Many international schools reaping huge profits, investigation shows

International schools in Bangkok are generating a healthy profit, with some generating profits equal to more than 50% of their revenue.
This information comes from the first data-driven and independent analysis of the industry, based on information from several authorities.

For almost a year, staff at TIS Monitor have been collecting data from various Thai authorities to gain a better understanding of how the international school sector in Thailand works, and what financial dynamics are driving it.

It has long been rumoured that the sector is very profitable, and the investigation shows that this is at least partly true.

“If the circumstances are right, running a school can be very lucrative,” Dr Anders Engvall, head of research at TIS Monitor, says. 

The investigation covers 150 international schools in Thailand, all licensed by OPEC, the regulatory authority for international schools in the Ministry of Education. Only English language schools offering at least six years of education at a primary and secondary level have been included.

Advanced research methods
School data have mainly been collected from the Ministry of Education, while financial data have been derived from the Ministry of Commerce. Fee data have been taken straight from contact with the schools.

“As far as we know, this is the first time that these different types of data sets have been combined and analysed together using powerful methods. Once we processed the data, patterns suddenly started to appear. Through this, we have gained unique insights into this industry, and can see more clearly which factors make a school successful from a business perspective,” Dr Anders Engvall says.

In the future, the team at TIS Monitor hopes to be able to include property data, such as land price and rent, as well as data showing teacher’s salaries, into the analysis, which will allow for the researchers to see how that data affects the running of a school.

In a series of upcoming articles, TIS Monitor is planning to share some of the insights gathered from the analysis of the data.

Trouble with identifying school owners
The main obstacle during the investigation has been the team’s attempts to identify the company, or sometimes companies, behind every school. Out of 150 schools studied, few are owned by a company sharing the same or a similar name to the school. The work to connect a school with a company was very time-consuming, and in a few extreme cases, TIS Monitor was forced to connect a company to a school by comparing addresses and telephone numbers, as well as individuals on the boards.

“We get a feeling that some school owners are deliberately trying to make it difficult to find them. This is unfortunate as some parents, as part of due diligence, may want to know more about a school before committing to an investment that can reach up-to 10 million baht over 12 years,” Dr Anders Engvall says.

Data missing for some schools
This first article will focus on International schools in greater Bangkok. Of the roughly 80 schools here, non-profit schools have been excluded, such as well known schools like ISB, Patana, NIST and Ekamai International School. Here there are also a few smaller, mainly Christian schools.

A few more schools have been excluded for being too new to have a stable economy. These include King’s College and Verso International School, both of which have been operating for less than a year.

The remaining schools, totaling about 65, can be divided into three separate groups: Those with fully available financial data, those with missing or incomplete data, and finally those with a business structure too complex to be able to easily understand at this early stage of the investigation. 

Many schools are hugely profitable, others confusing
The most recent data collected by the Ministry of Commerce is from 2019, and for some schools it stretches as far back as 2013.

Here are some of the key take-aways from the investigation:

● The average profit margin as a percentage of revenue for international schools that are located in greater Bangkok and have fully available financial data was 7% for 2019, and 12% for 2018.

 One company running a group of schools posted a profit margin for 2017 of 32% of revenue, and 55% for 2018. For this company, no data is available for 2019.

 One large and well-known international school has delivered a profit of around 20% of revenue for the last few years running up until 2019.

● One well-known mid-size international school showed reasonable figures for several years, then abruptly changed. According to collected data, it went from making many hundreds of millions of baht in revenue in 2016 to showing less than 20 000 baht in revenue for 2019.

● One large, well-known international school has a complex business structure, dividing its operations between several different corporate units, making it difficult to fully understand its financial status in terms of revenue, profits, and assets, without additional in-depth investigation.

One well-known international school, despite tripling its revenue from 2013 to 2019, and despite having had healthy profits until 2016, has since then suddenly started to rack up ever increasing losses, totaling more than 22% of revenue in 2019.

● One company running a well known international school on several campuses has been increasing its profit as part of revenue almost every year since 2013, reaching more than 31% for 2019.

There seems to be very little correlation between school size or recognition on one hand and profitability on the other. One school, almost unheard of in the wider community, and with almost no foreign students or teachers judging from the many photos on its webpage, but operating as an international school under OPEC, has been delivering a profit of between 18% and 38% of revenue year after year until 2019.

Parents loosing out
Dr Anders Engvall, head of research at TIS Monitor reports:
“At this early stage, we cannot explain why so many international schools in greater Bangkok have non-transparent finances, including reporting unrealistically low revenues. There may be valid reasons, but nevertheless, the losers here are those investing in their children’s education, the families who are pouring billions of baht into these schools, and who want to make sure that their money is spent wisely and ethically, but who have little chance of understanding what is going on.”

Q: With so many schools showing profits reaching 30, 40 and even 50% of revenue, how come the average is a modest 7% for 2019 and 12% for 2018?
”While there are several schools with very high profit margins, the median school has a profit margin of just above 6% in 2019 and 11% in 2018. This indicates that the typical school has a healthy, but not an extreme profitability,” he says.

The mixed reactions to Covid
2020 was the year when Covid first struck. This greatly hampered the operations of International schools, all of which had to turn to online teaching.

As much of the burden of teaching was pushed over to the parents, and as children were no longer getting the full campus experience, many schools were quick to offer discounts on tuition fees. Some schools however offered very little or nothing, claiming financial constraints and a need to cover running costs.

TIS Monitor has yet to collect financial data for 2020.

“As soon as we get it, we will hopefully be able to see what factual backing that statement had. It will be very interesting to see if schools increased their profits during 2020, when campuses were closed for many months and operational costs went down,” Dr Anders Engvall says.

As of April 2021 schools have again begun online teaching, however TIS Monitor has heard no reports of schools offering any major discounts to student fees this time. 

“When we get data for 2021, we will be able to see if schools have been more interested in safeguarding their profit margins than in helping parents at this very difficult time,” Dr Anders Engvall expands.

Signs of a lack of competition
Dr Anders Engvall says he wants to do more research before he ranks the profitability and competition among international schools in Thailand. Early indicators however show that many schools, rather than competing through lower prices and better services, appear to be setting fees at levels similar to nearby schools of the same size and service, thus safeguarding the profits of both.

Another indicator of lack of competition is the schools’ shared choice to refuse to offer discounts during the ongoing period of online learning in 2021.

“When so many schools seem to be acting in tandem, you start to wonder if they have come to an agreement among themselves to maintain their profits. Unless authorities take action, this seems likely to continue. In the end, again, the losers are the families,” he says.

Kindergartens show similar profits
While TIS Monitor decided from an early stage not to include kindergartens in its work, with these new tools to skim through collected data, the researchers could not resist taking a quick look into the sector of early schooling. Here, the figures are similar.

One popular kindergarten in the central part of Bangkok has between 2013 and 2019 averaged a profit margin of 23% and an accumulated profit of 120 million baht.

Another well known and popular kindergarten shows even better figures, with a 46% average profit margin compared to revenue during the same period, which translates to an accumulated profit of 57 million baht.

When TIS Monitor contacts this school via email to ask if it is currently offering any discounts given the ongoing home-based, online teaching, the school says it did offer it during previous sessions of online learning, but not now:
”We currently do not know the future and are unable to commit as we aim to offer realistic solutions based on the real situation,” a representative of the school writes.

As to why some kindergartens are so profitable, Dr Anders Engvall says:
“We haven’t looked into these schools in detail, but I assume that if the school already owns the land and the building, which otherwise hugely bears down on profits, it explains the profitability. Kindergartens, as opposed to primary and secondary schools, are often located in what used to be private homes.” 

Profits could explain the boom in number of schools
The opportunities to reap large profits could be an explanation for why so many international schools are opening in the country. As TIS Monitor has reported previously, the number of international schools in Thailand is increasing exponentially.

“In a perfect market, this would translate into better and cheaper schools, however this doesn’t seem to be the case. While there are huge differences between schools in fees, this can often be attributed to the selection and quality of campus facilities, and the number of foreign teachers. What some school owners don’t want to touch seems to be their profits,” Dr Anders Engvall says.


Note from the editor:
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