Cambodia’s Hotel Industry Continues To Rise
Cambodia’s Hotel Industry Trend Emerging in 2020
Many countries have already reported its suspension or indefinite hold on hotel projects due to the threat of COVID-19. Apparently, it’s not the same in the major cities of Cambodia. In fact, the country is expecting several hotel openings including Poulo Wai Hotel & Apartment and the first Hyatt Regency hotel, both rising in the capital city of Phnom Penh.
Tourism is one of Cambodia’s fastest-growing industries. Along with this, its sub-sectors are simultaneously growing. Tourism industry has three sub-sectors: Accommodation, Food and Beverage, and Travel and Tourism.
The accommodation covers the growing number of boutique hotels, guesthouses, villas, and other lodging services. Food and beverage refers to all restaurants, bars, clubs, pubs, and fast foods. Travel and tourism includes travel and tour agencies, airlines, buses, trains, and any means of transportation.
Travel and Tourism Sector
Cambodia is among the fastest emerging tourism destinations in the world for up to 2024. It has an annual growth rate of 6.9% in tourism’s direct GDP contribution forecasted to run until 2024. As a result, millions of tourists are arriving in the country every year.
Based on the National Bank of Cambodia data, over 4.8 million international tourists arrivals were recorded between January to September 2019. It surpassed the record in 2018 where only 6.8 million tourists visited Cambodia. These figures are 10% higher than the figures recorded in 2018.
Majority of the tourists arrive to Cambodia by air. However, Phnom Penh International Airport has the most tourist arrivals with 33% of the total 71% arrivals by air. Siem Reap comes second with 28% while 10% of the tourists land at Sihanouk Airport.
The growing number of tourists demands for a greater number and a higher quality of accommodation.
Hospitality and Hotel Sector
The hotel industry in Cambodia has been consistently growing every year. The investment in hotel businesses has increased to keep pace with the increasing accommodation demand. By 2030, it is forecasted to reach 15 million as it poses great investment opportunities.
For those who want to start a hotel business or vacation rental business, now is the best time to invest. The number of local and international tourists is expected to reach around 28 million by 2030, the Minister of Tourism stated. Cambodia is expected to receive 7 million tourists in 2020. Sihanoukville Province is expected to receive most local tourists.
Thus, the tourism minister ordered an increase in the number of hotel rooms especially in Sihanoukville. It is estimated that 100,000 additional hotel rooms are needed to accommodate the rapid growth of the tourists entering the country. More than half of it will need to stand as four and five-star hotels.
The global trend of luxury accommodation is in line with the rise of income earners above minimum wage and foreign tourists. In 2018, Cambodia has more than 800 hotels with a total of 46,000 hotel rooms.
Majority of the hotels are in these three major cities: Phnom Penh, Siem Reap, and Sihanoukville.
The capital city of Phnom Penh has been the economic hub of Cambodia. There’s a tremendous growth in international tourism, across business, leisure, and MICE (meetings, incentives, conferences, and events) in the city. It offers excellent opportunities for private sectors, developers, and business investors.
In the hotel sector, Siem Reap is notably more competitive than any other cities. It is due to the access to other main cities, international airport construction, and additional airlines and flights to the city. The greater opportunities lie in adding more international luxury hotels and tapping into the MICE market. Siem Reap has dominated its market with four and five-star hotels. At the end of 2018, the city has a total of 11,596 hotel rooms. Majority are the middle to high-end with 87% of the total hotels in Siem Reap. By 2020, an additional 541 rooms are expected for completion within four hotels.
Renowned for its refined beaches and beautiful islands, Sihanoukville is starting to capture tourists and industrial hubs. It was reported that 5,238 rooms across 46 hotels are operated in June 2019. However, the existing hotels are still dominated by the economy category with limited service.
Sihanoukville is becoming the top coastal destination in the country. There is a high potential value on developing and operating high-end hotels. Its accommodation sector offers a transformation to luxury hotels and resorts, and casinos.
Meanwhile, the hospitality industry also has a huge impact on both hotel and financial sectors. This industry employ locals from construction to providing services, making it one of the major sources of employment in Cambodia.
Food and Beverage Sector
As a form of entertainment, restaurants and bars are also catering to locals and tourists alike. Statistically, the restaurants in Cambodia have a steady growth of six percent and will continue to do so in the coming years together with the hotel sector.
The hotel industry will further expand due to the increasing number of foreign tourists. Its emerging growth reflects a high demand in the construction and real estate sector. Furthermore, it will result in a rise in investment and domestic demand, especially with increasing income and improving financial sectors. Thereby making the travel businesses flourish and becoming more profitable.