Throughout 2020, almost every sector of Cambodia’s economy was struck hard by the COVID-19 pandemic. Hospitality and construction, two of the Kingdom’s key industry were no exceptions. In an exclusive interview with Khmer Times’ Taing Rinith, Faz Ghotbi, executive chairman at Elite Hospitality & Trading, with more than 20 years of experience in these two sectors, gives his insights on how critical the situation is, as well as his perspective on recovery in the future.
KT: Can you tell us briefly about yourself and your ventures in Cambodia?
Faz Ghotbi: My background is mostly in construction and hospitality. I have been working internationally in many countries in the Middle East such as Dubai, United Arab Emirates, and Lebanon. The reason I decided to come to live in Cambodia is because I fell in love with the people because of their friendliness and hospitality. I have been settled down here for almost 20 years and even received Cambodian citizenship.
Throughout the years, I have been a co-founder and co-owner of several construction projects in Phnom Penh such as Palace Gate Hotel & Resort, Epic 1 and 2 clubs, Steak & Pan, and Eden Garden Mall. I brought two international awards to Cambodia, including Best Retail Development for Eden Garden Mall and the Prix Villegiature Award 2019 for the Best Charming Hotel in Asia for Palace Gate Hotel.
KT: Since early last year, Cambodia’s hospitality sector has suffered greatly from the effects of the COVID-19 pandemic. In the meantime, how has it affected your group which is specialised in this industry?
Faz Ghotbi: It was a very different year for all business sectors around the world. Some businesses such as hospitality and entertainment have been hit dramatically and we were no exception. Since last year, all of our five nightclubs have been closed. The revenue from our two restaurants dropped by 80 percent. We also lost 90 percent of the revenue from our hotels because of the travel restrictions imposed by the government. We have struggled a lot but, so far, we never stopped paying the salaries of our staff, even those who work for our businesses which are closed. Although we have had to reduce their salaries to 80 percent and then to 70 percent, we will never go less than 50 percent. It is true that we are losing money, but they worked hard with us during the good times and I know that I must do the same during this difficult time. I will continue this until I run out of cash.
Because some of these properties were closed for two or three months, I’ve used this opportunity to renovate them.
KT: And how about your construction business? How has it been doing so far?
Faz Ghotbi: We also developed Borey Eden Garden. The development has been suspended because I needed the cash that I was using to research the property to spend on my other businesses. I have rented the lands and I have to pay the rent to the landlords. The landlords can compromise for one or two months, but they cannot do it for a long time. However, in general, COVID-19 has not much affected Cambodia’s construction projects. Most of them are proceeding while some of them have slowed down a bit.
Also, I don’t think COVID-19 will lead to a real estate crash in Cambodia. You may see some people who need money and sell their properties under market value but, in Cambodia, the value of the properties will never drop because there is an end-user market. These end-users, who need the properties for use, represent 80 percent of the market. And these users are increasing in number because the middle class is growing very fast, while young Cambodian people are seeking more independence and looking for shop houses or flat houses when they have a family.
KT: When and how do you think Cambodia’s hospitality will recover?
Faz Ghotbi: In our meeting with the World Bank, Cambodia’s economy, especially construction, was cited to increase by 4 percent in 2021. No doubt, Cambodia’s GDP [gross domestic product] will be positive in 2021, but I’m sure that the hospitality business will not jump back this year. This sector might still struggle in 2021 because of COVID-19 but, as soon as the vaccine is distributed all over the world, I think when WHO [the World Health Organization] approves AstraZeneca’s COVID-19 vaccine, it will be distributed to the mass market because it needs to be stored at only 5 degrees Celsius in a normal fridge – and it’s very cheap at around only $3. I see that it is very positive for the hospitality business because very soon COVAX will be distributed all over the world and soon COVID-19 will no longer be scary. I expect a travel boom when the pandemic is over, probably in 2022 or 2023. (COVAX is co-led by Gavi, an international organisation created in 2000 to improve access to new and underused vaccines for children living in the world’s poorest countries, and the Coalition for Epidemic Preparedness Innovations and WHO. Its aim is to accelerate the development and manufacture of COVID-19 vaccines and to guarantee fair and equitable access for every country in the world.)
However, this is not the first pandemic, and it will not be the last pandemic. So hopefully, we will learn from this lesson so that we can be prepared for a future pandemic.
KT: How optimistic are you about the future of the construction sector in Cambodia?
Faz Ghotbi: I am very positive about construction in Cambodia for two main factors. First, because Cambodian end-users are there, and second because bank loans are getting getting cheaper and cheaper and there is more and more competition coming into the microfinance market space. This will allow everyone to go and buy properties, which is a long-term investment in the country. This is something cultural because people even buy property for future generations of their families. Plus, we have Chinese moving to Cambodia and purchasing expensive properties. Their injections [of cash] will make property in Cambodia positive in 2021.