I am going to continue this blog for a while since I now have more time. My wife and I had been hotel owners for close to 5 years. We closed the hotel in May 2018 due to very unfavorable circumstances regarding the hitherto very good location. I will have to back up a couple of years in order to explain this.

Many people will know that Sihanoukville has been chosen by Chinese investors as a prime location for casinos. The reasons are very clear and even understandable. Cambodia offers very easy access to business visas which can be renewed indefinitely for one year each at a cost of around $300. Both the national and the local governments are somewhat inept in directing investments in the right direction. They more or less let the outside world decide what’s good for Cambodia, and they really don’t care where the money is coming from. The national government relies heavily on foreign aid and loans, primarily from China to finance their infrastructure. Almost everything nowadays is being built by or with Chinese money. Basically there is nothing wrong with it, in my opinion, but when all of a sudden one Chinese company after another starts applying for casino licenses there must be a very good reason for them. One need not look far. When all this started gambling both online and onsite was still prohibited in China. Macao, the former Portuguese colony, enjoys a special status and is one of the premier gambling cities in the world.

There has been one Hong Kong based casino in place in Phnom Penh for a long time, additionally there were two casinos in Sihanoukville, operated by an Israeli company, and a Chinese company respectively. There were also a number casinos along the border to Thailand and Vietnam catering the cross-border gamblers mostly. These businesses ran successfully for a while but later on news reports indicated that many of them were practically losing their shirts.
Somehow, though, word got out that casino licenses are really easy to obtain so there was a first influx of Chinese casino operators into Sihanoukville back in 2014/15. They rented guesthouses at outrageous amounts and installed online gambling in them. After the Chinese government got wind of those in practice illegal places they asked the Cambodian government to intervene. Online licenses are only granted if there is also a brick and mortar casino on site. The government responded quickly and rounded up 80 Chinese nationals who were found to be involved in one way or another in online gambling. These 80 Chinese were deported in a matter of days. This caused great fear in the Chinese entrepreneurs that they would also be summarily deported without good cause whilst in China there awaited them arrest and imprisonment for operating illegal gambling directed at China. Reportedly there were about 4000 Chinese who left town in a matter of 2 weeks leaving behind quite some money they had paid in deposits and for equipment.

But then back in 2016/17 a different kind of Chinese investor appeared on the scene.  They seemingly had a business plan and deep pockets. They built new casinos from the ground up;  large operations catering to Chinese nationals mostly. Sihanoukville enjoys a reputation as a nice and comfortable seaside resort in the tropics where prices are still low appealing to middle-class Chinese at home. In no time at all, 25 additional casinos had sprung up with another 25 to come until now. The majority of them are huge operations by Cambodian standards that invested millions of dollars, but there reportedly is also a dubious sector taking advantage of the lax legal environment. Money laundering is rumored to be one key aspect for investment in casinos in Cambodia. Recently the Chinese government allowed gambling on Hainan island. The impact, if any, on the situation in Sihanoukville remains to be seen.

It definitely is not a boon for the local population except for land owners. These rent their land and houses at ridiculously high rates to the Chinese driving out the regular Cambodian tenants who can’t afford these prices. Following the investors riding on their coattails were all kinds of small time business people opening up restaurants and mini-marts, and a lot of them for Chinese customers/guests only. Menus and signs are in Chinese only, the staff is Chinese too. The same applies to the construction workers. The tall high-rises are built by Chinese companies that bring in their own workforce from engineers to supervisors. Only the basic menial jobs are given to Cambodians. Also unfortunately, many of these Chinese workers show no regard for Cambodian law, driving unregistered vehicles without valid drivers licenses, driving under the influence and causing accidents, some of them fatal, almost on a daily basis. The locals surely don’t appreciate this and have come to thoroughly dislike these newcomers.

As a consequence of this influx Sihanoukville has become a huge construction site. High-rises and 500-room hotels are being built practically everywhere, but, of course, primarily near the beaches. So what used to be somewhat nice beaches became more polluted with debris and waste from construction sites. The drainage system was insufficient to begin with but with all that construction many of the streets become flooded in the rainy season. This year we are seeing an especially wet rainy season with heavy and frequent rain storms. How this town is going to cope with the increase in tourists from China and the environmental problems this will entail is anybody’s guess.

Now this brings me to our decision to close the hotel. During the past 18 months or so we had seen a downturn in lengths of stay. We used to have 3 days during the rainy season and about 11 days in high season. This dropped to 1.2 days during the rainy season and 5 days in high season. Even the past 6 months we had an inordinate number of one-night stays as most Western tourists went to the islands and used us a for the layover only. We nevertheless had a very high occupancy rate but seeing as the construction was going on unabated we couldn’t see a lot of Western tourists choosing Sihanoukville town for their vacation. Until all the projects are finished it will be another year or two. As a resort hotel we were dependent on the high seasons for our financial survival which was iffy most of the time anyway. If we had kept it we would have gone under for sure.

So when the two high rises were built on one lot over and the land adjacent to our hotel on the other side was being cleared of trees and shrubs we knew that our reputation as an oasis in this town was over. We had put our feelers out for some time already and had a number of buyers who wanted to take it over – and you guessed it, it was Chinese buyers. One of them came to the first meeting ready to shell out the purchase price in cash which he had brought in one of those news satchels that you wear cross-wise over your chest. We talked to the landlord and suggested that he take over the hotel instead of us selling it to Chinese people for which he had shown a dislike anyway. After some thought, he agreed, and he would also reimburse us for the remaining term of the lease. As we found out the first day of his taking over he had rented it in a jiffy to Chinese people at two and a half times the rent he would have gotten from us or a potential buyer that we would have brought in. Well, smart thinking you must give him that. We had built the hotel with our money and he had a ready-to-run property for rent. We don’t mind as we just wanted to get out of this business there. In my view you can’t win with a hotel in Sihanoukville with all the problems you face starting with the staff, to the contractors, to malfunctioning equipment, constant repairs, etc., etc. I will get to that in a later post.

West side of the hotel – no more trees

Tree are gone – no shade

Another tall building on the east side – now it is 12 stories high.
Before the trees were chopped own

Powered by WPeMatico

Back to Blogs  |  
 
Copyright © Your Phnom Penh 2019