Friday, September 14, 2018

My Life as a Hotelier in Cambodia III


In this installment my pet peeve with my life as a hotelier – guests’ reviews and behavior - will get an airing. When we opened up we had generally good reviews, which was reflected by our average score of 9.1 out of 10. This slipped to 8.7 and 8.6 after a while which was in part due to the scoring system the online agents used. I had touched on that in part I.

I was used to guests’ reviews in my previous experience as I was active in tourism during a nowadays unimaginable period without internet. I dealt with guests’ complaints by letter. So before we could reply we often had to contact the service provider, airline, hotel, bus operator, etc. We then assessed the claim; most complaints involved a certain amount of refund or compensation, and we replied according to the results of our investigation. We remained relatively detached from any emotional letters, but some were obviously written by lunatics, e.g. the one who complained that there was too much sand at the beach, or the one who thought he could eat in all the hotels we had under contract because he had booked full board.

Now it was quite different, as a hotel owner is more or less in direct face-to-face contact with guests on a daily basis.

My first somewhat critical but not altogether negative review left me a bit perplexed. This was a nice, friendly, middle-aged couple, obviously well-to-do, on their first trip to Cambodia, or SE Asia as they did a typical three-country-sojourn. They wrote in a review that the owner’s frugal attitude could be felt everywhere at the hotel and the breakfast was a joke.

Breakfast was included in the room price and initially was a continental breakfast with their choice of 2 eggs, toast, butter, and jam, coffee, orange juice, and fruit. Now how can this be joke? They paid $35 per night for the room. These guests still gave us a good rating though and would recommend staying there.

Breakfast was a major reason for dissatisfaction. With 16 rooms it certainly is not economical to put on a breakfast buffet. Nowadays, many hotels offer this to save on staff expenses. Our breakfast though was always fresh whereas buffets tend to be rather tasteless once the food had been sitting there for half an hour, buffet dishes for keeping food warm notwithstanding.

We later added to the line-up offering 8 different dishes to choose from and switched to a semi-buffet. Guests would pour their own coffee, orange juice, toast their bread, and help themselves to fruit and additional toast or bread. But you can do what you want some guests found issue with that too. It was remarkable that especially overweight people complained they the food was not enough to be full.

The contrast in opinions about our breakfast couldn’t be starker. Some found it delicious, more than enough, while others thought it poor and definitely lacking in all respects. Now the funny thing is that especially French and Italian guests found fault with it. Considering that French and Italian breakfasts are rather basic in their home countries and nothing to speak of, one could only wonder why they found ours lacking.

At this point a brief rating of nationalities in terms of satisfaction versus complaints.

Most difficult and absolutely the worst:                  French                                
                                                                          Overseas Cambodian       2 out of 10 – 10 being the best
A close second:                                                   Italian                              3
Third:                                                                 Spanish, Finnish               4
Fourth:                                                               Austrian, Vietnamese         5
Fifth:                                                                  Dutch, Belgian                  6
Sixth:                                                                  Russian, Japanese             7
Seventh:                                                              Scandinavian, Chinese       8
Eigth:                                                                  American, British, Irish,
                                                                          Cambodian, Thai               8-9
Ninth:                                                                 German, Swiss,
                                                                          Australian, New Zealand    9                                           
Needless to say this is a very subjective rating list. I am personally particularly sorry about the French as I like their food, their country, and generally the people but as hotel guests they are simply a pest and just horrible (with exceptions, of course). I wouldn’t rate any nationality a 10. Although Asians generally do not complain and are not in the habit of writing reviews, at least not in my experience, but they are a sloppy lot. They leave everything lying around, tissues on the floor, towels are used to shine shoes; when they check out their rooms generally look like a bomb had exploded in there.

We had two different kinds of accommodation. The front building was 10 years old when we took it over. It had been rented to the Australian consulate general while there was one in Sihanoukville. The furniture was a little dated and of the traditional Cambodian style. The advantage though was they were all triple or even quadruple rooms. As price points were rather attractive they were well booked. But the downside was it dragged our rating down. The majority of guests just didn’t like rooms. They didn’t have a veranda, or a balcony, it was strictly a place to sleep. 3 were suites with a separate room for watching TV. The quadruple room for families of 4 or even 5 was booked heavily but still got its good share of negative reviews.

Guests who had 2 or 3 kids and complained that the toilet would clog up. Sure it would if you use an entire roll of toilet paper or put sanitary napkins in there. Even the dumbest guest must know by now that this simply is not done. Some didn’t know how to operate the shower handle and complained that either the water was too hot or too cold, depending on which way they turned the handle.

We had instructions in each room how to operate the safety box. You wouldn’t believe how many couldn’t even follow these instructions.

One family arrived later in the evening. They entered the family room, didn’t even properly look and although they had checked in yet left. They wrote it was dirty. It was over the New Year holidays too. Good luck finding another hotel. We did charge them though as per our policy, which didn’t sit well with them at all.

Another family that had booked the same room left the next morning claiming they had a death in the family and needed to head back. In their review though they wrote they didn’t like the hotel, it was dirty, the pool was not clean (they hadn’t even seen it). They asked for a full refund, which we refused. Telling lies and then asking for money back is kind of brazen.

Illness or death is an oft-used reason to leave early. So we had this family of 3 that had checked in and came to the reception an hour late they needed to leave again as the wife’s mother in Phnom Penh had died. Again, as per policy we told we needed to charge the full price but would refund it if they sent us a death certificate. The refused and argued back and forth but finally left anyway. When we tried to charge their credit card it was expired. In my book this is fraud.

We had this one inside room with a window that faced the hallway and therefore was never opened. We called it our budget room, and later added the ‘no window’ to the description online. It was priced accordingly – from $25 to $35 incl. breakfast and depending on the season. Well, cheapskates booked that room but complained afterwards saying it was too expensive. The cost for the a/c and the breakfasts was $10 already. What were people thinking? One such person booked it, said he didn’t like it so we offered him a room at the pool for an extra $10. Well, this guest called us cheaters or imposters saying it was a trick of ours to make people book this room so we could then charge the extra $10 for a better room. We had only one room like this. How would this make us rich? Idiot. The best of all were two parties that booked this room knowing it was without window. They then complained that the room had no window. WTF?

One evening a lady came in looking for a better room as she was not happy with the one she had booked at another hotel. We had just one room left. She wanted to take it and left to get her bags from the other hotel. By the time she came back an online agent had booked it which we were obligated to honor. You can imagine what kind of scene she made. If she had paid a deposit to hold the room which we had advised she wouldn’t have had the trouble. Quite a few guests say they will take the room and never come back. She called us dishonorable online.

A couple of people wrote reviews calling us frauds without even staying at the hotel. One had inquired about the rates and had gotten the rack rate. He had also met a guest and asked her how much she paid. She was a long-stay guest so had a very favorable for the budget room. Well we were the fraudsters charging two different rates for different conditions.

One of our rooms in the front building faced south. During high season it got really hot in there. We drew the curtains, aired it out in the mornings while it was still a little cooler, but this had only a minor effect. The a/c usually took about half an hour to cool the room down to tolerable temps. We had this one family who left a/c running when they left the room so it would be cool when they returned after 8 hours or so. At the time we didn’t have the automatic shutoff yet when people left the room. So our housekeeping staff was under instruction to turn all a/c’s off when they were cleaning the room When the family returned to their room it didn’t take them a minute to come rushing down the stairs yelling at the receptionist how we dared turn off the a/c. Again, we have an explanation in our room info that in order to conserve energy and for environmental reasons we turned all a/c’s off when the guests were not in their room, not to mention the cost of electricity which is not cheap in Cambodia. That didn’t impress them one bit. They kept hollering and even insulted the receptionist throwing our mobile phone on the desk breaking it. We charged them $50 for that. They refused to pay for that so we went ahead and charged their credit card. I had a long email exchange with the lady and indicated I would not accept her unruly behavior and might even press charges. That shut her up.

Air conditioning was another main beef with our guests. Some found it too cool, although they could regulate it. Others found it too hot but still used blankets!!! Some expect room temps to be in the teens, which is virtually impossible to achieve unless one uses a 5 hp unit for a room of 25 m2. We used only 1 hp which is normally really sufficient to bring the temps down to 24°, which is considered a comfortable room temp. But some guests wouldn’t be happy with that. I often wondered why they traveled to a tropical country, a third-world country at that. They must know that the standard is not comparable to highly developed tourist destinations, e. g. Spain, Turkey, or Thailand. We try to do our best but there is only so much we can do here. We installed a second unit in our family room and the room facing south to alleviate that situation.

A/C units break down, which they quite frequently did. If we couldn’t get a hold of a repairman right away, there is really not much how we can change the situation other than serving free drinks.

Our hotel was a non-smoking establishment as we wrote in our room info and on the internet. We also had no-smoking signs in the rooms. That didn’t keep some guests from smoking in there anyway. When we pointed out our policy they generally obliged but some became really militant. We had this Russian couple who had booked a full month. When the husband found out our policy he couldn’t smoke in the room, never mind that it was published on our agent’s website, he made one of the greatest ruckus I had encountered in those 4 ½ years. He insisted on smoking in the room as he used to watch TV in bed smoking. We told him absolutely not possible. Fearing that they would not pay their bill we charged them after 2 or 3 days for the full amount of their stay. They were Russian and the ruble was at an all-time low so most Russian guests paid cash, which they had converted on the black market. Of course, credit card charges were billed at official rates. So this made them even more furious. The relationship with them got so bad I offered them a partial refund if they left the hotel. They wanted to do that and started looking for another hotel. We were pretty much the only one in our category near the beach so he came back and said they couldn’t find a suitable one and were going to stay. They clearly wanted to get back at us by trying to influence other Russian guests at the hotel. We then asked a friendly guest to tell the obnoxious one that we would report him to the police and have him removed from the hotel if he didn’t stop this. And they ate as much as they could for breakfast as it was free, especially the wife who was overweight at that. Other than that they didn’t have one drink or any other food at our restaurant. As a response to their review we wrote we were glad they were gone and that they are a disgrace to the Russian people. I recently read a Greek hotel had responded in a similar way to an obnoxious guest’s review.

Here is another good one. A guest emailed us well before arrival he wanted a double bed, not two singles moved together (half our rooms are like that) and that we remove everything, especially all alcoholic drinks, from the mini-bar. We replied that we have a policy that we won’t allow guests to bring food or drinks into the hotel from outside as we have full-service restaurant and bar which we have established precisely for the benefit of our guests. So when he arrived – a single elderly man – had barely checked into his room when he came storming to the reception that he had requested that the mini-bar be emptied before his arrival. Well, we had thought our notice would have been enough. Not so, so we emptied the mini-bar. In fact, he didn’t put anything in it but later complained in his review that we hadn’t honored his request. We just replied that it was so vitally important that he not even see the contents of the mini-bar, e. g. because he a recovering alcoholic, we would obliged promptly and treated it with utmost confidentiality.

People travel to a SE Asian country and can expect the reception staff to speak at least English. That’s understandable as English has become the lingua franca of the world these days. But they can’t really expect the cleaning staff to speak English, French, or even their own language. They ought to at least understand that even the service staff at the restaurant has only a limited knowledge of foreign languages. We had quite a few complaints in reviews from guest whom we knew to speak no English who then complained about the staff not speaking a foreign language. It is amazing that there really many guests who travel overseas without speaking any other language. Foremost among them are Chinese and Russians.

Some guests take to three online websites to publish their misgivings. We take the liberty of pointing it out in our responses. Repeating an impression doesn’t make it necessarily more truthful. I got the feeling, as with many other internet phenomena that the majority posting reviews and their take of things suffer from a severe neurosis. People simply will have to make allowances for deficiencies in service and infrastructure.

The biggest draw of destinations like this is price point. If people only want to spend $30 for a double room with breakfast they can’t expect a luxury hotel with luxury amenities. We rated ourselves a 3-star hotel since we had a pool, a full-service restaurant and bar, room service, 24-hour attendance (although that was hardly ever necessary), a tour booking option, etc. We did start out in the low $30 range shortly after opening but gradually increased our rates to the $40-$50 range, commensurate with our standard and service offerings. But generally, guests expect Cambodia to be cheap no matter what they book or buy, starting with the cost of a drink to hotel rooms.

Concluding I should say that the vast majority, about 95% of our guests were satisfied with what they got. But there will always nags and curmudgeons with pet peeves. Some come in with the clear intent to get discounts. They complain about the prices of tuk-tuks, even if the fare is correct. Then some blame us for that. The same goes for tours, the a taxi driver drives, etc.

These are a few samples of what you get in terms of reviews. Now in the age of the internet people take to writing about things they find fault with, although a lot of times they don’t have anything to say at all. But the internet makes people want to be somebody – the selfie craze is symptomatic for that. On the hand, the internet is or was our main marketing instrument, how else would we have gotten any guests so quickly and continuously? After all we sold roughly 4000 to 5000 room nights per year so what are we complaining about? But guests who are a nuisance can really ruin your will to continue.

The way things are in Sihanoukville now I don’t expect anybody to open a hotel or guesthouse here anymore. Chinese investments have made it a huge construction site, harming the environment, polluting the sea, among others. Only a fool would come and do business here.

Tuesday, August 21, 2018

My Life as a Hotelier in Cambodia II


If you don’t own land in Cambodia you need to lease it in order to build the hotel you wish to operate. I posted an article a few years back how difficult it is to find an appropriate location in Sihanoukville. Finally, after searching for about 18 months we decided on a lot that had a building for lease on it and a larger lot in the back that we could utilize to build another 10 rooms, a restaurant, a small bar, a kitchen, and most importantly, a swimming pool. Although the beach was only a 100m from the place guests nowadays want a pool to relax at.

The entire size of both lots was 1900 m2, large enough to build 2 small restaurants, one in front one in back. I designed the general layout of both buildings and the rooms’ interiors. We chose a builder that had already built our villa as we were satisfied with his work. We had a few misunderstandings about a couple of details but we could work them out amicably. One was for the size of the restaurant he wanted to build 4 by 10 meters, I only wanted 4 by 8 meters. The second one was roof overhang and the width of the small terrace in front of the rooms. He didn’t build the overhang which we had him add, and increased the veranda width by 10 cm, which we couldn’t reverse as the verandas were finished already. Naturally this affected the price and he wanted to add a hefty $50,000. We argued back and forth and in the end he agreed and let it go. The going rate per m2 was $200 at that time.

We made a couple mistakes by forgetting to have rain gutters added and using a tin roof for the bar. In the rainy season this created an almost unbearable noise there. We deflected this somewhat by putting up a layer of reed on top of it. Of course, we had them installed later on.

Sihanoukville has no drainage and sewer system, so all buildings needed a septic tank. With 17 rooms we had 4 septic tanks built. To our dismay we found out later that the builder had one built right under a guest room under one of the nightstands. When we needed to pump out that one we had to lay long pipes from outside the lot at the rear to the room through a window. Needless to say, we had to wait until all the guests were outside the hotel so they wouldn’t see what was going on and right a scathing review about that. The rainy season created additional problems as the rain water flowed in the tanks in the rear together with the use water from the guests’ bathrooms. Sometimes we had to have the tanks in the back pumped out every other week at $65 a pop.

Further adding to our frustration was the unreliability of the power supply. For the first 2 years we did not have a back-up generator as the power company had promised that there were enough power plants on the grid to supply all the power. When all the hotels were full during holidays in high season this caused immediate black-outs, which could be accepted during the day but when it happened in the dark we had a great problem on our hands. The majority of the guests took it with a shrug as they knew they had traveled to a developing country where such things happen frequently. But lo and behold, especially Cambodian guests complained the most as if they weren’t used to it in Phnom Penh. That situation got better after 2 years and we had also bought a back-up genset to alleviate the situation. It happened to be a little to weak at 45 kWa so we switched to a 65 kWa just in our final year. And badly needed it was. With all the new construction going on because of the Chinese investments and the need for a lot more electricity the power grid broke down incessantly.

The basic problem areas in a hotel in Sihanoukville are the power supply, the water supply, the quality of the equipment, the scarcity of repairmen and contractors, and the ignorance and unreliability of staff; in other words besides guests who can make hotel life in this town really hard, there is nothing that would contribute to a smooth operation where you could just focus on guest relations and improvement of services.

As with the power supply the water supply was also affected by that construction craze. Needless to say, they needed a lot of water for mixing their concrete, etc. It also happened quite frequently that some earth moving equipment punched a hole in the water main – result: no water. Our water tank was depleted pretty quickly with people in 10 rooms taking a shower simultaneously.

The quality of the equipment is so poor that we needed repairs continuously, whether it’s a float switch in the tank, a broken a/c unit, internet service disruptions due to somebody else cutting the cables (twice willfully, several times by nearby construction), cable TV problems, etc., etc. On account of all these problems that affected basically all hotels in the area repairmen were hard to come by. Sometimes it took hours, even days for them to come and take a look at the problem. For a while we a couple of good ones, other times we needed to beg them to come and take care of things. On top of it the rates they charged were higher than in the U. S. Another reason for the poor quality in my opinion was that things were pretty cheap which led me to believe that Cambodia got second rate quality from wherever they imported they equipment from, mainly China. A/Cs were particularly prone to failure which in part was due to power fluctuations which will wreak havoc on electrical equipment, not the least the power surge when the power comes back.

Not once was there a week that went by without any problem at all – and we are talking close to 5 years. If it wasn’t the equipment or the repairmen it was the staff. People always write about how one needs to help these poor people so they can support themselves. This is all good and true but doesn’t take into account the basic mentality of Khmer people with little or no education whatsoever. I got the feeling that their Buddhist belief gets in the way. Everything in life is preordained by whatever higher being there is. Khmer people are rather stoic. The want to work, of course, but only because they really do need the money to feed themselves, not to get ahead in life (those are few and far in between). They have no ambition whatsoever. A hotel traditionally employs more women than men so consequently we had 7 or 8 female and 3 male staff. Housekeeping staff was the most unreliable. The slightest problem healthwise (and they always had a fever or bad stomach) or at home made them call in sick. If it wasn’t themselves it was their kids. One would never know whether you had your staff coming in today or not. One time we had all housekeeping staff except one quit without notice on the same day. Another time we had just paid their salary when we got a call from one saying she needs to quit for family reasons – like she didn’t know this 2 weeks before. So we changed our schedule and paid salaries on the 7th the following month. If somebody quit without giving appropriate notice we would just withhold the pay for the entire past month. A smart one though even knew how to work around that. She wanted to quit right away but knowing our system she just asked for and advance in the amount we owed her for the seven days. She needed it for her kid who was sick she said. We also had just paid her salary. Promptly, she didn’t show up for work the next day. Another irksome thing is their huffiness. You just criticize them very carefully but they are prone to up and leave right on the spot, not matter the loss of pay. Of course, you can never do this in front of others. She may be a lowly maid but losing face is a real tragedy. Sometimes they just take a day off without asking us. We also had to deal with theft a few times. We could never prove anything but we eventually found a way to get rid of that staff. Sometimes they have two jobs, one in the morning, one in the afternoon/evening. There was this one receptionist who used to disappear for his break for an hour leaving the reception unmanned at 7 pm when guests were going out for dinner or returning, or checking in. When we found out about that we gave him a warning but he even stayed away for more than 2 hours once afterwards upon which we let him go. He had 2 kids to look after in the evening until his wife came home who also had a job at a different hotel. And so on, and on, and on.

What made this entire situation with all that frustration really unbearable was the financial aspect, and I haven’t even begun to write about some crazy guests. We had invested a sizable amount of money and with all the repairs we couldn’t even break even when we paid ourselves a normal salary. The hotel did support us but nowhere near the level we were used to before. We didn’t expect to make $10,000 a month but at least expected compensation in line with Cambodian pay scales, which would have been $3,000 a month for 2. Whenever there was a profit that would have enabled us to that kind of pay we needed to spend the money on repairs, purchase of new equipment etc. It did get better the last 18 months when we finally managed to pay ourselves a bit more.

Operating a business requires working capital in addition to the actual investment, of course. A hotel our size had overheads in the amount of $11,000/month on average excluding our own pay. This is exactly the amount we thought we needed. In order to be on the safe side we put in $15,000, one year even $30,000 to tide us over those financial bottlenecks. Again, this situation eased up the last 18 months when we didn’t need any additional working capital as the liquidity was sufficient to fund the operation.

If the business had continued as in those 18 months we would have a moderately successful business worth our while. But then that construction craze encroached on our vicinity which made the location of the hotel so unattractive with two towering buildings next to our lot and accompanying noise that we feared that no Western guest would want to stay there come high season – hence our decision to get out of it; even if it meant without profit. Looking at the location right now we are just so glad we made that decision. With all the frustration we had suffered the last 4 ½ years, the financial worries, and now the prospect of no guests who would want to go on there. We made a clean cut, got our money back, including backpay, and that was it. Good riddance.

People reading this will certainly be discouraged to go into this kind of business here but what with all that is going on in this town we don’t think anybody is even remotely contemplating going into business, any business, here at all. It may be somewhat different in Phnom Penh which doesn’t have these pronounced seasons as a resort town but the sheer number of new hotels that have opened there pose a very serious problem for anybody who wants to invest there. So beware!

As mentioned in a previous article we returned the property to the owner who turned around and leased it to Chinese people at more than twice the rent we had paid. What these people want to do with this property baffles us to this day.

Monday, August 6, 2018

My Life as a Hotelier in Cambodia I


As I wrote in a past post I wanted to counter the declining prices of natural rubber on my rubber plantation by diversifying and investing in another business – a business that I was familiar with from my past professional experience as a tourism expert in Europe, the U. S., and Asia. Being a beach person and an avid boater I chose Sihanoukville – at that time the only resort town with acceptable beaches.

Before I describe the pitfalls that one encounters when opening and running a hotel in Cambodia I am going to start by writing about the booking portals that make life for small, independent hotels easy in terms of marketing but can become really frustrating to work with over time.

We opened the hotel in early January and were fully booked within a week or two for January and February, the best months in high season in Cambodia. Although we did have a relatively high share of walk-ins the majority of bookings came from booking.com, followed by agoda.com.

Booking.com is the largest hotel booking portal in the world, claiming to represent over 770,000 hotels world-wide. The major slogan is unbiased reviews citing numbers in the millions. That number can hardly be disputed but the word unbiased is a misnomer in my view. A hotel guest writing a review cannot be unbiased, he/she is subjective and judgmental. Their personal experience is not based on neutral criteria. Some guests think the rooms are rotten, others feel they are superb. Unbiased connotes fairness which we have found not to be true with a majority of guests. Some guests like the staff, e. g. single men if one of your female staff is pretty, others don’t. Some eat breakfast like gluttons, others are happy with a muesli.

Nevertheless, booking.com which was founded in the Netherlands and later sold to priceline.com had made enormous strides over time making it the one booking site that a small and independent hotel cannot ignore. In our case they contacted us immediately on learning that a new hotel was about to be opened. We never signed an agreement with them; they just went ahead and created a page on their website. We just furnished them with all the information and they did the work for us. Agoda.com worked the same way. We gave them our pricing (mid-market level for Sihanoukville from $30 to $50 initially, later up to $75 in high season) on which booking.com charged 15%, agoda.com charged 20%. Later this was raised to 18% for booking.com and lowered to 17% for agoda.com. The more commission you pay the better the exposure you get on their website, i.e. ‘recommended for you’ or placing your hotel on their first page. If you choose certain program features this will also elevate your position on their pages. We paid 18% and showed up as their recommendation on top of all choices about 50% of the time.

These rates may appear very high as commission rates for agents are normally 10%, and in exceptional cases 12%. But one has to consider that they have this enormous presence on all search engines for which they pay probably equally enormous amounts to appear on the first page when looking for a hotel, e. g. in Sihanoukville without giving a specific hotel name.

So you could argue that this is our marketing expense. We take care of the hotel and the guests and these two booking portals do the rest. It definitely is a beneficial relationship in this respect. As in any business relationship there are drawbacks. Booking.com does not collect the money upfront but only collects the payment details, i.e. credit card number without checking their veracity, etc. and lets the hotel charge the guests when they check in. This leaves the hotel with the risk of false credit card information, insufficient funds, etc. This is very irksome in case of no-shows, collection of cancellation fees, etc. We made spot-checks for certain guest groups which we knew from experience to be somewhat unreliable, Russians, Vietnamese, Cambodians, sometimes down-and-out Westerners. Upon notification by booking.com they were supposed to furnish us with correct details otherwise we had the option to cancel the booking. We tried out the ‘booking without credit card needed’ but that resulted in an increase of no-shows of more than 100% so we quickly abandoned that policy. Payment of commissions due booking.com are made by credit card online.

Agoda.com on the other hand collects the payment from the guests and we charged agoda on a virtual credit card that was authorized for the value of the booking. About 2 years in we added Expedia.com with its many subsidiaries but this did not result in a significant increase in bookings. We found that Expedia covers North America, Japan, Finland well for us as far as we could ascertain from the bookings. Since the majority of our guests originated in Europe, mostly Germany, Great Britain, France, the Netherlands, Scandinavia as well as Australia and New Zealand, the bookings coming from Expedia were negligible in terms of earnings despite the low 15% commission they charged. They also collected payments upfront, which was a plus.

So all in all everything would add up to a beneficial cooperation were it not for those so-called ‘unbiased’ reviews which can make or break a hotel. Since those booking portals are our marketing instrument per se and these days the majority of hotel (and flight bookings) bookings are made via the Internet people use and abuse their power on the Internet to a very large extent.

All booking portals have criteria in place by which a negative review can be removed. But these criteria are so broadly conceived and furthermore up to interpretation by the portal’s review team that hardly any review ever gets removed. The Internet is full of complaints about this from hotel owners all over the world. Guests can insult a hotel owner, misrepresent the facts, outright lie, the review will not be removed as this is the traveler’s experience. Insults are understood in different ways by different people. A Western rep might see this differently from, say, an Asian rep. This has happened to us many times. All portals state in their terms and conditions that a review is the guest’s personal opinion and experience and the portal cannot and does not accept any responsibility for the truthfulness. In addition guests can post anonymously. How does that help a hotel? If a guest uses profanity, sexual innuendo, etc. those reviews will be removed; after all those 3 portals are U. S. companies. Booking.com, agoda.com which is also owned by Priceline, and Expedia comprise about 90% of all online bookings worldwide. Booking.com alone has a share of over 70% of world-wide online hotel bookings. So what can a small hotel do against such behemoths? Their review policies are clearly unlawful as they commit unfair and deceptive trade practices as guests can post dishonest and untrue reviews harming the hotel’s business. There are EU and U. S. laws in place but an individual lawsuit is practically impossible as there must be clear and substantive evidence that the business suffered harm from those reviews. So a hotel would need to show the loss it suffered from harmful untrue reviews. Only a class action would bring relief as the totality of complaints would make presenting a case in court much more feasible. Those booking portals regularly state that only 2 rooms are still available, or this place is in high demand, so hurry and book quickly. Most of this is untrue and regulators in Europe stepped in and made this illegal. Now they say only two rooms on our site. This might now be legal and is advantageous for the hotel but it just goes to show that portals aren’t fair in serving their customers. The just want you to book there quickly; they don’t care which hotel, the main thing is the guests book.

All portals have a rating system from 1 to 10. You never see a 1 as I have never seen a 10 or even a 9.9 either. They start publishing ratings at 5.0. Booking.com used to let the guest choose from 4 choices, ‘ fair, good, very good, excellent’. Additionally a guest got to choose to rate five more criteria – cleanliness, staff, location, pricing, and service. They converted this into an average for all ratings a hotel got using a scale from 1 to 10, in other words, if you got a straight very good which would be a 7.5 it would show up as a 7.5 on their website but with a verbal rating of ‘good’ only. Requests to have this changed (not only by our hotel) resulted in a slightly modified system but it took years. Instead of ‘fair, good, very good, excellent’ they now introduced ‘poor, fair, good, excellent’. So if you got a straight ‘good’ you would now get a 7.5 and a ‘good’ rating on their site. If you averaged more than 8.0 you got a very good, and over 8.5 it was excellent, and 9.0 or more got an outstanding. So it was a slight improvement for those that before only got a good instead of the deserved very good.

When we started out we received excellent ratings on all portals. As time wore on this slipped down a 7.9 on all three sites in the end due to complaints about certain older rooms we had in a front building. The rooms around the pool would almost always get at least a very good rating. We couldn’t help this other than remodeling these rooms at very high expense which we had shunned as our aim was to recover our investment first.

In my view as a result from my experience these companies are by far too powerful and need to be split up. If you have a world-wide market share of over 70% it is a monopoly. Regulators are only now recognizing the immense influence of those huge internet companies like Google, Facebook, etc. Booking portals seems to have slipped by their attention so far, it seems.

Not for nothing are the big chains trying to move away from those third party booking portals. Large airlines now offer access to hotels through their websites, another indication of a widespread dissatisfaction. We also strived to lessen their impact on our business and for reasons unknown as we did not do any other marketing outside those portals we achieved a share of direct bookings, extensions, walk-ins, etc. of 35% which really significantly contributed to our financial success in the end. When I worked in this business way back there was no internet. Travel agents booked hotels directly by fax, or room allotments; granted, a much harder way of doing business. Complaints were handled by mail so never see the light of publicity. So the internet is both a boon and bane for hotels. A hotel owner really has to be on their toes to reap the benefits of the internet.


Sunday, July 29, 2018

Another phase in our life comes to an end

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

Visitors