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Small Indo-owned resort has offered 3 year leasehold/management. Seeking advice.

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  • Small Indo-owned resort has offered 3 year leasehold/management. Seeking advice.

    Hello all.

    During a recent holiday in Bali, the Indonesian owner of a small resort in rural/coastal Bali offered me a 3 year management lease on his resort. He is too busy to run it properly (lives in Denpasar and has another very busy business) and he feels sad for his staff that they haven't received any bonuses for a few years now because they are not very busy. There has been very poor marketing done and there is barely any online presence for this place, despite it's lovely buildings/locations/vibe.

    I am thinking of just heading in on a social visa, staying for 5 - 6 weeks to tweak a few things around the place then returning to Australia to work here, managing the bookings/marketing remotely in close collaboration with the staff (who are great).The place already runs itself really well, but the staff are bored and really keen to see more people walking through the doors so the main task would be marketing. The place has so much potential! I've done a couple of budget scenarios and it's certainly a viable proposition, and there is a modest income to be made. I foresee that the money will all stay in Indonesia, paying bonuses for the staff and then paying for my trips there a couple of times a year.

    Is this outline viable or would I be breaking laws?

    Thanks in advance for any advice.

    Martine

  • #2
    Yes you would be breaking the law. But hang on, what do you mean by management lease? You get to pay the owner for the "right" to manage his resort for 3 years? Isn't it usually the other way around?

    Comment


    • #3
      Originally posted by El_Goretto View Post
      Yes you would be breaking the law. But hang on, what do you mean by management lease? You get to pay the owner for the "right" to manage his resort for 3 years? Isn't it usually the other way around?
      Well yes, indeed, you do have a point and I did wonder why they didn't just offer me a job. I just thought things must be done a little differently in Indo?

      What he is offering is for me to lease the whole thing from him for 3 years. He would pay for any infrastructure expenses and repairs, but everything else would be my responsibility. I would basically take it over, and profits would be mine.

      I am wondering if its going to be worth it if the visa process is going to be a big struggle. I don't have a lot of capital and really, I'm considering it more for the experience and to have a connection to the place. Naive, I know.

      Perhaps, to get around the visa/law issue, the owner and I should be considering a short term contractors role where I go back and make the necessary tweaks and then he pays me a small retainer after that to manage the online presence from here.

      If I were to stick to the original plan, however, what paperwork would be required? Obviously a notary contract. Is it possible to apply for a self-sponsored work visa? I was able to do that in Japan after 4 years of being there, and working freelance.

      Cheers

      Comment


      • #4
        All expenses except [COLOR=#333333]infrastructure expenses and repairs (if the owner agrees they are needed) would leave you with payroll, inventory, services, etc. If this place isn't doing well yet then on top of the lease payments you may have large out of pocket cost. You really don't know how long you may take to fill rooms and there was just an article about room cost coming down in Bali due to too many rooms available and more being built. You will need to offer more then just rooms with a nice view to get the people in.

        Annual bonuses are mandated by government degree and if they had not been paid then perhaps you will be held up for them. I would go into this very carefully and any contracts will need to be gone over very closely by people that understand Indonesian because that is what it will be in, written by someone who is a friend of the owner most likely. I think if this owner thought the business could be successful he would have hired someone to manage it for him. Has he been trying to sell it? if so that tells you something. If you get it going will he sell it away? [/COLOR]
        Last edited by fastpitch17; 03-12-13, 11:28.
        [COLOR=#333333][FONT=Verdana]Some love to milk Apostate.[/FONT][/COLOR]

        Comment


        • #5
          Originally posted by martinec View Post
          ... I am thinking of just heading in on a social visa, staying for 5 - 6 weeks to tweak a few things around the place ...

          ... Perhaps, to get around the visa/law issue, the owner and I should be considering a short term contractors role where I go back and make the necessary tweaks and then he pays me a small retainer after that to manage the online presence from here.

          ... Is it possible to apply for a self-sponsored work visa? ...

          Cheers
          I think that in relation to work visa , legally the only options are :

          1- To be hired by the resort owner , if the resort can get a kind of "resort's plan for hiring foreigner worker" approved by the Indonesian Manpower Department and you is considered eligible for the job (probably requiring university diploma in management or marketing + some work experience in one of these fields) .

          2- To buy at least a part of the Resort by converting it in a PT PMA business type (if possible) , and then getting a director position in it .

          Comment


          • #6
            Managing a business, such as a hotel, remotely, where attention to detail is the difference between a good business and a doss house, would, to my mind, be fraught with risks. Also how would you deal with the day to day cash flow and keep an eye on that side of the business? The owner of the business is the one who should be taking risks. His concern for his staff is touching but I reckon he is primarily looking after number one. If the staff bonuses are a big issue then it's likely that the wages are crap. It's in his interest to build up some turnover so he can sell it as a going concern.
            "[COLOR=#000000][FONT=Helvetica Neue]I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it.[/FONT][/COLOR]"
            George Bernard Shaw

            Comment


            • #7
              If you do decide to go ahead legitimately or not- I would not pay him anything- but maybe make a deal where you split the profits.
              Or at least where they provide you with free flights & accommodation (in essence free holidays).
              Don't invest (be that time or money) anything that you are not prepared to lose. See it as taking a trip to the casino
              Cicak Magnet

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              • #8
                or... marry his daughter... (assuming he has one of age available & assuming you are single)
                Cicak Magnet

                Comment


                • #9
                  Originally posted by martinec View Post
                  Well yes, indeed, you do have a point and I did wonder why they didn't just offer me a job. I just thought things must be done a little differently in Indo?

                  What he is offering is for me to lease the whole thing from him for 3 years. He would pay for any infrastructure expenses and repairs, but everything else would be my responsibility. I would basically take it over, and profits would be mine.

                  I am wondering if its going to be worth it if the visa process is going to be a big struggle. I don't have a lot of capital and really, I'm considering it more for the experience and to have a connection to the place. Naive, I know.

                  Perhaps, to get around the visa/law issue, the owner and I should be considering a short term contractors role where I go back and make the necessary tweaks and then he pays me a small retainer after that to manage the online presence from here.

                  If I were to stick to the original plan, however, what paperwork would be required? Obviously a notary contract. Is it possible to apply for a self-sponsored work visa? I was able to do that in Japan after 4 years of being there, and working freelance.

                  Cheers
                  Many hotels and resorts hire foreigners legally into management positions, so there's really no valid reason for him to make you pay him money while you would be breaking the law.

                  If you pay him any cent, he can simply run away with your money and that's it. You wouldn't be able to do anything about it, even if there's any kind of contract because the whole situation would be illegal in the first place.

                  To me, this whole thing smells like a scam. And if it's not, the fact that this owner thinks this way would make me run away as far as possible because obviously he is very oblivious to how things work in the tourism industry in Bali and should clearly look at an other line of business. I lean on the first option though.
                  Last edited by El_Goretto; 03-12-13, 15:36.

                  Comment


                  • #10
                    Originally posted by bad_azz View Post
                    or... marry his daughter... (assuming he has one of age available & assuming you are single)
                    Indonesia doesn't recognize same sex marriage BA. I doubt that Martine is a man, more a woman's name...

                    Comment


                    • #11
                      Originally posted by martinec View Post
                      What he is offering is for me to lease the whole thing from him for 3 years. He would pay for any infrastructure expenses and repairs, but everything else would be my responsibility. I would basically take it over, and profits would be mine.
                      Run, do not walk. The best case scenario of this for you would be a modest profit, the worst case it would be a bottomless money pit for which you would be responsible. And if you do turn it around, which could very well take the 3 years you have, there is no obligation for him to extend your lease.

                      Also, you don't pay someone to manage their property, they pay you to manage their property. I would work out a deal where your company (more on that below) become the manager of the resort, for a percentage fee, taken directly from gross (not profit). Usually at least 20% and that is just management fees. On top of that you will bill him for all utilities, and any significant maintenance. That is how it's done.

                      [COLOR=#333333]If I were to stick to the original plan, however, what paperwork would be required? Obviously a notary contract.[/COLOR]
                      If you do stick to this plan, would you be able to do the due diligence on the property? I mean, there are TONS of angles you need to watch out for: is the land legally owned, are the proper building permits in place, are the business licenses in place..etc...etc.

                      As far as visas, you can set up at PT PMA (foreign direct investment firm), then have the PT PMA sponsor you (although some areas are restricted to PMA, I don't know if hotel management is one of them, but I doubt it). Then have him hire your company as managers of his resort.

                      But if I were to summarize this in one sentence, please read the first sentence of this post again.

                      Comment


                      • #12
                        Yes you can do business like that.. lease the premise. A company in London lease a small apartment of a friend of mine for 3 years and run it as a serviced apartment. The company bares the loss if there is no one rent the unit. But don't businesses always have a risk?

                        I am not really sure about paperwork, but here is my opinion .. You lease the hotel from a landlord, run it as 'business' but you do not work here, so I don't think you need any paperwork but the income that comes from the business will be taxable to Indo.

                        I can say that you are a passive partner, investing in Indonesia but do not own the property and do not work here. No need visa and not against the law.
                        Last edited by Missnaughty; 03-12-13, 16:09.

                        Comment


                        • #13
                          Originally posted by atlantis View Post
                          Indonesia doesn't recognize same sex marriage BA. I doubt that Martine is a man, more a woman's name...
                          It could be Martin ec just as easy as martine c
                          but you are correct, my bad for assuming this is a man posting- so ... martine= if you are a woman. marry the bloke or his son
                          Cicak Magnet

                          Comment


                          • #14
                            Originally posted by bad_azz View Post
                            It could be Martin ec just as easy as martine c
                            but you are correct, my bad for assuming this is a man posting- so ... martine= if you are a woman. marry the bloke or his son
                            She has signed her OP with the name Martine. End of the post.
                            Last edited by atlantis; 03-12-13, 17:56.

                            Comment


                            • #15
                              Originally posted by dafluff View Post
                              Run, do not walk. The best case scenario of this for you would be a modest profit, the worst case it would be a bottomless money pit for which you would be responsible. And if you do turn it around, which could very well take the 3 years you have, there is no obligation for him to extend your lease.

                              Also, you don't pay someone to manage their property, they pay you to manage their property. I would work out a deal where your company (more on that below) become the manager of the resort, for a percentage fee, taken directly from gross (not profit). Usually at least 20% and that is just management fees. On top of that you will bill him for all utilities, and any significant maintenance. That is how it's done.


                              If you do stick to this plan, would you be able to do the due diligence on the property? I mean, there are TONS of angles you need to watch out for: is the land legally owned, are the proper building permits in place, are the business licenses in place..etc...etc.

                              As far as visas, you can set up at PT PMA (foreign direct investment firm), then have the PT PMA sponsor you (although some areas are restricted to PMA, I don't know if hotel management is one of them, but I doubt it). Then have him hire your company as managers of his resort.

                              But if I were to summarize this in one sentence, please read the first sentence of this post again.
                              Is it worth going through all the troubles of setting up a PT PMA for a 3 year operation?

                              Comment

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