Saturday, December 26, 2009

Success Stories

Quite a few Westerners live in Cambodia. I am always amazed that comparatively many foreigners chose to come to Cambodia and work here. Of course, a good number works for NGOs, embassies, and the few large multi-national corporations operating in Cambodia. Another surprising feature is the number of bars owned and operated by foreigners in Phnom Penh; unfortunately, many of them cater to the prowling sex visitor. Normally one finds those bars in resort towns, so Sihanoukville and Siem Reap are no exception there, but then Phnom Penh is the capital where all foreigners usually arrive first. English being the language of choice these days in Cambodia, like everywhere else, English-language teachers also abound here.

However, there is a small group of foreigners in the small-business sector that discovered a niche in the hospitality business and worked their ideas into a huge success. I am talking about the group that owns and operates three boutique hotels in Phnom Penh. As it happens, they are in business with my Khmer friend and business partner. The whole thing started with one Frenchman, let’s call him Jean, opening the Mekong River Cruise company in Phnom Penh in 2002. First, he had worked for a Cambodian tour operator together with my Khmer friend. Then a French tour operator approached him with the idea of operating the first Mekong Cruise ship. So he left to work for the tour operator and started the Compagnie Fluviale du Mekong. Since it’s always hard for a Westerner to do business in Cambodia without any Khmer help he asked my friend to come and work with him.

They converted a traditional Khmer riverboat into a luxury vessel with five air-conditioned cabins, replete with bar and restaurant, that was to sail from Tonle Sap to Saigon. At the time I was skeptical. As it turned out my skepticism was well justified, as then the huge tsunami hitting Thailand brought an abrupt halt to tourism to the region. My friend left the company to seek work elsewhere; Jean stuck it out but didn’t receive pay from the mother company. He got shares instead. Before coming to Cambodia Jean had spent most of his time in Russia due to his father’s job. From that time he knew a couple of other expats there who were looking to go someplace else. Jean sort of liked it in Cambodia and described it as an easy place to live for French people. In short order two other French guys, Claude and Pierre (all names changed), followed from Russia to see for themselves.

They putzed around for a while looking for a worthwhile business. In the meantime, the Mekong cruise became successful after the effects of the tsunami had worn off. Additionally, people booking such a tour are different from the usual package tourists in Thailand. So they thought prospects for a small hotel were not too bad. They just didn’t have enough money for it.

Claude had bought some land in Kep hoping to use it for farming. But just at that time, the real estate boom was taking shape, and he decided to sell the land. He made a nice profit, which he now used to open his first boutique hotel, the Pavilion. The business model is practically very simple. He rented a French-colonial villa, which was somewhat in disrepair. He contracted with the owner for a ten-year lease. He would renovate it into a small guesthouse with originally 10 rooms (which was eventually extended to 14 rooms through the addition of another nearby villa), a lush tropical garden with swimming pool and small bar/restaurant. He would pay rent but keep all the proceeds from the hotel. (Pictures of the property can be viewed at their website at Another boutique hotel followed quickly, the Kabiki. While the Pavilion caters to Western couples in their twenties to forties, the Kabiki is geared towards families. They are both similarly furnished, a mixed modern Khmer/Western style. What’s most appealing to guests from all over the world is their well-landscaped tropical garden right in the middle of Phnom Penh – like a serene island. Another big plus for them was their location. They are a stone’s throw from the Royal Palace and the riverfront. These two hotels became such a smashing success, that they decided to open one more, the Blue Lime ( First I wondered at the name Why ‘Blue Lime’? The ‘blue’ only serves to set it apart and catch people’s attention who might otherwise not notice the name. This way it certainly stands out. They followed the same business model. Renting, long-term lease, renovating, premium location, tropical garden, swimming pool. All three have free wi-fi internet access. The special feature of the Blue Lime, however, is their concrete furniture, which to some might seem ultra-modern and too cool, but it also became an instant success.

Many tried to imitate and replicate their style, but no one with as much success as these three guys. Additionally, the driving force among the three, Claude, opened a very popular restaurant, the ‘Elsewhere’. And just recently, he added another restaurant in front of the port, the Chinese House, which is mostly used for functions and special events. They recently hosted a Cambodian film festival there. When visiting Phnom Penh, try not to miss this. It is worth seeing for its traditional Chinese style alone.

This enterprising relatively young man, he is in his early forties, is also planning an eco-resort on Koh Rong island, and an eco-swimming hotel in Phnom Penh. The pavilion website has links to all these. Overall, their endeavors, efforts, and entrepreneurship are amazing and admirable. They came here with little money, parleyed it into a little more, but rather than take it back home, they re-invested it in Cambodia, creating jobs for about 150 people (and they pay well above average wages, which makes all their employees very happy), and helped re-build a beautiful part of Phnom Penh.

Now what became of Jean, the first Frenchman who lured the other two to Cambodia? He left the Mekong Cruise company once it was up and running, starting to make money. He cashed out his shares with the French tour operator and opened a boutique hotel or guesthouse in Battambang. This hotel was just as successful as the Phnom Penh properties ( The only problem Jean had with it was that he felt kind of lonely out in the provinces, missing his friends and the busy life in Phnom Penh. He finally sold it about 15 months ago to another Frenchman. But what did he do with the proceeds? He is opening another small hotel in the province – this time in Stung Treng; also an old French colonial building, again following this very successful business model.

Now there are many boutique hotels in Phnom Penh, but none can beat the three owned by this group. Mostly they are more expensive (Le Quay, the Bourgainvillier), or they don’t have the same standard. The French group’s hotels charge anywhere from $40 to $75 a room, which keeps the riff-raff out but still attracts normal, mostly European, guests who really have been getting a bargain with their strong Euro. During the slump in tourist arrivals, theirs were the only hotels in Phnom Penh that still ran at an average occupancy rate of 90%. Try to book a room and you will find out how popular those hotels are.

All three posted a sign, ‘Sex Tourists Not Welcome’, which elevates them from almost all other similar-priced hotels and certainly raises them above the level of all those cheap flophouses. They do not allow their guests to have female company stay in their room. Some people complained that they discriminate against Khmer women, which is, of course, complete nonsense. If a guest makes a reservation for two people, and the female companion is Khmer or of another Asian background and they have an ID-card or passport, they can stay at their hotels without any problem. What they don’t want is those single male travelers who come to Cambodia for just one purpose.

They once opened their properties (swimming pools) to the local expat community. Soon they were overwhelmed with pool visitors, which brought in a good dollar at the bar, but the guests started complaining. Now they started charging $5; the guests are among themselves again.

There is a similar success story in the hotel business – this time one of the few overseas Khmer who returned and turned his efforts into an admirable enterprise – Loo Meng who opened the Amanjaya, the Almond, and the Anise hotels, and one of the best restaurants in Phnom Penh, the Malis (or Melis, which is Khmer for Jasmine).


Eco Resort Lover said...

What great information... and written so well. Thank you

Anonymous said...

Great successful story from my homeland. I appreciate you as foreigners came to do bissiness in cambodia with good role model for Cambodian people. I hope some days I can go back to live in my home land again.
From Khmer oversea