Building a little boutique resort in Thailand

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Building a little boutique resort in Thailand

Postby quamsukh » Wed Nov 21, 2012 1:22 am

Hello people! My wife, myself and 2 friends are planning to move to Thailand next year to build and run a little boutique resort, likely in Koh Phangan or Koh Chang (we were put off Samui by rumours of an operating mafia on the island!). As with any venture of this size, it seems to involves a LOT of research!

I am 30 and currently work in finance (not banking!) but am desperate to leave the industry to focus on something that I love and have had this shared dream with my wife (British) for some time.

I was just wondering whether anyone could offer any guidance on how much a small resort would cost to build? We are thinking of between 10-20 kabanas on a beachfront property, with a swimming pool, restaurant & bar, yoga and wellness centre, along with a separate bar/function area. I'm sure it is very hard to offer any kind of accurate guidance on costs for such a venture, but any kind of steer would be hugely appreciated!

Also, if anyone knows of any good/trustworthy architects/builders etc that they you may be able to pass their details over to me that would also be great!

I hope that someone out there can help! :)

All the best,

Raff
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Re: Building a little boutique resort in Thailand

Postby Mike Judd » Wed Nov 21, 2012 5:32 am

As some one who has paid quite a lot of visits to Samui /Phangan etc; and seen them grow over the last 12 yrs, I would think the best bet for you as you would have to have access to a reasonable amount of finance. Would be to go there first and rent a small place, have a look around, meet plenty of people, go into all the details of ways of "Farangs" buying or leasing land in Thailand for a start. That will take some time ,but a lot better than jumping in feet first I would think. Having a Honest Thai partner would be a big help , other wise you could be taken to the Cleaners.?
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Re: Building a little boutique resort in Thailand

Postby Roger Ramjet » Wed Nov 21, 2012 7:47 am

quamsukh,
I have no idea if you're Thai or not, but certain laws apply, especially to do with land purchase. You also need to make sure the land you purchase (probably your biggest expense) is really owned by the people that are selling it and comes with a real land title (Sor Por). In recent months Thai National Parks have evicted many "illegal" resort owners and destroyed the resorts because the land was illegally purchased and was in actual fact part of a National Park. Beach front land is at an all time high and will cost an arm and leg depending on if you can find a seller.
Stay away from Samui, the mafia and police are in cohorts there and have been for years. It's also noisy the whole time.
I would recommend talking to an international real estate agent first. There are many. They would be able to give you an idea about land.
More advise from members will flow as you post some plans and decide on either 10 or 20 cabanas and what quality build you want.
I don't think anyone would recommend any Thai builder.
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Re: Building a little boutique resort in Thailand

Postby wazza » Wed Nov 21, 2012 10:44 am

I would hate to think what beachfront land on samui or pha ngan is these days. I recently bought beachfront 60km south of here on mainland and prices quoted to me since I bought are 4-5 million per rai in an undeveloped area.
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Re: Building a little boutique resort in Thailand

Postby quamsukh » Wed Nov 21, 2012 3:08 pm

Hi - thanks for the replies. All of the people looking to be part of the venture are British. We are aware of all the stringent land laws and the complex issues that we have to deal with in order to "own" the land through a thai company with a set % of thai shareholders. We are being advised by a legal team on these issues which has been a great help thus far. It all seems overly complicated but at least there are means to do it!

Some VERY useful information here though, especially illegally owning land in National Parks that is then repossessed.

We have made some initial investigations into property prices in Phangan and been amazed by the costs, but as has been mentioned, beachfront property is at a real premium at the moment it seems. We wondered whether we might pay above the odds if we dealt with an international real estate agent? Can anyone corroborate that suggestion? I guess the offset of that might be a better chance of gaining the land legally, but perhaps that assertion is in itself naive.

We will be visiting Thailand in February to conduct a thorough feasibility study and spend some important time on the ground, but until then, we are trying to gather as much information as possible that can help us. It definitely seems that we will need to have our wits about us, and steering clear of Samui both because of the cost of land and the presence of a mafia was an easy decision in the end but a bit of a spanner in the works!

Thanks again for the posts so far and I would appreciate any more insight from both those who have and have not already posted!

Thanks

Raff
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Re: Building a little boutique resort in Thailand

Postby Roger Ramjet » Wed Nov 21, 2012 5:57 pm

quamsukh,
quamsukh wrote:We are aware of all the stringent land laws and the complex issues that we have to deal with in order to "own" the land through a thai company with a set % of thai shareholders

Also don't forget the ratio of "Farang" employees to Thai employees, so if you have British partners who also want to work in Thailand, you're going to have a lot of Thai employees, otherwise they won't be able to get work permits. And if they are "caught" working without one, the legal costs and court case will break you unless you "know" someone. And be warned the Thai employees will tell immigration if they think the "ratio" is wrong.
How do I know? My Thai wife has worked for 3 different international companies including BMW and one company (Sansha) is still paying for being caught....so far about 5 million baht and no court date in sight and they "know" people. Do not expect the Thai employees to be loyal either, and you'd better make sure at least 3 Thais speak passable English (head chef, front office and bookings) otherwise the others will do what they want, not what you want.
The good part about running an international resort in Thailand is finding qualified personnel. Thailand has a number of colleges and universities that run International Hotel Management courses in English, and trust me, you're going to need all the help you can get when you get underway.
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Re: Building a little boutique resort in Thailand

Postby LivinLOS » Fri Nov 23, 2012 11:38 am

What your suggesting here (beachfront resort) is a process that to do properly, and attain true ownership will run close to a mil USD.. And could easily run into multiples..

You need to consider the return you expect from this investment (as your in finance I dont need to tell you) and consider that v the return of the resort.. Then the time and effort to run it.. and the amount 'unknown unknowns' which relate to risk around ownership, business activity, rivalry, etc..

I would also say that anyone who isnt a veteran expat having been incountry for a number of years at a minimum shouldnt expect to jump off the plane and do this, your expenditure will be far far less, leading to a much greater ROI if you come and take up residence first, know some locals (not bar flys and whiners), get an idea of true value not claims of prices sold, speak some of the language, and get the true lie of the land.

I would also say dont be so put off by the samui = mafia thing.. Everywhere in Thailand corruption leads to people having power in ways that dont operate through courts and laws. Samui is no worse than many other places (tho the family that runs the solo nighclub among others are not to be trifled with) as a business you need to look at arrival numbers. KPG and Koh Chang suffer from the lack of airport and have different tourism markets, Chang is basically dead in low season is my feeling. Theres still some value land south of Lamai thats peaceful, and has potential.

I actually know a low key resort of many cabanas with lots of room for expansion in Lamai that is for sale, tho not beachfront.

I tried to PM you but maybe my low post count stopped that.
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Re: Building a little boutique resort in Thailand

Postby setaputra » Fri Nov 23, 2012 12:54 pm

Hi quamsukh,

The best advice is to immerse yourself in Thailand for a few months and do a lot of listening, reading, and observing. Even then, what you see is not always what you get. You will need to adopt a very different lifestyle to make things work here. Your costs will be more than that given to a Thai and you won't have any realistic access to the legal system. You can not own land; the company route will technically give you a minority share but if you make a lot of money you may find you are encouraged to sell out. Upset someone and the rights you have in the company may suddenly vanish with odd interpretations of the law and your contract being made by lawyers and judges. It is as naive to think that there is only one mafia on one small island as it is to believe a Thai lawyer has only your interests at heart.

That said, you can make things work here if you do things the Thai way. But forget thinking you can do business or live here using Western ways. Do as much research as you can then check it against a different source. And the golden rule, do not invest any money that you can't afford to lose.
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Re: Building a little boutique resort in Thailand

Postby quamsukh » Tue Mar 05, 2013 12:42 am

Hello again! so its been a long while since I last posted on here. The posts were very useful back in November and I am back here to post and update and ask for some more advice!

the group is now down to 2, with just myself and my wife still involved. we have just got back from our scoping trip of Thailand which was more useful than we could have imagined. we met with a number of lawyers, real estate agents and a large number of existing resort owners - ALL of which were extremely helpful and useful for our project. we also gained a huge amount of insight into the style and design that we are looking to create.

Our running costs and revenue projections look good, and we were given the details of a trustworthy western builder in thailand who we are getting in contact with to get a rough quote for the build cost.

One thing that was mentioned in the previous posts, and something that we noted as hugely important when we were in thailand, was that we would need to find an honest and trustworthy thai to represent us. this is an area that we are really struggling with right now. our plan is to raise investment over the coming months and fly out to in September, find a plot (most likely on koh phangan), go through the legal proceedings of entering into a long lease, and living in the location whilst that all goes through in order to assimilate into the local community. We were hoping that during this period, we would meet people who we would hopefully bond with and trust enough to employ as that trustworthy thai. I am about to start learning thai now in anticipation of this so that locals take us seriously.

what I am interested in, is other peoples' experiences in how they met local thais that they have either entered into business with, or have found the local trustworhty person that they entrust to speak and act on their behalf where the colour of my skin means that i will inevitably be seen as a dollar sign by some official or tradesman. (excuse my cynicism - this comes from my own past experiences in the country and through stories of others. it does not deter me and i generally love thais but we are definitely trying to go into this with our eyes FIRMLY open). Any advice that anyone can offer on meeting trustworthy locals would be brilliant!

we're currently in the process of finalising our business plan before we set up investor meetings in May onwards. Also if anyone has had experience with investors in their home country whilst doing business in Thailand and how you may have explained the legal issues surrounding business ownership, it would be great if you could share any experiences.

After our recent visit to Thailand, I feel that we are MORE than capable of the actual running of the resort that we envision. the tricky part (OF COURSE) is going to be in getting investment and getting the resort built! But we are both big dreamers and both of us are go-getters with bags of enthusiasm so we will continue to work hard to get this venture off the ground! any other advice or insights that anyone wants to share, either on this thread or via a personal messgae would be really appreciated.

thanks once again in advance

Raff
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Re: Building a little boutique resort in Thailand

Postby setaputra » Tue Mar 05, 2013 4:12 am

I wish you both well but you really have not taken on board some of the advice and comments on Thailand that have been offered.

Someone suggested spending some time here and getting to understand how Thailand is so different from your current perceptions. I think that is good advice, you currently have too rosy a trusting picture of Thailand and are underestimating the problems that will arise. Problems can be surmounted but your posts suggest you are thinking too much in a western way. You need to understand the culture and you can only do that by being here for a little while and listenihg and observing. Be a little cautious, don't take things at face value.

Throw away the rose-tinted glasses.

You can make a success here and I wish you well, but you need to make some radical changes to your thinking.

Why did your previous two friends back out? Have they read some of the advice offered on this thread?
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Re: Building a little boutique resort in Thailand

Postby LivinLOS » Tue Mar 05, 2013 7:36 am

I know of a resort that due to a death and ill health is quietly on the market.. Its got (great) potential to expand, already has a lot of money put into the place and could be had at approx the kind of money it would take these days to buy the land. If I wasnt involved with other businesses, and my time unable to divert to an island life, I would be considering it myself.

It would end run and shortcut so many issues your going to face.

That said.. My sincere advice remains as above.. DONT DO IT.. Not until you have been resident in country full time for a couple of years.. I have seen so many people get off the plane, jump in feet first and lose their nest egg in the first business or two.. Then after they have been here a while, know the real prices and values, know how things work and can now run a business.. Only have limited capital and are trapped in poxy little businesses, competing with everyone else with no capital, when if they had dont the loss leader little biz forst they would still have the few mil to buy or build something that actually could make an income.
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Re: Building a little boutique resort in Thailand

Postby Mike Judd » Tue Mar 05, 2013 1:55 pm

All the advice you have been getting is worth listening to, with the main one being , spend a while living there first. Samui is a great place but like Phuket and others ,it's getting too popular for it's own good and you really need to quietly emerge into the scene over a decent period. Having a Thai pardner who you know and trust would be no 1 on the list. That said I can't imagine why anyone would want to try and make a living in Thailand, competing with the local businessmen . So much easier to have some sort of investment back home which may only be modest there ,but in Thailand translates into much more than you would need to have a good life style. But then maybe it's the challenge you are looking for, which is O.K. as long as you can afford to lose on the venture.
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Re: Building a little boutique resort in Thailand

Postby LivinLOS » Tue Mar 05, 2013 6:26 pm

Mike Judd wrote:That said I can't imagine why anyone would want to try and make a living in Thailand, competing with the local businessmen . So much easier to have some sort of investment back home which may only be modest there ,but in Thailand translates into much more than you would need to have a good life style.


Sage words..

Make money in the real world.. Dont compete to fight over the seashells and buttons that many / most businesses earn here.
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Re: Building a little boutique resort in Thailand

Postby setaputra » Wed Mar 06, 2013 7:47 am

Agreed with two reservations.

1. Most Thai businesses have higher gross margin percentages than those in the West. The difference is that Thais don't generally go for volume, so the bottom line is lower. They also prefer to be cash rich. This the reason why the economy and the baht are so strong comparatively.

2. You have to factor in any loss on exchange in repatriating those modest UK profits before making a comparison.

That said, the op is certainly advised to think before he leaps. He has learnt so little about Thailand and is being too trusting. At least on to this site he is getting the truth about the reality.

I would not normally recommend his reading some of the other Thai internet forums because much of what they write is inaccurate or just pure flaming, but for balance he could read some of the scare stories.
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Re: Building a little boutique resort in Thailand

Postby quamsukh » Tue Mar 19, 2013 1:41 am

Hello again, and thank you very much once again for your replies.

I must say that I have read a number of different forums and have come across many of the scare stories. Whilst I understand you are not trying to simply scare me off but to help provide a balanced picture, I feel that I have read and heard plenty of stories. We have a large number of expat friends in Thailand (many of whom are running non-tourism related businesses) and have heard a number of stories from them as well. Unfortunately, none of these people live close to the islands that we are looking at, other wise they may have been able to provide a local trustworthy Thai contact!

In the last couple of week, we have been given a rough ball park figure on build cost using a western architect and builder - the MD of the company is a good friend of one of our expat friends there so we feel like we can trust him. The company has won a number of awards so they also have a reputation to uphold which is important.

LivinLos - out of interest, where is this resort of which you speak? Please can you message me some of the details?

Our friends backed out of the venture because one of them has some personal issues that may have caused problems for them as a couple in Thailand, so they made a call not to go for it.

I think that your advice about living in Thailand before progressing is a very good idea. Our plan will be to arrive in September, and spend the next 3 months looking for the exact location. We will then spend around 6 months with the architect planning the layout etc, before looking to start the actual build shortly after that. So in reality, we will have been in the country for almost a year before a footing has been dug or a brick laid! We are anticipating that it will take around 1 year to build, so we will almost certainly have been in the country for approaching 2 years before opening our doors.

thank you for your last post as well setaputra - we have accounted for both of these factors in our planning.

cheers

Raff
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