How much does it cost to invest in a resort business ?
- Dithanon Khrutmuang
- Jun 4
- 5 min read
Updated: Sep 4
Many new and experienced hotel and resort business owners invest too much of their budget in certain areas, leaving no funds for other essential aspects. For example, they spend all their money buying land in Phuket and building accommodations, resulting in no budget to hire skilled staff, insufficient funds for marketing to make their property visible, or neglecting the use of technology such as AI.
Table of Content
From the clip I made about the 50-30-20 rule for investing in a resort business and managing a resort with strategic planning https://youtu.be/F59NNlY3qTY?si=Y0C99p6THR3ujziA, it should provide some guidance on starting a hotel or resort business for you.
Let's review the investment rules a bit. I have divided them into three parts: 1. Long-term investment budget2. Short-term expenses that are consumed3. Short-term investments that remain in use
Normally, when you start investing to build a hotel or resort business, or even if you've been running the business for a long time, you can never avoid these types of investments in such businesses.
Part 1 : Long-term investment budget
mainly refers to investments in land and buildings. Typically, business owners fund this part through loans. It's crucial to be cautious about interest rates and to carefully assess whether your business profits—not just revenue—are sufficient to cover those interest payments. The key point here is profit, not income. If, after paying the bank interest, you still have enough profit left, that remainder can be reinvested in developing your business further or serve as a reward for yourself. Moreover, land tends to increase in value over time, making it an asset for you and a key advantage of running a hotel or resort business.
Part 2 : Short-term expenses that are consumed
such as water bills, electricity, internet, staff wages, food costs for guests, and maintenance fees.These are costs you’ve already paid and will never get back. However, they are essential investments to ensure your guests are happy. If you neglect this area, your guests will be dissatisfied, which will inevitably harm your business.
Part 3: Short-term investments that remain in use
such as advertising and marketing budgets to build brand awareness and recognition. Part3: Short-term investments that remain in useFor example, you may invest in creating a website and producing engaging content to attract guests, or promote your property through OTA agencies like Agoda or Trip.com. These efforts come with costs, but they are crucial in helping potential guests choose your accommodation.Although investments in Part 3 may not generate direct financial returns like those in Part 1, they can yield indirect returns—such as increased brand reputation, positive reviews, and greater online visibility—which can influence future bookings and long-term profitability.
Applying the 50-30-20 Rule to Your Hotel or Resort
Typically, a long-term investment budget should take up around 50% of your total investment. For instance, suppose you have personal savings of 1 million baht and you obtain a loan of 3 million baht from the bank at an interest rate of 3% per year. This gives you a total investment fund of 4 million baht.Now, let’s divide this 4 million baht into three parts
Part 1 : Long-Term Investment Budget – 50 %
You would allocate approximately 2 million baht for long-term investments such as land and construction. You need to ensure that your business generates an annual profit that is at least equal to or greater than the bank’s interest. For example, 3% interest on the 3 million baht loan equals 90,000 baht per year. This means your business must earn more than 90,000 baht in profit annually. If you can achieve this, congratulations — you're on the right track.
Part 2 : Short-term expenses that are consumed
Although this is a necessary budget to keep your customers happy during their stay, I have good news: you can reduce spending in this area while still keeping your customers just as happy. This is possible through better management. For example, you have an investment budget of about 30% of 4 million baht, which is approximately 1.2 million baht. You don’t necessarily have to spend all of this. Good management using your business's own data and technologies like AI can help you better understand customer behavior.For instance, my resort hires part-time employees to assist with guest services during times that align with customer bookings. By reviewing data on when guests typically stay, we can prepare the team accordingly.
You can see that if we use the data collected by the accommodation and apply it with technology, your decision-making will become easier, customers will be happier, and you will gain more profit.
Part 3 : Short-term investments that remain in use
for example, advertising and marketing budgets to increase reputation and awareness. In this part, data and AI can also help you decide which booking channels your accommodation should focus on to achieve the highest profit. With so many options — whether promoting your accommodation independently or listing it through OTAs — and choosing which platform or provider to go with, data can also help make your decision easier.
As for the proportion rates, you can be flexible and adjust them to suit your own business. For example, if your accommodation business is in the early stages of new construction or renovation, the budget for long-term investment may exceed 50%. But once the long-term structural investment is complete, you may allocate less than 50% to long-term investment and instead use it to develop other areas. However, this portion should not fall below 30% so that you always have funds available to repair and improve your accommodation to keep it attractive and up to date.
Income or estimated annual revenue | Small accommodation (not over 2.5 million THB) | Medium accommodation (2.5–10 million THB) | Large accommodation (over 10 million THB) |
Long-term investment budget | 50% | 40% | 30% |
Labor budget to create good service | 30% | 40% | 50% |
New customer acquisition marketing and AI technology | 20% | 20% | 20% |
It can be observed that small accommodations tend to have fewer staff, whereas large accommodations—especially hotels or resorts that are already completed—allocate most of their investment budget to staff salaries.
Point to Considered
Large accommodations can utilize AI technology to help reduce costs in certain positions where AI can assist, such as accounting and marketing.On the other hand, it may be difficult for small accommodation businesses to invest in AI. However, they should start by using technology that manages booking data automatically, such as a Channel Manager, and then analyze the data obtained to create Data Visualization for sharper business decision-making.Finally, the 50-30-20 rule for investing in accommodation businesses must be applied alongside the data you have.
But if you're unsure or find it inconvenient to do it yourself, we are happy to turn what seems difficult into something simple for your business.
Comments