Cambodia February Update 2022

Greetings from New Nordic in Cambodia!

We would like to wish a Happy New Year to our clients and partners around the world. As we enter 2022, we continue to see signs of improvement and a brighter path forward from the global pandemic that has so crippled travel and tourism.

In the months of November and December last year, our executives were able to access Cambodia for the first time since the pandemic began. Our teams were in the country for nearly one month, and were very active both on the construction site itself, along with our team members in the Phnom Penh office.
First and foremost, we found the construction site itself to be in very good condition. All materials in written inventory were found safe and secure and no vandalism was found on the site. We inspected the project based on the general contractor’s final progress report from March, 2020 and our findings matched the report with 80% of the construction complete. We also had meetings with the onsite security services to understand the local conditions and how we can best support them.

A series of meetings took place between our project managers, the general contractor and specialty subcontractors. We first analyzed the remaining budget and materials requirements in relation to present day costs. Obviously, impacts to the global supply chain continue to wreak havoc for projects which reply on imported goods. We identified those line items which could be procured domestically rather than from overseas, such as built-in and loose furniture. Overall, we have instructed our general contractor to propose various revisions and a construction timeline which makes sense in the present environment. We continue to work on this daily and look forward to sharing more information soon.

Aside from the physical buildings which make up the project, we spent a considerable amount of time on market study and research. Cambodia has scrapped quarantine requirements, only requiring a COVID test on arrival. On the other hand, flights remain limited and relatively expensive compared to normal times. We noted very few international tourists in Phnom Penh and nearly zero in Sihanoukville.

While we understand the desire some clients have to resume construction activities as soon as possible, we continue to rely on a prudent and measured strategy making decisions based on data as it becomes available. At the moment, it is still very difficult to estimate basic hotel operations metrics such as daily rate and occupancy, but we are quite confident it will take at least 2-3 years before the number of global travelers reaches 2019 levels. This being said, we continue to explore multiple options for operating the Sunshine Hotel & Resort project including in-house operation as originally planned, leasing the property to a global “branded” operator or retooling the project to focus on long term rentals.

As we have said from the beginning of the pandemic, our goal has been to protect the value of our clients’ investments. In our view, this is not only the physical building, but providing the best possible operational return for the largest number of clients. A completed, but empty building will bear nothing but costs on both our side and that of the client.

We would like to assure you, we are working every day on the next steps for the Sunshine Hotel & Resort project. We reject chatter that has been brought to our attention that claims we have abandoned the project or have no plans to move the project forward. We do, however, want to make sure that any decisions made are sensible and in the best interest of clients for the long term.

Our work will culminate in a new proposal for clients, which will most likely include a revised rental guarantee program that considers the dramatically different market conditions present in Sihanoukville. This proposal will be provided after we have taken into consideration all possible options for operations and have selected what we feel is the most viable and sustainable. We appreciate your patience during this process!

Thank you for your support through these difficult times. We remain ready to assist you with questions about the project. Simply e-mail info@newnordicgroup.com and we’ll do our best to get back to you within 48 hours.

Until next time, be safe and healthy!
Regards,
New Nordic Cambodia