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Logo of Phnom Penh Post newspaper Phnom Penh Post - Cambodia hotel market booming

Cambodia hotel market booming

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Raffles Hotel Le Royal in Phnom Penh. Photograph: Wesley Monts

The hotel sector in Cambodia had a positive year in 2012 and rates and room numbers are set to increase this year and next.

A new report from property agents CBRE says tourism accounted for 9.7 per cent of Cambodia’s GDP in 2012, a rise of 5.5 per cent from 2011. Investment in the tourism sector has increased by 16.7 per cent year on year, and total foreign arrivals increased by a massive 24.8 per cent year on year, with business arrivals seeing the greatest increase, at 47 per cent.

The Phnom Penh luxury hotel market “significantly benefitted from the presence of the ASEAN summits,” in April and November, which CBRE said brought over 1,000 delegates and international press into the city.

Room rates “have generally increased in the market, especially for suites and the more exclusive properties. This again can be attributed to ASEAN activities and the corresponding business activity,” the company said.

The outlook for the hotel industry in Siem Reap is positive “with strong growth recorded in 2012 and already during 2012 – 2013 ‘peak’ (2012 – 2013) season, with some hotels recording their highest occupancy rates since 2007.”

With tourism in Siem Reap hitting record highs already in 2013, “international hotels and operators are experiencing as much as a 20 per cent growth in occupancy rates based on the same period of the 2011 – 2012 peak season,” CBRE said.  

The company said the “vast majority of tourists staying in Siem Reap are either part of a package holiday or have booked through travel and tour operators, with this characteristic being markedly true for the Asian Market,” and as such, international hotel operators with increased exposure and presence with travel and tour operators have been able to directly convert the increased number of tourists into higher occupancy rates.  

However local or foreign-owned four and five star hotels, with no international operator, “have suffered from a lack of international exposure and have struggled to directly translate increased tourist numbers into higher occupancy rates.”

Because Siem Reap is the ‘Gateway to Angkor’ it means tourists visiting for two or three days spend much of their time outside their hotels, weakening food and beverage sales. Also the lack of many large corporations in Siem Reap means the market for corporate hospitality and events is very small in comparison to Phnom Penh. Siem Reap has an average hotel length of stay of 3.52 days, shorter than Phnom Penh, at 4.38 days.

The supply of hotel rooms in Phnom Penh is set to increase in the next few years with the completion of the Sokha Hotel on Chroy Changvar, and Naga 2 - Sokha is set to launch 500 rooms onto the market and Naga 2 is set to launch over 1,000, increasing the current luxury hotel supply by 70 per cent.

With supply increasing and the market becoming more competitive “it is expected that a number of established luxury hotels will undertake major refurbishment works in the near future,” CBRE said.

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