Property and busniess

[kunz]

am a frequent travel to Thailand. I love the culture and the country.
Having traveled there often - I would like to have a second home there and have a business.

I am interested in the hotel business and would like to own a 40-room hotel.
I have done some research and found out the following
1. Foreigner can not have 100% Possession of business or land in Thailand, one has to start up with a local Thai partner - Does this mean all foreigners owned resorts in Thailand, are partnership projects?
2. If I do start a partnership with a local Thai partner, would I require his formal consent?
to buy/sell, grow the business.
3. What happens when our “Foreign –Thai” partnership does not work out? Is there an exit route for me as an investor? Can I have complete control of the Project even as a partner?
4. What are the "Return on investment" I should be looking at in this business?
5. For A project like this what is a typical break-even period?

All/Any comments are welcomed

Thanks
Regards
Kunz

[colin howard]

hi kunz, 1 yes,2 yes,3 not a hope,4, for you or your thai partner?,5 after you have paid your bills for psychiatric help and counseling quite some time , choc dee, colin .

[banmebkk]

1. Foreigner can not have 100% Possession of business or land in Thailand, one has to start up with a local Thai partner - Does this mean all foreigners owned resorts in Thailand, are partnership projects?

Yes, you will need Thai partner.

2. If I do start a partnership with a local Thai partner, would I require his formal consent?
to buy/sell, grow the business.

Yes, you will need his consent as his name will have to be on the business documents. If you find someone trustworthy, they will let you use their name for free. If you cannot find someone you can trust, I suggest avoid taking the risk. But you do not need his consent to grow the business, but you will need his consent to sell as his name will be one of the owners of the business and you will need his signature. Its up to you how you talk to your thai partner.

3. What happens when our “Foreign –Thai” partnership does not work out? Is there an exit route for me as an investor? Can I have complete control of the Project even as a partner?

You can have complete control, most foreigners who own business here only borrow thai peoples names to be on the document. But they run the business any way they like. Again this will be how your agreement with your investor is, sometimes they may be part share holder and put up some money, the rest is your control. Sometimes they want to manage it with you.

4. What are the "Return on investment" I should be looking at in this business?

Are you building your own hotel or buying one? How much are you renting rooms for? Staff salaries? You will need to figure that out, once you do you can calculate your ROI. If do not know how to calculate your own ROI, don't even try running a hotel.

ROI on a simple 70 room apartment (not hotel) for rent with yearly contract is around 8-10 years, ROI around 8-10%, this is very basic 1 bedroom 25-30 sqm apartment. Rent at around 8000 baht per month. Costs around 70,000,000 million to build (land+building) fully furnish with low grade furniture. This is a location not in the middle of city.

Typically ROI for hotels is around 5% or less, but for small boutique hotels it can be around 10%. If you are running a 40 room hotel, it should be around 10% given its just basic lodging. There are many factors involved, but this is just an estimate.


5. For A project like this what is a typical break-even period?

See answer for question 4 first.