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168 Owning & Operating a Hotel in Costa Rica with Hospitality Expert Marco Thomas

168 Owning & Operating a Hotel in Costa Rica with Hospitality Expert Marco Thomas
168 Owning & Operating a Hotel in Costa Rica with Hospitality Expert Marco Thomas

Podcast Transcription

[Richard Bexon]
Good morning, Marco. How are you doing?

[Marco Thomas]
Hey, good morning. Good to see you.

[Richard Bexon]
Yeah, good. It's an absolute pleasure to have you on the podcast.

As I said, we've known and worked together for many years on certain things. And yeah, it's great to get you on here, buddy.

[Marco Thomas]
Well, same here.

Thanks for having me.

[Richard Bexon]
Not at all. Well, I mean, the first question I always like to ask Marco is just get an idea of kind of what's going on in the market at the moment.

You know, with world economies kind of somewhat stalled, you know, how has this impacted your kind of your work level? Is it still continuing? I mean, what are you seeing happening in the market?

[Marco Thomas]
It's still continuing, yes, but it's sort of spotty in some points. There's some uncertainty, I guess, in the air. In general, I think that Costa Rica is pretty strong, but, you know, most investors that wanna work here or wanna do something here are looking at other countries.

I mean, you have to be clear about that. So sometimes when they hit other markets and they get to start, you know, they start getting all these mixed messages, then they translate it to our market. And so that makes it a little bit more, it constrains a little bit, you know, what they're willing to do.

But in general, the market in our country, in Costa Rica, it's pretty strong. I mean, we see developments coming up all the time. We see people interested.

People are visiting Costa Rica. We have, you know, numbers are as good or better as they were in 2019. So in general, for our country, it's looking good.

Actually, the challenges we have are the ones that you usually encounter on hot markets. You know, high, you know, high land prices, high airfare, higher taxes. So, you know, those are just those things that happen when you're doing good.

[Richard Bexon]
Yeah, no, I mean, I agree. You know, Costa Rica is very hot. The last podcast we had, Frank Bush, who actually owns an escrow company, and he was just talking about, like, just generally in Latin America, Costa Rica is seen as stable.

It's a safe investment. Like, I think that if you wanna take risks, there are other Latin American countries out there, as we know. Personally, you know, I mean, I'm biased, of course.

Costa Rica is just a solid, you know, place to put money.

[Marco Thomas]
Yeah, I agree, totally. I mean, it's been solid for years, and it's been increasing. I mean, the recovery that we had after COVID, I think it's nothing short of impressive, really.

I mean, we really hit very good numbers in 2022, and that's not, it's easy, you know, it's easy to say it. It's not so easily done.

[Richard Bexon]
Yeah, definitely. I mean, when someone's looking to invest in Costa Rica or do a project in Costa Rica, what other countries do you typically find come up on the radar that they're comparing Costa Rica to?

[Marco Thomas]
Nowadays, I mean, there's places like Panama, of course. I think that would be first one on the list, I think. Belize seems to come up, especially in the last, well, before COVID, but especially in the last year, year and a half, I've seen Belize coming up a little bit.

And then the Caribbean. The Caribbean is, I think, Dominican Republic, for sure, and some of the other non-traditional markets for us, like the smaller islands in the Caribbean, Bermuda and those places. So these are the type of people that are looking for, the type of investments we are finding that people are looking are those.

I mean, we are a world destination. And so we're being compared with destinations that historically have been worldly. And so I think that the Caribbean, Panama, certainly, Belize, I mean, sometimes people are investing a lot now in the new sort of resurgence of Colombia, but I think that they still have a ways to go.

But yeah, that's what I'm feeling.

[Richard Bexon]
I mean, where do you think most people go wrong when looking to create a vacation rental, like invest in a vacation rental or invest in a hotel in Costa Rica?

[Marco Thomas]
I think they sometimes, people need to be clear on what they wanna do. Do you want your home or in the mountains in a tropical destination or an exotic destination? Or do you want this as a business?

Sometimes they over-design, they over-decorate, they over-personalize the property to their specific needs. And then they're surprised when it doesn't sell well. Well, it's just a matter of understanding that part.

I think that's the biggest challenge. And when you're dealing with people that, these are successful business owners, so they've done it, they've been there, so they know everything. And so it's difficult to sway them to make them understand that not every market is the same, not every destination is the same and so forth.

So I think that in itself, it's the biggest market. And then sometimes they fall in love with a specific property that when you're, when you've been doing this for over 30 years, you know that there are certain destinations where you're not gonna get that return that you're hoping for, or that you think you're gonna get just because you have a very nice house. So that's really the challenge.

I mean, it's not only location, location, location, as we're all accustomed to hearing, but it has to do a lot more with market, with the type of build, the concept that you wanna put out there for potential guests and clients.

[Richard Bexon]
Yeah, I mean, I think humility, having humility when you come to Costa Rica and understand that this is a market that you don't understand. Like, it's like investing in the stock market. If you don't know what you're doing, I mean, you could lose your, I mean, you'll lose your ass very, very quickly.

I mean, that's what they had stockbrokers for. If you don't want that, you put it into a fund. But like buying an individual property in Costa Rica is like buying an individual stock.

Like you better really know what it is that you want or have a great stockbroker, meaning great consulting here in Costa Rica. And I think sometimes people come down here with not the humility that they need to have been like, look, I've had success in my home country and this vacation rentals work there. And those rules apply here.

And as I always say, like, look, the game is different. The board may look the same. The colors of the pieces might look the same, but they're playing chess and we're playing checkers.

That as soon as you start watching the game, it's different. And it takes a long time to understand how it's played.

[Marco Thomas]
Exactly. That correlation that you make with the stock market. I mean, who, I mean, how many people in their right minds would go trading in the stock market without a trader?

[Richard Bexon]
In a foreign country. In a foreign country, you don't speak the language.

[Marco Thomas]
Exactly. You know, you don't speak the language. You don't know the culture.

You don't know how the strings move or attach to each other. So yeah, you need somebody that knows what they're doing so that they can properly assess you on your investment. I mean, it's not little money.

[Richard Bexon]
It's quite an endeavor. Yeah, I mean, I think the saying is don't be penny wise and pound foolish, you know? So, but I think that like, look, if you do want to do it on your own, feel free to, but like spend a lot of time in that one area, speak to a lot of people, get a look at data.

Like, you know, we've got a client who's looking to do a project up in Aranau and, you know, he's from Europe, but he lived in like Uvita or Hachao area for like over a year. Spent tons of time up in La Fortuna and was really looking at those two destinations. Decided on La Fortuna, but only after exhausting everything.

Speaking to the local people, like, you know, it's just really, like he lived here basically for years, and then was able to make an informed decision rather than just coming down and putting a pin in the map.

[Marco Thomas]
Yes, exactly, exactly. That's very important. Just getting to know the local culture, the local people.

I mean, it's just that knowing the business culture here is one of the most important things. I mean, it's not the same here as it is in other countries, certainly north from here and certainly in Europe. It's just different.

We are wired a little bit different. We're more into the personal relationship things. You know, you need to know people to get things done.

And so that sometimes is difficult to get across with people coming from abroad. Well, and people don't know how to say no here either.

[Richard Bexon]
That's the other thing. Even if they don't want to do it. Yeah, they'll say yes or maybe.

Yeah, they will, you know. And they'll be like, well, he didn't say no. It'd be like, look, Costa Ricans don't like to have confrontation.

So they won't say no, you know. And I think you need to understand that culture here really to get anything done here. Yeah.

Marco. Definitely. If somebody, a lot of people come here with this idea of starting some form of hospitality project, whatever that may be, you know, should they get started?

[Marco Thomas]
Concept. Conceptualization is the most important thing. I mean, you need to have a clear concept of what you want to do.

The owners or the owner's vision is always important because some of these owners or developers, they have this worldly knowledge that, you know, sometimes one doesn't have. And they have a certain vision of what they want to do and how they want to do it and what the final product should look like. That is very important to take into account, especially in a country like ours, where, you know, we're the boutique property or the boutique hotel mecca.

Everything here is 20 rooms or less, you know. So that character is very important. So you have to have a very good concept of what you want to do in your property.

And then that has to be molded through with somebody like yourself, like myself, that knows the market, that knows how to go about it so that you have a product that works in the market. The vision is very important. The concept is very important, but it has to be operational.

So that is where you tie in everything, you know. Companies such as yours, as mine, that ties it all up. So I think that the concept is the most important thing because the concept of what you want to give out, the service that you want to present, your target market, what your target market is going to be has to, and what that concept brings, you know, has to be tied in with the operation.

You know, you need to have the spaces, create the spaces in the property to make that vision, that character, that concept come through.

[Richard Bexon]
Yeah, I mean, I agree. I mean, I completely agree. I think having a general north and a really clear concept is very important.

You know, and also is, look, I think if you're chasing money, well, there are probably better countries that you can make money in. But like, if you're looking for like a lifestyle style investment where you get to enjoy it as well and bring joy to people's lives and feel fulfillment, you know, and be somewhat present, I think Costa Rica is an amazing country to do that. And I think that concept needs to fit with Costa Rica.

And I think what you said there of like somebody having that, you know, that has that worldly view and has traveled and has seen something, some concept that could fit here in Costa Rica that maybe is not here. You know, like if you think it's going to work, like it may work. Like we're not here to tell you something that like, you know, the one thing I always say is the one thing I know is nothing, Marco.

Like, you know, there are so many, so many retreat centers here in Costa Rica, but maybe there's a concept and a thin line in that retreat center that does not exist here, you know? And how are you going to gorilla down, like gorilla market down to make sure that no one can really attack you? Like, how are you just going to own that sector of the, you know, of the industry?

You know, but I think it's smart what you said there, Marco, which is just that like, when you have that worldly view of like, bring those concepts to Costa Rica, because they could work.

[Marco Thomas]
Yeah, yeah, definitely. Definitely. I mean, I've been involved with some projects that in terms of design, in terms of the things that these owners think it's possible, it opens up our eyes sometimes, you know?

Sometimes it's surprising to see these ideas, these concepts. And so, yeah, you need to just make those operational, make sure that once the house, the villa or the hotel is functioning, that the operation of the thing works with the concept, that you're not shooting yourself in the foot by, you know, trying to do something that the operation is not built for or the facility is not built for, you know? So, you know, you need to definitely take into account all of those.

I mean, I've been involved in two or three or four different projects that just the vision of the owner, I mean, having in terms of design, in terms of decoration, in terms of sometimes in terms of service and what they wanna put out there, you know, it's something that without their input, without their views, wouldn't come true.

[Richard Bexon]
Yeah. No, I mean, look, I think if anyone's trying to do something here in Costa Rica and the owner has a vision, he's gonna need to be there, especially at the beginning to drive through that vision or to be very clear, because like while you can have a general manager or someone to kind of oversee that, nobody's really gonna feel it and see that vision and have that passion as much as an owner would do.

[Marco Thomas]
Yeah, definitely, definitely.

[Richard Bexon]
So, I mean, what are the hidden costs of doing business in Costa Rica, Marco? I'm sure there's a variety of them, but which is the one where a lot of owners and investors are just like, wow, I was not expecting that.

[Marco Thomas]
Time, time and time. It takes a while sometimes, it takes a while. It's not as easy, you know, with some of the local governments, especially, depending on when you're building, where you're building, where you're developing.

It takes a while sometimes to get those permits. It takes a while for them to get those permits signed off. And there's so many different agencies, government agencies involved in the process of developing that sometimes, you know, one steps on top of the other and it makes it, sometimes it makes it difficult to move forward.

So I think that is still, even though we've improved, that's still one of the biggest challenges that we have. I mean, not everything is for tomorrow. You keep, you know, can you have this in a week?

If it was up to me, probably yes. Most cases it's not up to me. You have to go through the process.

I mean, sometimes we'll, you know, just getting a building permit takes a year. And God forbid you have a well in your property or you're within the legal 50 meter tight line in the coast. So, you know, or you're building and you're excavating and you find some sort of pottery.

Yeah. So that is the most sensitive thing. And then people have to be aware of that before starting the project.

I mean, it's like buying an old house and remodeling. You never know what you're gonna find behind the, you know, once you turn down those walls. So I think that is still one of the biggest challenges that you find.

And then we're still a small country. That's why personal relationships here are so important. Because if you have, you know, your neighbor might have that personal relationship that you don't have.

And if he feels threatened because you're building beside him, then he might pull onto those personal relationships. So developing those relationships, developing that know-how, being part of the community is very important. So that the community feels that you are part of them and that you're there to help, to enhance the economies of the local community, that you're there to give employment and so forth.

That helps a lot in the process. But yeah, I mean, I would say that time is really the thing that you need to be sometimes patient with and understanding with. But again, as I told some clients the other day, in the end, it works.

I mean, you don't have 3 million tourists a year and you don't have all that interest in investment if it wasn't working. So it's just one of those things, but in the end, it works.

[Richard Bexon]
I like it, Marco, because I think it's a natural filter for assholes. Like anyone that wants to just come and rake the land here and make quick money, this is the wrong country to do that. Cause it just, it's not possible.

It just takes so long that they're like, I'm going to go somewhere else. It's so much easier. Like people that want to do something, that feel they're calling, that have vision in this country and that are willing to take their licks, like it just seems to attract a certain type of person, which is usually a decent human being that loves community, that talks about being present, wellness, protection.

Like it's just a certain type of person that is attracted and that can last here in Costa Rica.

[Marco Thomas]
Yeah, yeah, totally, totally. I agree. I mean, it's certainly a natural filter, certainly a natural filter.

And then the people that really end up doing it, they stay here for a while. It's not like a build, try for five years and leave.

[Richard Bexon]
They're here for the long-term. Yeah, Costa Rica might need a new slogan. The nineties was no artificial ingredients.

Then it's essential Costa Rica and the new one should just be like no assholes. I'm joking, I'm joking, man. That's the great thing about the podcast.

We can kind of talk about anything, but like, I think you'll start to feel that like people don't talk about politics here. Like people are talking about having fun and spending time with family and like, again, being present. It's just, it's a different speed that we have here.

Definitely. So what type of product do you think is missing currently in the hospitality sector in Costa Rica? I mean, you have a viewpoint of this whole country.

You've been in it for 30 years. I mean, if someone was like, look, dude, I just want to do a project in Costa Rica. I'm passionate about Costa Rica.

I just don't know what to do. Like, what would be your advice to them? What would be like, dude, we're missing this?

[Marco Thomas]
We're missing an all family hotel or resort somewhere that you can go with your kids from two or three years old until they're 11 or 12. And you have suites that the kids can have their own room, their own bed that they can have, that you have babysitters, that you have the slides in the pool, that you have the game rooms, that you have the special menus, that you have all the activities that are suitable for kids. I mean, the biggest question that always leaves unanswered is, if I'm in Costa Rica and I want to do something with my three or four-year-old, what can I do?

You can't go rafting. You can't do the canopy tour. You can do the hike, you know.

You can't go on the snorkeling on the boat because you're not going to have a three-year-old kid in the sun for three hours while the others snorkel. So what exactly it is that you can do with those two, three, four-year-old kids? And I think that a family resort is the thing that's missing.

It's been missing for a while. Yes, there are hotels that have the swimming pool and they have the slide and they have the little game room and they have, yes, of course, we all know them. But something that's geared, focused on kids, like the Disney cruise, you know.

Something that you know you go there and you're good with your kids. And as you know, if the kids are happy, the parents are happy. So I think that's the one thing that we are missing.

We are well-covered in the wellness section and we're well-covered in the luxury and we're well-covered in many other aspects of travel. But a family-oriented, well-designed, well-thought-of, family-friendly property, I think would make it. I think would make it for, I mean, Costa Rican certainly would go there.

[Richard Bexon]
Yeah.

[Marco Thomas]
And of course, all of these resort-type vacations that we're getting now would certainly benefit from a property like that.

[Richard Bexon]
I think maybe the closest thing we have to it is the Springs in Arenal, which Lee Banks did, which is kind of like has the slides, has the games room, has stuff for kids to do. But yeah, I agree that there is not a focus on that younger kid range. Costa Rica is a great destination for kids like 10 and above for the adventure.

But where's the kind of light adventure for younger toddlers, I agree.

[Marco Thomas]
Exactly. Yeah, that's what I think. And yeah, I think Lee Banks has done a very good job.

Even the other project, I mean, the waterfalls, I mean, just walking up and down the trails and the pools and so forth. Yes, I think that's one of them. But I think we need something that's really marketed and focused on that specific market.

I think that would be a good thing to look at.

[Richard Bexon]
How does a property in Costa Rica go about making sure it has strong marketing when there is so much competition here in the boutique space, Marco? I mean, there are some big players, but there's a lot of small hotels. So, I mean, how do you just make sure that you have strong marketing?

[Marco Thomas]
Start early. Start early, start, you know, you have to have your outlets in place as early as possible. I mean, before you start building even.

I mean, if you have, you know, strong marketing, start dates, or if you already have your concept and you already have an idea of design, start with that. I mean, a year, year and a half in advance, two years in advance. So you have to start early.

You need to have your website. You need to have your social media outlets. You need to, you know, start with your teasers and all that.

So start early with all your marketing efforts. That's crucial. That's very, very important.

And then you need to have a clear understanding of the different channels that you have available to sell your property. Of course, the OTAs, you know, you need your Expedias and your bookings and so forth to market your hotel, but you also need a very strong presence in social media and a very strong presence with your database. Start to build those databases so that you can reach out to these clients or potential clients that you need to make your business work.

So that is one thing. And then the other thing is just data. I mean, you need your data.

You need to process that data. And we need to find, you know, you need to find a way to look at forward facing data. And, you know, yes, the historical is important, but how can I make my forecasts as accurate as possible in terms of what a business is coming and what our costs are going to be, but certainly know your different channels and work with those.

And then you need to, nowadays, I mean, you need to use technology as much as you can. Use technology as much as you can. I mean, it's impressive to see all these autobots that respond automatically.

And, you know, the AI thing that everybody talks about now that we've had for, you know, for three or four or five years, maybe. The past year is just sort of the discussion has picked up a lot, but basically use all of those tools to your, as much as you can to your advantage. But yeah, you need to start early.

You need to devote funds to the, you know, these efforts and then you need to know your market. What is, what's the market you're going after and then be consistent. Be consistent with that, with those efforts.

Nothing comes from one day to the next. It's not like getting, you know, it's not like buying the lottery and then you buy the ticket and then you reach the next day. It takes a while.

It takes a while. You need to be consistent in the market so that it works. And then one of the most important things is market the destination as much as possible.

I mean, we have destinations that are very well known, others that are not. So it's very important that, you know, the chambers or whatever gets to get together and market their destination as a whole so that your property and the properties in the area benefit from that. People need to know the area.

Costa Rica is so diverse, so much diversity in terms of places to visit and tourist destinations that each area has to, you know, work for its own identity and getting as an area, getting known so that your property, in essence, as a result, sorry, gets noticed as well. Sounds like a lot of work, Marco. It is.

But if you have the right people on your side, then it can be done.

[Richard Bexon]
I agree. I mean, I think if you can use technology to kind of leverage those processes and automate them as much as possible and review data. I agree, man.

I mean, you know, whenever I've done anything, it's like, you know, data, data, data, weekly, same data. What is it they say? That like extraordinary things are done by ordinary people doing ordinary tasks over an extraordinary long period of time.

Like it's just, it's like going to the gym. Just do the weights, like constantly. And you'll see the change, but you won't, might not see it, but the data allows you to see the difference between where you started and where you are now.

And just kind of keep adjusting that and see how basically it adjusts your data, how it adjusts, you know, those key performance indicators, which then, you know, roll down basically into your sales. Exactly.

[Marco Thomas]
And it's a daily work. I mean, it's daily work on a daily basis. You have to gather that data on a daily basis.

Make sure that you know what, you know, your KPIs are that you need to cover on a daily basis. And even though you might not be taking, making decisions on a daily basis, that daily information that you're recovering will help you in making a more accurate decision in the end. But yeah, it's very important to have somebody that's picking up that data and then doing the little charts and then you can just review that and start finding trends that will help you in your forecasting.

Definitely.

Let's Get in Touch!

Marco Thomas, Hospitality Consultant and I chat about owning, operating and investing in a Costa Rica Hotel. Marco gives his advice to any would-be hoteliers as we discuss where he would be investing in Costa Rica.

Contact us: info@investingcostarica.com
Free Consultation: https://meetings.hubspot.com/jake806/crconsult

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