How Should Hotels Respond to the Growing Number of Tourists?

• 10 March 2018
• Local News
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Tourist crowd in Siem Reap

The tourism sector is one of the key bright spots in the Cambodian economy, with visitor numbers continuing to grow. Hotel occupancy rates in cities like Phnom Penh, Siem Reap and Sihanoukville were at record levels in 2017. The continued growth in tourist arrivals and rising occupancy rates encouraged more hotel developments all over the cities and towns.

We expect the total supply of hotel rooms in Phnom Penh and Sihanoukville to grow by at least 20 percent with thousands of new rooms. On top of that, there are also more hotels being planned, particularly in the seaside cities/towns and eventually supply and visitors will continue to grow. “I don’t have an exact number of hotel room supply in Phnom Penh, but I believe the demands for hotels are still there, and luxury hotels are still doing well,” said Nguon Chhayleang, CEO of the Pointer.

In general, the hotel market is segmented – you have people who want to stay in the high-end hotel or backpacking hostels. Therefore, the challenge for hotel owners and operators is to target the right segment for their property. “Cambodia is a very dynamic market that welcomes visitors from all different backgrounds and income levels,” explained Chan Mlop Sokha from Sokha Law Firm.

NagaWorld hotel in Phnom Penh

The hotel market in Cambodia is generally comprised of different nationalities of guests. It receives Chinese, Russian, German and British arrivals and hoteliers do not face too many challenges because they don’t have to be 100 percent reliant on a single market. But I estimate that over 50 percent of foreign arrivals to the coastal cities and towns are from China. The growth in these Chinese arrivals presents hotel owners and operators with opportunities, but this also presents challenges and threats in that in the coming years it will become reliant on a single market. Chinese tourists spend a large proportion of their budget on accommodation. Taking into consideration the huge size of the Chinese outbound market, there is still definitely room for growth.

Hotel construction along the Sihanokville beach

Like many other Asian countries, tourists arriving Cambodia are willing to spend more during their travel in order to have a better or more unique experience. Fortunately, Cambodia is not dependent on one market because any downturn in that particular market economy will reduce their citizens’ overseas travel. However, the concentration of risk, being dependent on one or two major markets is increasing, for example, Malaysia and China, as this will affect both the whole country and individual properties.

Nonetheless, hotel investors or hotel project developers should take into account these risks when they are considering new projects.

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