Thursday, March 27, 2014

Has anyone seen this?

Well, yes it is ours and we put it up for sale as we want to live closer to the hotel in town. Contact me if interested.

The Trials and Tribulations with Building a Boutique Hotel in Sihanoukville

I don’t really know what got into me to finally decide to go ahead with my long-spawned plans to go into the hotel business. Of course, among other things, I do have a long-time experience as a hotel contractor for a large tour operator, which entails the review and contracting of special rates and allotments with resort hotels. This led me to many parts of the world, not the least SE Asia. So I do know the ins and outs.
Another aspect is that I needed to diversify as the rubber plantation business is in the doldrums at this time. Prices on the world markets hit a low of a less than $1900 per ton or for us smallholders $1.60 per kilo of dry latex.

I had been looking to buy an existing business as this is usually easier to remodel either in part or as a whole. But in one of my previous posts I had described the shortcomings of most of the properties that were available at a manageable price; but mostly they were not worth the money and trouble. Plus I was looking for a certain standard that none of them had. I hope I managed to realize this with my property, most importantly in the eyes of my guest.

Finding the right spot was a big headache in the beginning. Some of the existing good hotels still have old lease agreements with rents as low as $600 per month for a lot 30 x 40 m. These were the rents paid 7, 8 years ago and are nowhere near attainable in this day.

Nevertheless, we finally decided (I have a partner in this) on a suitable spot. As one can imagine lease agreements are usually quite difficult to negotiate in Cambodia. But our landlord proved to be quite amenable to our requests. Of course, it helped that he had wanted to rent the place for some time. As one can see at the website we have two parts – the front which is half of a larger 15 room villa, and there was an empty lot behind on which we wanted to build 10 units with a swimming pool.

The rooms in front are actually suites, as each has a separate sitting area. One actually has a small kitchen corner built in.

Cambodian style and ideas are in no way even close to how Europeans or Americans build houses. So quite a bit of remodeling had to take place, mostly in the bathrooms. The contractor we chose had built my private house already so I thought I made a good choice as I didn’t have any problems with him before.
One thing always amazes me: contractors look at a plan and give you a price almost instantly. A few take a night to think it over but in general they seem to know what they are doing. Needless to say, my contractor came up with the lowest price. So the decision was an easy one.

The initial work progressed nicely. The biggest problem was the quality of the work; they simply have no sense of how something is done properly, e. g. they put tiles in and don’t wipe off the grout along the bordering edges, floor, wall corners, etc. Or they put in door jambs, caulk the edges but never do that in a straight line. It always looks like it’s unfinished. Sometimes they just don’t paint the plaster around the door jamb. Another thing is that they don’t realize that they need to cover work areas so they don’t get ruined by cement (wet or dry) footprints, etc.

A tiled deck surrounds our swimming pool. The tiles are anti-slip. They are quite expensive. The construction workers had nothing better to do but walk across it with their dusty shoes or feet; our brand-new tiles look like they had been used a good number of years already. The contractor said ‘we’, yes, ‘we’ needed to cover the area. The pool contractor had put a rope around it. That lasted exactly one day. Then the workers had torn it and moved across the tiles like before. Responsibility? If you think that the construction contractor would feel any obligation here you are in for a surprise. No way does he think he needs to do anything about it. In the end, we got him to get the area cleaned but cement has a way of creeping into those tiny cracks that these tiles have. So they are still smudgy.

Most of these contractors are self-taught. I have nothing against being self-taught. In large part I am sort of an auto-didactic person myself. But sometimes their work just isn’t up to par. Look at the wiring and the plumbing. First of all, for certain applications copper pipes are better. These are, of course, expensive they you will hardly find any in any of the buildings here. Like in most hot countries they use PVC pipes. But there are different strengths. So here is a problem I couldn’t fathom how to solve. Our water system feeds off the city water supply, the pressure ‘pumps’ it into a 7m-high water tank from where it flows into the room plumbing. When the water tank is full there is supposed to be a shut-off valve that closes automatically once the float switch triggers it. There is a float switch but the valve is of such a poor quality that it doesn’t close properly. Consequently, the water keeps flowing into the tank, although at a slower speed. During the day, this is not a real problem as water gets used all the time. But at night when the kitchen is quiet, the guests are sound asleep, the tank will simply overflow. People familiar with Cambodia (and other SE Asian countries) know that part of the structures is covered by tin roofs. So our bar area which is just a few feet away from the nearest room is right underneath the water tank tower. You can imagine what kind of noise dripping water from 7m high makes on a tin roof. It will wake up ghosts. Solution: none available in Cambodia. We eventually covered it with reed to make a thatched roof out of it. That dampens the sound of the rain somewhat. But our night guard has to turn the water off at around 12 am and the morning staff turns it back on at 6 am. The contractor did install a larger float for the switch so it would exert more pressure on the shut-off valve so it closes all the way. I was told that all hotels in Sihanoukville face the same problem. I still don’t believe it. A water tank is meant for emergency cases. Last year when there was a huge problem with the water supply everybody needed it. But this year they seem to have solved the problem (sufficient power supply for the pumping stations) there shouldn’t be a need for a system like this. Too much water pressure in the city system? That must be a legend.

Our plans called for two small restaurants seating around 10 people each – one in front, one in back. The front was done first. This still being November with a bit of rain, we found that the rain splattered onto the tiled floor making it slippery and eventually ruining our wooden tables and chairs.  The contractor said the roof overhang or eaves would take care of the problem. Of course, it didn’t. Normally, you use rain gutters and down spouts. We literally had to convince our contractor to put those in. He said in Sihanoukville they wouldn’t help as it really rains so hard in the rainy season that everything will be flooded anyhow. Like there is no rainy season with thunderstorms and hurricanes in Florida, and people there don’t know how to build houses. We insisted, and lo and behold, when the next big rain hit there was no flooding of floor.

The most nagging problem we had was the unimaginable unreliability of contractors. The worst case we experienced was with the guy who put in both the electrical wiring and the plumbing. Not that he didn’t do his job properly (with one exception), but he showed up in the morning, and then told us he needed to get some parts and would come back in the afternoon. Next time he showed up was two days later, and then only, after we had threatened to cut the contract price. This happened time and again and I thought I was getting an ulcer. Needless to say, the rest of the work stopped as well as the brick workers, plasterers, etc., could not continue until all the wires had been laid. Of course, it didn’t help that this guy worked on three construction sites at the same time. Our general contractor also works as a policeman. With all the demonstrations in Phnom Penh going on he was called into meetings all the time and was unreachable for us. He didn’t have a foreman on site either. So nobody really supervised the worked which prompted us to be there 10 hours a day to do that.

And don’t forget, lunchtime in Cambodia is hallowed. It starts at 11 am and ends at 2 pm, when you are lucky at 1 pm. Of course, being lucky meant that they would show up again in the first place.

Now, why am I not complaining about the officialdom? Supposedly that’s one of biggest hurdle to take in Cambodia. Well, my landlord is a somewhat big wheel in Sihanoukville and he helped with everything that had to do with the city government. We got our licenses in two days at a fraction of the ‘normal’ cost for foreigners (my wife is the titular owner anyway). The only guy who shows up regularly once a month is the tourist police collecting the guest registry and a small baksheesh. No other police come by to ‘protect’ us and look after our well-being.

Of course, once everything is finished, it is not really finished at all. The water connections in the bathrooms still drip, sometimes the water doesn’t flow at all in one part of the buildings, or the swimming pool drain was connected to the regular kitchen pipe that leads into the sewer. So when you backwash the pool filter the kitchen is flooded with stopped up sewage. New air conditioning units stop working. And remember, warranty doesn’t imply a faulty unit will be replaced right away. No, they only repair it. Don’t ever buy Akira inverter units. They are pure crap. The thing is that the dealer buys them in Phnom Penh. So if they can’t repair it they get shipped back to Phnom Penh and it can take up to a week for the unit to come back. So what about our guests? Who cares? The same thing happened to one of our water heater, which we were foolish enough to buy in Phnom Penh ourselves. When it broke down we were face with either buying a replacement unit while getting the defective one repaired or have one room without hot water for a week; and that with a fully booked house.

Back to the electrician (sic); in one room the air conditioning unit would only work off and on. Sometimes it would respond to the remote control, sometimes it wouldn’t. The A/C repairmen tried everything, even replacing the unit and taking it back when that one wouldn’t work either. We connected in another room. It worked just fine there. We even connected it to the power outlet in the room’s bathroom. It worked. Everybody was flabbergasted, most of all our electrician. He would only laugh and shake his shake his head. Then he fumbled a little with the wiring – to no avail. His usual attitude in situations like this: he would need to buy a certain part and come back tomorrow. Well, you guessed it; he wouldn’t show up the next day. We couldn’t rent that room for three days. Finally, I remember that our laundryman – he owns the Modern Laundry in Sihanoukville – is an electrical engineer. I asked him to help out. He came over, checked the situation, analyzed the problem, and told me what the problem was. He just didn’t have the time to do it himself so I instructed the electrician the next time he came by to do it exactly like the engineer told him – I had them talk to each other on the phone. But he would only do it once I had yelled at him and used the only effective threat – no payment.

Now, payment!! Our general contractor kept asking for money out of turn although we had agreed on certain installments at regular intervals. I kept paying him sooner than scheduled just to speed up the job, which it did. But near the end, he came in once again with his open hand. When I refused once more (I didn’t want to lose my best leverage after all) he came back shortly with a list of jobs that needed to be paid separately as it was not part of the contract. I must say here though, that my partner (being Khmer) who undertook the entire initial contract negotiations did a real sloppy job there. According to the general contractor eaves were not included, the restaurant was larger, though nobody had ordered it, the building was larger than planned, etc. etc. It all came out like an additional $12,500. That final settlement talk really turned into some nasty bickering. I don’t know what prompted him to accept my version of an additional $500 (with credits being deducted) in the end but I had listed it like all businessmen would do with money due according to contract, work done, credits applied, etc., and reasoned that eaves belong to a roof, and we don’t normally pay for what we didn’t order, and so on.

Well, it goes on and on with all these small problems caused by unreliable tradesmen, if you can call them that at all. I must say I haven’t seen anything like this in Phnom Penh. You call somebody; although he might not show up on time but he will show up. Is it that people in Sihanoukville are too busy to care with all that construction boom going on, or is their more laid-back attitude? It could surely dampen if not altogether ruin your enthusiasm of building a hotel in Sihanoukville. The one consolation we have is that we managed to get it done in a little more than three months despite all the headache and aggravation. Surprisingly, another consolation, we have been doing quite well the first few months which I hadn’t expected. Normally, it takes at least two seasons until you reach an acceptable occupancy but we got that right from the get-go. But the rainy season is upon us. Let’s wait and see what will happen then.
Next time I will post about the staff problems.

Monday, March 3, 2014

Where was I?

When you are really busy it is very hard to maintain a blog, which after all should cover some recent insights and experiences.

Here is why I have been absent for so long.

Some might think I am out of my mind to open another hotel in Sihanoukville. But I did it. It kept me more than busy for the past 4 months. But against all odds I managed to have an existing house remodeled, and 10 new rooms around a swimming pool built in just a little over 3 months. We opened on Jan. 30, just in time for the Chinese New Year. 

Before I had a plan (I published on this blog) to build 10 bungalows at Otres in 3 to 4 months. Everybody said, 'No way.' Well I didn't do it there (it fell through because of some problems of  a personal nature), but I did it here. You can check it out here and even try it out whenever your travel brings you to Sihanoukville. It is a 3-star property with 16 rooms/suites and all amenities. Regular rates are $60 a night, but this being Cambodia, there are always some special offers available. Currently it is 30% off. 

We also rent suites, that is, rooms with a small sitting area, by the month. One suite features a built-in kitchen corner. Rates vary, so get in touch if anybody is interested. So far they have been very popular.

I will post another piece about my experience with local contractors a little later. That surely was no walk in the park, I can tell you that.