• Significant costs of entry / sunk costs.

I'm an accountant in Australia, my Mrs is Thai and we regularly holiday in Thailand. I often look at foreigners trying to battle it out in hospitality going toe to toe with Thai's, and I think the odds are really stacked against them.

That said, hospitality in any country is about passion more than it is about money I think. Sure, if you're passionate enough about what you do then you'll be successful. But I really think that if you're looking to make some money, there must be easier ways.

Good advice Anthony.

Who's Anthony ??

[mike324]

running a guest house is not easy work, for those who think they can kick back and relax while the money flows in, you are wrong! Its like taking care of a kid, need to wake up in the middle of the night to fix problems and solve disputes. Again depending on how big the guest house is. If you are not prepare to do that, you should not be running a guest house.

[lpwhite]

The tax bill of almost 200,000 I was told in no certain terms I should pay as requested or my lease would be canceled being a Farang & her being "such a powerful member of Patong" I paid it and had no money left at all

a lot of sleepless nights later I met with her to suggest she "delay" the upcoming rent for a few months so I could catch up the answer was NO NO DEFIANTLY NOT even after all the improvements & millions I had spent she would not even entertain the idea (just too money hungry)

it was then I told her I was selling the lease she even said she would not allow another person to take over the existing lease and that I would have to find a "tenant" willing to re-sign a new 3x3x3 lease jst so I would lose the hotel what a B****

But as the hotel was fully booked for the High & Peak Season and number 1 on trip advisor I found a buyer very quickly THANK GOD

I would never ever lease a business again you have no power & when dealing with the super rich (as most building owners are) no legal rights

I was so happy when I "presented" her with new tenants and said my final goodbye seriously a total nightmare

The only way I could see a westerner making any money with a hotel is if the building was owned by them (under a company)

Maybe I was just one of the unlucky ones who knows

[Robert24]

I have no experience with guesthouses but I do have some student apartments I rent out daily over Agoda. My sense is this is very competitive as rates per night are usually very low here in Thailand. But calculate the returns you can make from your investment and you will soon have an idea whether you want to invest in this. And returns should be well above 10% otherwise stay away from it.