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Friday, 6 May 2011

Koh Samui Properties Blog May 2011

The sun is shining again and we are getting no more than the usual isolated brief tropical shower. Samui is getting back on its feet but it will take time to recover fully, particularly the tourist industry which has been hard hit. The storms and their effects were widely reported and pictures of crumbling seaside bungalows were all over the internet. Many hotels suffered damage and the island infrastructure has taken a pounding with damaged and washed away roads, collapsed electric poles, fallen rocks (see last months newsletter) etc. Samui is simply not set up to cope with these disasters and it is all very well for Dr Prasert to be wise after the event (see report below) but maybe he could see his way clear to making the island more accessible with realistic air fares and service that justifies the title “boutique”.

As a general rule we do not get involved with the sale of businesses but I do keep an eye out on what is going on in that market. One of the reasons is that I have yet to find a business owner on Samui who has a realistic idea of the value of his business and consequently the whole exercise is a waste of time. I have been presented with figures which do not even justify the price they paid for the business when they bought it and now they want to sell at a higher figure still. The usual comment is “Well if the buyer did this or that, they would make a lot of money” and they seem to think that justifies their
price tag. I have to bite my tongue and not ask why they do not do “this and that” to make the profits they believe are there. There is a learning curve to any business and it takes time for a business to become established – the general rule is three years. A good well run business, with a steady track record and not dependent on the personality of the seller can make sense at the right price and provided there is sufficient time left on the lease to regain the invested capital. However, so often small businesses are dependent on an individual, their personality and expertise and that does not carry over when the business is sold. Buying an existing business is no guarantee of success and you really have to work out why the present owner is selling – because if the business is as successful as he makes out – then why is he selling?

There is no international standard for the star rating system for hotels and star ratings are frequently approved in accordance with the local practice and at the discretion of whichever national body is responsible for tourism and the hospitality industry in that country. So a 5-Star hotel in one country may well not reach that category in another. There is then the quandary of “Boutique” hotels. Quite an interesting article can be found here at Wikipedia. One definition I found states “Small but exclusive property that caters to the affluent clientele with an exceptional level of service at premium prices”. Bangkok Airways claims to be a “Boutique Airline” then one would transpose the words “property’ and “airline”. The only issue I have with that is “exceptional level of service”. I do not travel on Bangkok Airways very often but I have to say that the last few times I have the service has been less than exceptional in the extreme and on a par with the low cost carriers operating in Thailand. This is a shame as when I started travelling between Samui and Bangkok several years ago, the flight was something to enjoy and you could appreciate the service provided. That has all sadly gone. Fares have gone through the roof and service through the floor. Whilst they were rightly complemented on the help they gave to the island during the recent floods, the complaints from tourists about the way they were treated was a reflection of what a monopolistic enterprise can get away with. Tourism is the life blood of the island and, as I have stated in previous  newsletters, this came about as a consequence of Bangkok Airways investment in the airport. There are many reasons for the decline in tourism here but I just hope that Bangkok Airways understand that they have played more than their fair part in this and return to the original standards of service we were once used to.

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Ko Samui Villas said...

I'm glad to hear that the property market is back on the up-and-up after the recent storms and bad weather. The island always looks lovely this time of year.


Koh Samui Beach Villa said...

Excellent post. Very glad to see the market is back on track.

antx too said...

The growing plants in the villas increase the natural look of the villas. The reflecting pools or stone garden make the villas cooler.

Samui Property