The hotel acquisition in Thailand
Hotel acquisition strategies in bad times: Avoid problem cases and legally distressed hotel properties to efficiently benefit from Thailand’s future prospects
Traditionally Thailand’s hospitality sector, travel and tourism play an important economic role for the land of smile. From the low budget hostels, guest houses, serviced apartments, vacation clubs, holidays resorts to the five stars hotel category in Hua Hin, Pattaya, Phuket, Koh Samui, Koh Chang, Koh Phangan or Koh Lanta, Thailand’s hotel industry creates not only revenues but also jobs for educated and uneducated Thais.
However, under the current economic and political situation, it is not a promising venture to run a hotel in Bangkok, on the beaches and islands, or in the regional centers of Thailand. The fact that an enormous number of hotels are changing hands is not at all a sign of growth and international expansions. Foreign investors experience a buyers’ market in which supply exceeds demand, giving purchasers an advantage over sellers in price negotiations.
Despite the present unattractive situation, in the medium and long run, Thailand’s hotel industry will prosper again and a clever foreign investor might see a perfect point in time to investigate Thailand’s hotel markets for a cheap buy instead to build and operate a new hotel or guest house. Apart from financial considerations and the decision which area and province provide the best hotel location, it is of utmost importance to short-list available hotels on legal particularity as a shepherd divides his sheep from his goats.
Top 10 initial legal information requested for hotel acquisitions in the “nation of hospitality”
- Hotel name, number of rooms, trademark protection of establishment
- Corporate entity, date of establishment, shareholders’ background
- Date of land acquisitions, land title deeds, lease agreements, household registrations
- Building construction permits (with application date), including permits for maids quarters, guest accommodation, and swimming pool, if any.
- Environmental impact assessment documentation (if 80+ rooms),
- Licenses for hotel business, restaurant business, seminar rooms, entertainment business (with application and expiration date)
- Liquor licenses, tobacco licenses, other
- Hotel management agreements and similar arrangements
- Agreements with marketing websites, organizations, and software (Agoda, Amadeus, Fidelio user license agreement, etc.)
- Other commercial agreements like maintenance and cleaning service agreements
This compilation constitutes a matrix of basic legal characteristics and criteria as a very first step to identify possible acquisition objects. It should not at all be seen as a “hotel due diligence checklist”, but just as a compilation of the top 10 legal data required to avoid time-wasting discussions with brokers and hotel owners.
Ask the law firm for sophisticated legal assistance in identifying legally viable hotel purchase opportunities and offers – and professional assistance through the whole hotel acquisition process.
Other professional services in the hotel and hospitality sector include
- Development of an appropriate acquisition structure under Thailand’s foreigner legislation,
- Property due diligence, and corporate due diligence, if required,
- Zoning, bylaw & regulation survey,
- Contract drafting and negotiation,
- Resort development and construction,
- Hotel business license application,
- Hotel and villa management agreements,
- Finance and restructuring,
- Registration and transfer of legal ownership, and
- Tax advice and planning
Sophisticated solutions in a complex legal environment. Serious legal and tax advice in the land of smile.
The above remarks are highly simplified and should not be taken as guidance for a specific case, which is typically unrecognized intense and complex. PUGNATORIUS supports Thailand’s hotel owners and hotel operators with smart legal solutions regarding hotel sales and acquisitions, hotel business licenses, sophisticated hotel management agreements and a highly efficient cross-border tax planning. We dispose of a broad database of example work products to avoid time-consuming and costly mistakes. More about Thailand’s hotel industry at pugnatorius.com/category/hotel. Secure your hotel in paradise.