Buy or Rent Hotels in Cambodia

Investing in Cambodia Hotels

Albeit one of the smallest countries in the Asian basin, Cambodia is quickly becoming globally talked about for a range of investment opportunities.

With tourism seeing a sharp increase in the last decade due to new infrastructure for tourists to visit Angkor Wat, we believe there will be a rebound effect.

More significant tourist numbers than we saw in the last decade will be coming into Cambodia in the 2020s.

Cambodia also has a burgeoning manufacturing sector and a young population that have a thirst for urbanisation.

Compared to other parts of Asia, Cambodia is considerably easier to conduct business and own companies outright. Visa regulations are inviting, transparent and easy to obtain.

Foreigners can also own up to 70% of all units in a Condominium building.

However, in this section, we are covering commercial real estate and focusing on hotels. Of course, this requires more planning and due diligence than buying a villa, borey or condo for example.

Here are the Topics We Will Cover in this Section:

• Can a foreigner Purchase a Hotel in Cambodia?
• Using a Cambodian Company to Purchase a Hotel
• Tax Registration
• Hotel Approval and Licensing
• The Market for Hotels Cambodia
• China’s Influence on Cambodia’s Hotel Industry
• Profitable Cities for Hotel Investments in the Kingdom

Can a Foreigner Purchase a Hotel in Cambodia?

Except for Singapore and Malaysia, you are unable to purchase a hotel as a foreigner in Cambodia.

Strata titled units predominantly equate to condominiums.

We do, however, see the rare occasion when foreign investors have been able to do this, such as The Peak, for example.

Given that you are browsing this part of our website, we assume that you are interested in procuring a hotel project in Cambodia, so our first port of call will explain how to set up a local company.

Here are some finer details:

Using a Cambodian Company to Purchase a Hotel

Suppose you plan to acquire a hotel or resort in the country. In that case, the best option is to incorporate a local company and use this as your investment vehicle.

We will look to incorporate a Limited Liability Company (LLC) using a local citizen or citizens.

This is the most straightforward and safest form. The investor(s) could be either an individual or a legal entity.

We always advise three security layers to ensure this process is as watertight as possible for our clients.

• Differentiate classes of shares
• Draw up a minority control document
• Land Security

Share Classifications

When using a land-holding company, a foreigner will only own 49%. However, you can structure two different share classifications.

• One set of shares are owned by a Cambodian citizen(s)
• The second set by a foreign shareholder(s)

In this agreement, the Cambodian(s) can be given lesser rights for nominating directors or transferring shares. Any decision made by the company can need a two-thirds majority to be approved.

The Minority Control Document

Working with the law firm or directly with the Ministry of Commerce, also, private agreements can be reached to add security.

The Cambodian shareholder(s) can give the foreigner(s) additional voting rights such as:

• Permanent Board Majority
• Additional powers of attorney
• Open shareholder transfer forms

Land Security

The last security layer is land security. Here, the mortgage is registered on the property, meaning it cannot be transferred without the foreigner’s acceptance.

Tax Registration

After 15 days, you have to ensure to register with the tax authorities after the Ministry of Commerce has signed off on your business registration certificate and registration approval.

These are then subsequently filed at the tax authority with the business location and address.

VAT and patent certification are only possible after the submission of the hotel license being approved.

Lux will advise you on credible law firms who deal in multiple languages and have vast experience in this field.

Hotel Approvals and Licensing

The Ministry of Tourism (MOT) will evaluate the following before issuing the license application:

• Letter of security, fire control certification and safety
• Sanitation certificate
• Construction or renovation approval
• Company location approval

The company location approval is the factor that takes the most amount of time. The authorisation has to go through the Commune (Sangkat), the District (Khan), and its department to sign off and stamp the approval document.

At this stage, you will also submit corporate documents and your lease agreement to them.

The Market for Hotels Cambodia

Cambodia offers one of the more intriguing hotel markets in Southeast Asia.

With a burgeoning tourist industry until the global pandemic and travel restrictions, it’s an area of the world that will see a substantial rebound effect in the coming years.

The country already boasts some of the biggest hotel chains in the world:

• Raffles
• Park Hyatt
• Sofitel
• Rosewood Hotels and Resorts
• Ibis
• Marriott
• Le Meridien

To name a few.

The country’s ties to China have opened another colossal tourist market. The country is no longer viewed as a backpacker destination like the late 1990s and 2000s.

The prediction from the Tourism Ministry is that the hotel industry will need more than an extra 100,000 hotel rooms around the country in the coming years.

In 2019 we saw over 3.3 million tourists visit the country. With the craving for travel now that vaccines are forthcoming globally, we feel the rebound effect will be even higher for the remainder of the decade.

China’s Influence on Cambodia’s Hotel Industry

China remains an essential wheel in the cog of Cambodian tourism.

This sector has seen double-digit growth year on year from 2010 to 2019. By 2025, the Tourism Ministry estimates that over 10 million Chinese tourists will be visiting annually and beyond. Considering Cambodia is looked upon as a frontier market, this is by no means a modest number.

With the country planning to expand airports in Phnom Penh, Siem Reap and Sihanoukville, with the islands of Koh Kong and Koh Rong starting to open up, the hospitality industry will thrive again.

However, accommodation and hotel rooms need to keep pace with the Cambodian government’s rapid expansion plans.

Cambodia now attains a global audience for travel and curiosity of this famous land. South Korea, Japan, Malaysia, Singapore, and Thailand, provides Cambodia with stalwart tourism and the United States, the UK, and many EU countries.

Several tourist attractions are being built, such as waterparks and fun fayre’s, climbing and potholing ventures in Kampot. Cambodia is constantly looking forward and not holding back due to the global economic downturn.

Profitable Cities for Hotel Investments in the Kingdom

Although the country’s population has doubled in the last two decades, it’s still home to a modest 17 million people. So hotels and businesses are focused on only a few cities.

Phnom Penh

With development moving out to districts that were once considered out-of-town becoming part of the city Phnom Penh as a whole’s population sits around 2.2 million. And surprisingly, Phnom Penh exceeded Siem Reap as the most visited city in the country at the back end of the last decade.

As mention above, here you find several 5-star hotels and renowned brands. Visitors to the city enjoy plentiful leisure activities, including casinos and much cheaper fine-dining and late-night entertainment than other parts of the world.

Koh Pich (Diamond Island) epitomises the government’s plans. With ten new branded hotels in the course of development for 2022, the focus is on attracting business travellers for Meetings, Incentives, Conferencing, Exhibitions (MICE). Many hotels and high-end condominiums have already been built, including massive exhibitions halls and other entertainment venues. In addition, other plans for additional international meeting places are already being drawn up.

Sihanoukville

The days of Sihanoukville being known as a laid back sleepy backpacker destination are over. People that haven’t been there for a decade or more would not even realise they are in Sihanoukville.

There has been over US$1.5 billion invested in commercial development from China since 2019. The majority of this money is being put to use for commercial developments, condos and hotels.

We saw a move away from budget tourism in Sihanoukville at the back end of 2019 and fully expect the demand for higher-end, modernistic hotels to continue.

Statistics from the Association of Travel Agents deemed that 4-star hotel demand will increase dramatically throughout the 2020s.

Sihanoukville’s new increased airport will, by all accounts, count to superseding Phnom Penh for hotel rooms during late 2021. The new US$16 billion Ream City scheme being a contributing factor. (Ask Lux for more information on Ream City).

The estimation is that Sihanoukville will have just over 13,000 hotel rooms at the end of the year.

Siem Reap

With Asia’s most important and historic world heritage site of Angkor, Siem Reap will never be short of visitors. Angkor Wat is the largest religious monument globally. New findings make historians wonder whether they may need to re-write the history books as technological advances pose even more questions about how the city once was.

However, statistically, Siem Reap is still behind Phnom Penh and Sihanoukville for luxury hotels. Siem Reap is more of an independent boutique hotel haven, priced in the mid-tier section.

The Chinese market pushes Siem Reap more towards luxury hotels and accommodation, including higher-level travel experiences once inside the country.

The market is more competitive than Phnom Penh, and more hotels have been approved and are starting to be built.

Statistically, we are looking at development during this period of mid-tier being 42% and high-end 58% of the upcoming developments.

At Lux, we look forward to speaking and meeting with you to discuss this diverse but ever-expanding and exciting hotel marketplace.

The country is far from saturated. There are endless land opportunities to build from scratch or old hotels to be renovated. Even turn-key hotels to move straight into existing client bases and add your ideas, twists, and marketing ready for the influx of tourism are now available.

Please get in touch with us for a consultation.