Cost and Return Analysis of Small Emerged Homestay Business: A Case Study of Tha Chang Homestays, Surat Thani Province
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Abstract
Tha Chang homestays have been established as a community enterprise in 2011 which is composed of 12 households. It offers both land and sea-side homestays, five and seven of each, respectively. This business has faced many problems especially those that are related with management, marketing and finance. The issue has aroused considerable interests to the researchers. Consequently, the research topic was selected for this study. Results may offer guidance to strengthen financial capability for tourism community enterprises to run sustainable businesses. This study primarily focused on analysis of financial capability. The cost and return analysis was performed to determine a break-even point and appropriate pricing of the business. Each owner of the homestay enterprise was interviewed using semi-structured questions during June-August 2017. Descriptive statistics was employed and financial and long-term capital investment analysis was conducted. Results showed the establishment costs for land and sea-side homestays were 760,462 and 408,509 THB (approx. 25,349 and 13,617 USD), respectively. The estimated incomes for each type were 155,097 and 153,929 THB per annum, respectively. The current price of a homestay package is 950 baht/person which includes a room with three meals and one-day-tour. The set price is approximately 44.8-46.4%higher than the break-even point. Return analysis was conducted after 10 years of investment with expected 10% benefits. Findings revealed that presently land homestays gave a negative net value (NPV) of –429,041.4 THB, internal rate of return (IRR) 7.6%, and a payback period of 8 years and 4 months. However, the return of sea-side homestays was higher than that of the land ones which had NPV and IRR of 264,349 THB and 13.3, respectively. The payback period of the sea-side homestays was 5 years and 11 months. The findings imply that sea-side homestays have more financial capability in terms of revenue, costs and returns.
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