It is a common dream to set up a guest house in a foreign country and live in paradise. I certainly have considered it. Wouldn’t it be great to live in a tropical climate and have a profitable business funding your lifestyle? However, running a business, especially one in a foreign country, is not always glamorous and exciting. In this interview, I talk to Mike Henry, who has recently bought a guest house in Bali with his wife. He shares what it is really like to own and run a guest house. (Also, check out this 2009 interview with Mike when he just arrived in Bali.)
Please tell us about your guest house in Bali.
Our guesthouse is located on the north coast of Bali in the village of Anturan and about 6km from Singaraja, Bali’s second largest city. It comprises of just four guestrooms, a restaurant, a pool and our own house.
What is Bali like?
I have lived in Bali for nearly two years. There are many things I like about Bali, the weather, the culture, the easy going nature of the people and the scenery. There is still a very strong sense of community in Bali and many people still live a simple village life. It makes you realize how unimportant many things are that we place high value in western countries.
The thing I don’t like is the difficultly of getting information on laws and regulations. Internet forums can be very helpful in finding answers, but of course you cannot rely on them 100 per cent for your information.
Why did you want to buy a guest house?
Firstly, I didn’t want to keep renting so we were looking for a house to buy. I have spent the past few years traveling in Asia and I usually stayed in guesthouses. So I always had a dream of having my own place. I thought it would be a good way to still meet other travelers even though I am staying in the one place. You can employ staff to run everything, so you still have the time and freedom to do what you want.
The world is changing and some businesses and industries are no longer needed. I think people will only want to travel more in the future and providing accommodation is one business that will always be needed.
How did you find it?
My wife works in property, which is how we found out about the place. The sale went through pretty much without a hitch.
What is it like running a guest house?
Initially it was a little bit crazy. The first night we had guests, but we didn’t give the room keys to our staff and we were out at the time. So the guests had to find another place. It felt a little bit like a scene from Fawlty Towers. We have staff now, who take care of the day to day operations, so there is nothing much for me to do.
How many staff do you hire?
We have two staff for now and we have employed some workers to do some maintenance on the property since taking it over.
Can you generate a good income?
Right now, no. It’s low season, so very few people around here now. I will be happy enough if we can cover our operating costs and pay the staff salaries.
Unless you have a big place in a popular tourist area, you can’t really make a lot of money. There is the potential of expanding further on down the road, but that will be some time yet.
Is it difficult to find guests?
Yes and yes. We are not in the main tourist area of Lovina, so we get few walk-in customers. We are hoping to build a greater online presence and get bookings that way, but it takes time. Right now it is rainy season, so it’s not the best time to be traveling in Bali. July and August are the busier times of the year.
Is it difficult for foreigners to buy or set up a business in Bali?
It’s not easy. Foreigners cannot buy freehold land in Indonesia. Foreigners can own a PMA company, but they are expensive and difficult to set up. It’s difficult to find accurate information on starting a business in Bali, which is why I created a guide for starting a business in Bali. My wife is Indonesian which of course helps a great deal.
How much money does it cost to buy or build a typical guest house in Bali?
Property prices are way more expensive in the south of Bali than the north. There is a nice place for sale in central Lovina for example for 245,000 euros. Initially we wanted to buy land and then build, but that is increasingly becoming more expensive and unless you are an experienced builder, it can be a lot of trouble and a stressful experience.
What advice can you offer for others considering setting up a guest house?
If you are going to be running it with your partner, you obviously need to have a good relationship. Since you will probably live on the property, you will be spending most of your time together and you will both need to agree on how you want to run the business.
I think it is important whether you have your own job or business to try and have multiple income streams, so you are not just relying on one source. You can have a backup if one income stream is not working out. There are many things that can cause people to stop traveling, terrorism or a natural disaster are just some examples. Look at what is happening right now in Egypt. It’s going to take a long time for their tourism industry to recover.