Opening a Guesthouse in Cambodia = Newhart + The Beach?

July 22, 2008 8:33 PM

My wife and I want to drop our corporate lives in New York and open a guesthouse in Cambodia for backpackers. Anyone have any experience with this or other crackpot plans?

My wife and I have contemplated breaking out of the rat race in various ways, but as we are about to finish paying off her student loans, our discussions are becoming decreasingly hypothetical. Our latest plan, which is actually getting a surprising amount of traction, is opening up a guesthouse/hotel/hostel in Cambodia or Laos. I'd originally planned on Siam Reap, where I went in 2002, but I've heard that it's been ritzed up lately and we might need to find a more under-the-radar locale.

Regardless, the same concerns would apply. Although we're both lawyers and ostensibly smart and hard-working, etc. we have no experience in the hospitality business, no contacts in this region and, last but not least, no abilities to speak in the native tongue. On the upside, we only want to do this for a year or so and we're willing end up $10-20,000 in the red on the whole enterprise so we've got that going for us. We are, however, strenously opposed to being robbed, raped, murdered or thrown into a Laotian prison. Plus there are real concerns like insurance and drug laws and kidnapping and and bribery and Khmer overlords and lawsuits that can't be dismissed with the sheer force of a Carpe Diem attitude.

So has anyone out there ever done something similar to this and do you have any constructive advice on starting a business in a foriegn country?

posted by pokeydonut to work & money (18 comments total)

I haven't done anything remotely like this, but if your fears are more about personal safety than business failure, have you considered maybe trying this closer to home instead? You're familiar with US law (as you're both lawyers), so you stand a good chance of negotiating the legalese involved; you woudln't need to move quite as far; and you can still find travelers.

A dwindling number of states in the US have IYH-affiliated hostels; maybe trying to open one in an underserved state yourselves and trying to make it into their network (I always pictured it as being like the Michelin Star) would be a goal.
posted by EmpressCallipygos at 8:42 PM on July 22, 2008

What is it that you don't like about your current life?

What do you expect to get out of the new experience?

Have you already travelled extensively in the non-developed world?

Even if nothing extraordinarily terrible happens, there might be daily annoyances that you haven't considered before.

I have had experience in detaching from the corporate teat and pursuing something completely different. I didn't realize how much I'd miss a fat paycheck.

I have also recently traveled for 2 months in undeveloped world. I didn't realize how much I'd miss my creature comforts. Clean bathrooms, a varied diet, etc.

But, if I hadn't done either, I'd be wondering what it'd be like and wishing I had the guts to do it.

Life's funny that way.

Is there something smaller that you can try out first? Beg for a leave of absence at work, and go for an around-the-world trip? Find some kind of legal-aid post with the UN?
posted by ebellicosa at 8:55 PM on July 22, 2008 [2 favorites has favorites]

....no abilities to speak in the native tongue...
...we only want to do this for a year or so....

A year really doesn't seem like enough time, especially starting from scratch.

What is it about the guesthouse idea that is specifically interesting to you? Could you join up with an established program that does volunteer/mission/foreign employment? Have you looked for English-speaking Cambodian guesthouse keepers that might be interested in having you as an apprentice, or even just for advice?
posted by fermezporte at 9:13 PM on July 22, 2008

The part that sounds weird to me is wanting to put in all the work and agony of starting a hostel, with the intention of shutting it down after the first year. Just getting the permits, finding the right property, hiring staff, and starting to get advertising and clients could take most of a year -- why would you invest that kind of effort only to immediately drop it?

I guess what I'm asking is, are you sure that you are asking about opening a guesthouse, or is the question really about how to have a working vacation in Cambodia? Because if it is the first, the one-year timeline makes no sense, and if it is the second the obvious way would be to find work managing someone else's guesthouse rather than open your own.
posted by Forktine at 9:16 PM on July 22, 2008 [2 favorites has favorites]

I can't speak for Cambodia, but here's some insight I got from some people who tried the same in Thailand:

I've never met an expat guesthouse owner who didn't follow the model of marrying a local first. There are probably a million reasons for doing this that make running a business more feasible.

Next you need property/location/location/location. If you want something oceanfront then you're only choice will be to buy a 20 year (or similar) lease on land since it already belongs to the gov't or someone else with strict regulations on the number of huts you can put up, space between the huts, distance from the beach etc.

Have you considered how much time and money it would cost to have huts or hotel rooms built? Or how much money it would cost to buy existing ones? Have you considered how much time it would take you to get that money back when people can get a nice room with satellite TV in Siem Reap for $12 a day (Cambodia is the only place I had TV and a warm bath in all my SEAsian travel).

Then there's the corruption. I was told that the reason the road between Siem Reap and the Thai border is so shitty is not to keep away Thai tourists (and there are a lot of them) but because the gov't transportation official happened to have their fingers in the $25US a head they collect from thei airport tax at Siem Reap.

Finally, have you googled information on what it takes to live in Cambodia for longer than a tourist visa? In western countries you'd have to have a large amount of money to invest (fix to six figures at least).
posted by furtive at 9:32 PM on July 22, 2008

Oh, I don't know if you remember or experienced the begging for money while you were in Cambodia, but the reason they came to you is because you're a target... you'd be naive not to think that at least some business people would look at you the same way.
posted by furtive at 9:34 PM on July 22, 2008

What about working at a guesthouse? Seems like it would give you the dramatic change of context without as many practical drawbacks.

Of course, you'd need to get good with playing the role of illiterate foreigner who changes the beds -- but maybe the temporary change in status would be enjoyable to a couple of people wanting a break from their high-pressure lives.

Bonus: more time to travel and hang out. I imagine owning your own guesthouse would be exactly like hard work. Plus, the whole deal becomes less of a financial risk, so you can use that $10-20K for something else you both want.
posted by ottereroticist at 9:42 PM on July 22, 2008

Crazy idea. Especially when you could live pretty well with a $10 - $20K loss for more than a year over there. What's the point of running a guesthouse with a zillion headaches, no chance of success in such a timeline, and in a place where you don't know the language, culture or anybody? Volunteer or something, and it would be more productive, less of a nightmare and cheaper.
posted by Dee Xtrovert at 9:45 PM on July 22, 2008 [2 favorites has favorites]

Have you looked at ownership law in these places? I know that in Laos foreigners cannot stay for more than 3 months without special dispensation. Further, foreigners cannot own property (hence the strategy of marrying locals). There are lots of stories of people doing joint ventures with locals and getting screwed out of the property. The last time I was in Cambodia the rule of law seemed barely to apply and lots of conflicts seemed to be resolved by machete. I strongly advise you to understand the legalities of owning property and immigrating to these countries. Also, I wouldn't bother unless I was willing to spend at least 8-10 years of my life doing it. Otherwise just take your 10K and live like a king for a year in SE Asia.
posted by zia at 10:13 PM on July 22, 2008

My partner and I contemplated all kinds of schemes like this to 'get out of the rat race' - for us, it was really about getting away from our life together, so we split up and I went back to school full time in the humanities - anyway, not saying this is you, but caveating my advice because I have not attempted to open a guest house in cambodia (or anywhere) for a year.

So, my thought is about what the others have said - why do this? What is it about your current life that you don't like? Do you really want to be an innkeeper? Do you know what this life entails?

If you can take a 10-20k hit, go enjoy yourselves somewhere. Starting a business is stress enough, much less in a country where you don't speak the language with only a year time limit. Dealing with visas, permits, corruption alone is probably more than you are going to be able to handle without speaking the language, or you're going to end up sinking a lot of money and hard work into this thing only to have your year up. On the other hand, if you pull this off, maybe you will fall in love with the lifestyle of the innkeeper and never leave - who knows, but there's a reason there are so many bed-and-breakfasts for sale (I know some people that dropped out to buy a bed and breakfast in the US only to find out it was sucking the life out of them) - so proceed with caution, I guess.

Here's what I think you should do (for all that's worth) - you're both smart and hardworking - instead of going and opening a guest house, do something productive to help some people. The backpackers in SE asia will find a place to sleep. Join the peace corps, volunteer. If you really think the guest house is the only way to go, I would head to Cambodia with the intention of staying there for a year and see what happens - maybe the opportunity to run somebody's guest house will come up, or you'll find something more interesting, but instead of driving yourselves nuts trying to make this idea work, let the opportuniy come to you.
posted by drobot at 10:20 PM on July 22, 2008

I can't speak for Cambodia, but here's some insight I got from some people who tried the same in Thailand: I've never met an expat guesthouse owner who didn't follow the model of marrying a local first.

That's because foreigners are not allowed to own property in Thailand.

As to the question: there are only two places in Cambodia where you will ever have a chance of getting close to breaking even: Siem Reap or Phnom Penh. And frankly, Phnom Penh is a really depressing place that doesn't see nearly as many tourists as the Angkor Wat region.

There are two major reasons for this: first, because there's just not that much history preserved in Cambodia due to the Khmer Rouge (and subsequent vestigial insurgent activities in the 90s). Second, because the countryside is still quite heavily mined.

I don't see how you could do this and still compete with the locals who have been doing it for longer, work cheaper (and probably harder) than you will, and are already entrenched in the good areas. Add to this the fact that they've got the whole operation down to a science. When you take the bus from Bangkok to Aranyaprathet, there are hundreds of tuk-tuks waiting to ferry you to the border. Most of those guys will have relatives on the other side that will drive you to Siem Reap. Once you get there, they will take you to an uncle/cousin/brother/auntie's guest house. Basically, the entire supply chain from Thailand to Angkor is saturated with locals who know the laws better than you, have more friends and family in the area in case anything happens, and have years more experience doing this.

It's kind of like Disney land, in that once you commit to going, you can basically get the entire trip--transport, hotel, laundry, food, etc.--all handled like a travel package by the same extended family members. Good luck trying to break into that market.

Last time I was in SR I stayed at a guest house where they provided us free marijuana. You think you can beat that? Do you know the right police to bribe? Do you know where to get the cheap grass? Are you willing to risk getting thrown into a Cambodian prison if caught? Of course not. But for the locals, there's no punishment if they're caught... just a fine bribe to the right official and they're on their way. But for an American? Forget about it.

My point is that doing this is like trying to open up a car manufacturing plant in Japan. The barriers to entry are so outrageously, unfairly skewed against the outsider that you won't stand a chance. If you tried, it would probably take you months just to get your electricity or water turned on because you didn't know the right guy to bribe, or because the local businesses complained to the right people that some foreigner was trying to set up shop.

You're looking at a barrier of entry the size of the Great Wall of China.
posted by Civil_Disobedient at 10:46 PM on July 22, 2008 [6 favorites has favorites]

If you were asking about any other place on the planet, I'd have nothing to say.

I was in Siem Reap last year though, and stayed at a hostel I'd had recommended (word of mouth). It was a bit tricky to find, and the local tuk-tuk drivers told me repeatedly it was closed. In the end, I bumped into someone who worked there who showed me the way.

It was great- very affordable, good vibe, good people, and the owner was an eccentric Swiss ex-pat who used to be an architect but threw away his old life to come and live in Cambodia and run a hostel.

He seemed very happy, with a strong undercurrent of stress.

He didn't engage in bribery, he didn't 'tip' taxi drivers for delivering guests, and he didn't pay any protection money to the police. This meant that tourists would often be told that the place was closed, drivers would refuse to take people there, and the few times there had been some kind of vandalism the police were very slow about making their way there.

That being said, he was remarkably jovial and I have only good memories of my stay there. If you want to do something similar, I'd make sure you know as much about the local laws (and unwritten laws) as possible. I can understand them not being all that enamoured with some foreigner who shows up, opens a business and refuses to take part in what everyone else considers to be the normal way of doing things.

I guess my point is that there are people who do this, in Siem Reap, and they are happy doing it, but I think (for this man, at least) he would have been served well by a better understanding of the place before he arrived.

As for Civil_Disobedient's comment that the whole supply chain is saturated with locals, that's fair enough. I don't think you can compete with them there. But there are lots of people who avoid that supply chain as much as possible (such as myself and many of the people I met there), so it's not a complete lost cause.
posted by twirlypen at 11:05 PM on July 22, 2008

You should read Don't Stop the Carnival by Herman Wouk.
posted by Jahaza at 11:51 PM on July 22, 2008

With that money, rent a nice place and relax for a year while you think this shit through. Running a guest house is work, worse work than being a lawyer.

Maybe you could rent a big enough place to allow friends and family to stay with you while they are on their vacations.
posted by pracowity at 12:44 AM on July 23, 2008

Previous thread on running a hostel
posted by romakimmy at 4:22 AM on July 23, 2008

Instead of running a hostel, wherein you'd be perpetuating a service economy and not really contributing to the local population in any significant way, consider getting involved with the Rural Schools Project, which would give you the same flavor of living in Cambodia, but by helping educate you are making a far more lasting contribution to the people who will be there after you are gone.
posted by plinth at 5:36 AM on July 23, 2008

Wow, pokeydonut. Have you considered coming to the July 26 Central Park meetup? I'm sure you can pick up some advice there, too.
posted by StickyCarpet at 8:47 AM on July 23, 2008

I agree that starting up a guest house is going to be a big headache. The ex-pats I see running one have usually been there a long time, often marry locally and spend a lot of effort dealing with local laws, bribes etc. I think it takes them quite a while to start breaking even and probably 3+ years to find themselves in a guidebook. A lot of places where I've met people building a new guest house they've already spent more than a year getting permits etc. before they can start to build. A large proportion of them are also drunk every night, I'm not sure what that means.

If it were me I would invest in Ethiopia or Mozambique right now (although I don't know about laws, ownership rights, taxes etc.). I'd love an English-speaking guest house in Madagascar (there's tons of French-run ones). But since you're not looking to invest I say spend $20,000 on a year-long sabbatical. Rent a house for 3 months on a few different continents and relax.
posted by Bunglegirl at 9:49 AM on July 23, 2008