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Riding on domestic tourism to tide over slow international arrivals

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Cambodia has stunning beaches and cultural sites that have lacked promotion in the past. POST STAFF

Riding on domestic tourism to tide over slow international arrivals

Local tourists have been travelling inland whenever the opportunity allows for it in Cambodia. Though it isn’t enough to prop up the economy, domestic tourism has helped resuscitate some parts of industry

By default, the commune elections this weekend will likely cause a spurt in spot tourism as people travel home to cast their votes, thanks to a government order to employers to give workers time off.

“I have no doubt this will happen as Monday is a holiday. They will definitely enjoy the local [tourist] sites in their hometown,” said Thourn Sinan, chairman of Pacific Asia Travel Association (PATA) Cambodia chapter.

For Cambodia, it is the next long holiday after the weekends in May, which saw up to one million domestic trips, following the four-day Khmer New Year break.

Between January and April this year, Ministry of Tourism statistics showed, some 4.6 million Cambodians, 10 times more than foreigners, visited main tourist sites.

During the Khmer new year break, over five million domestic travellers criss-crossed the country, with Battambang, Kampong Cham and Banteay Meanchey holding the top three positions for the most visited provinces.

In that time, local tourists spent nearly $500 million or an average of $500 based on the expenditure of a family of five, the ministry said.

Since the pandemic, life has breathed into the tourism sector following the government’s decision to open up Cambodia to vaccinated travellers, though the complete return to pre-Covid tourist arrivals might only be in 2025.

In 2019, the tourism sector contributed 12.1 per cent to gross domestic product, Asian Development Bank stated. Last year, it plunged to 1.3 per cent.

Overall, the hotel sector has seen some improvement at around 20 per cent, said Din Somethearith, president of Cambodia Hotels Association.

“We are still struggling though. As you know hotels need to secure 50 per cent occupancy to survive, to sustain business. If you can’t secure 50 per cent occupancy, you are running at a loss. Therefore, we continue to struggle although the trend is positive,” he said.

International tourism in this region remains sluggish as external headwinds (Russia-Ukraine war, inflation, fuel surcharge) continue to weigh on the industry, and more in the coming months.

For the moment, industry players are banking on revenge booking in domestic and regional markets to sustain but this optimism is measured due to competition.

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Sources: World Tourism Organization (UNWTO) and World Travel and Tourism Council (WTTC)

Cambodia falls behind Thailand and Vietnam in terms of recovery, Somethearith pointed out.

Thailand, which recorded the highest number of tourists in Asia before Covid-19, got nearly 40 million visitors a year then. “No one has more tourist arrivals than Thailand,” he remarked.

The Thais also benefit from local tourists including trips by organisations, schools and businesses, which push up hotel occupancy.

“[But] Cambodia is a little different. Although we try to attract local tourists, our standard of living and gross domestic product [GDP] is lower compared to Thailand.

“They have more money than us, where GDP is higher, and it is more populated. So their local economy is robust,” Somethearith said.

In Cambodia, tourism operators “reap” the benefits of domestic tourism on special festivals and weekends, which is “not enough”.

“My hotel or other hotels that depend on travellers can’t attract locals because our rates are high for middle class Cambodians.

“If they are rich, they book into luxury hotels while middle income visitors go for more affordable ones,” said the founder and chairman of four-star Frangipani Royal Palace Hotel in Phnom Penh and Phumi Phka Trokoun Resort in Kandal province.

Somethearith explained that many domestic travellers go for “cheaper hotels” even though they “drive luxury cars” and “eat at expensive restaurants” because they want to save on the accommodation.

“They try to reduce spending on accommodation as they’d probably stay for one night and not spend [too much] time in a room. They also have cars, so they would explore and eat outside,” he said, describing the characteristics of local tourists.

He also drew a correlation with Southeast Asians’ spending power which has some influence on their choice of holiday destinations.

Comparatively, Europeans, who possess stronger currencies, tend to splurge on their holidays whereas Southeast Asians would pick a country where the cost of living is lower, so they get more for their money.

“We live in Southeast Asia, normally everything is cheap except in Singapore. You go to Thailand, Laos and Vietnam, it is cheaper than Cambodia. The rest – Malaysia, Indonesia and Philippines are similar to Cambodia.

“That is why when visitors come to Cambodia, they don’t really want to spend. I think most of them come for business reasons rather than vacations. In addition, many in Asean are still worried about Covid-19 although Cambodia is nearly free of it. We have allowed the removal of masks in open areas,” Somethearith said.

‘Ticked those boxes’

It is undeniable that the quantity of domestic tourists is not sufficient to meet the demand of local tourism suppliers but the boom in domestic tourism has pushed business owners to become creative.

“They are creating new, unique, foreign-inspired tourism products and services, particularly in provinces that were least popular with locals prior to the pandemic,” said Chhay Sivlin, president of Cambodia Association of Travel Agents.

This has encouraged international tourists to consider spending longer holidays in Cambodia as there are more activities and unique products to explore. “Incidentally, it continues to give tourism professionals hope to return to the industry despite a two-year hiatus,” she told The Post.

Sivlin said since the reopening of Cambodia’s borders last November, 45 to 50 per cent of operators have resumed partial operation.

“Some are waiting for a bigger flow of incoming tourists and financial support from the government while others are considering whether to make a comeback,” Sivlin commented.

In the meantime, the absence of international tourists especially Chinese tourists has led to a reliance on ASEAN travellers to drive recovery.

“This is the most critical impact because the Chinese used to own a big share of the market. Until now we haven’t seen any positive news from China,” Sinan of PATA said.

As a result, Southeast Asia has become an important source market for Cambodia and ASEAN. To be sure, recovery in regional tourism is evident, particularly when juxtaposed with 2021.

Hannah Pearson, Asia travel analyst and speaker, said the industry is seeing “thousand percent” year-on-year increases because 2021 was a tough year for the tourism industry regionally. “We are starting from a very low base indeed.”

However, she stressed, it is a “very mixed” picture if the comparison on recovery is made between 2022 and 2019.

“On the one hand, we saw that in Cambodia, domestic travel exceeded 2019 levels over the Khmer New Year period.

“But if we look at Singapore’s Changi Airport, one of the key airports for the region, it only almost reached 40 per cent of its pre-pandemic capacity in April. There is still a long road to recovery ahead,” she told The Post via email.

She noted that there was pent-up demand across Southeast Asia, with Malaysia and Singapore’s passport offices facing “huge volumes” of applications and renewals with the hope of travelling abroad.

“When it comes to outbound travel, the guiding principle which many travellers in the region are using to choose a holiday destination is convenience – do I need to take a test to get in? Do I need to quarantine? How easy is it to fly there? Do I have tedious paperwork to fill in? Does the vaccination I have actually allow me to travel to the country I want to?” she shared.

Owing to those questions, Southeast Asia was not a “destination in general” which “ticked those boxes” in the first quarter of 2022.

“But, as April and May have progressed, it has become easier and now makes short-haul, intra-ASEAN travel more attractive than previously, which means that ASEAN markets in turn become valuable source markets once again,” she said.

Ambitious targets

When it comes to Cambodia, Siem Reap, home of the 12th century Angkor Wat temple complex, absorbs 58 per cent of international tourists, although the country is endowed with “stunning coastal sites, cultural and heritage, and eco-tourism and conservation sites”.

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In future years, tourist numbers to Cambodia could shrink unless new products are developed in Siem Reap to attract repeat visitors, ADB said, quoting commentators.

In its “Community-Based Tourism COVID-19 Recovery Project: Grant Assistance” report in January 2022, it wrote that “over-reliance” on Angkor Wat had seen limited investment in policy or regulation development, human resources and infrastructure in other provinces and cities.

ADB also identified five factors that contributed to the “lack of diversity” in product offerings and visitor experience. Two of which speak about the inadequacies in conservation and protection of natural and cultural heritage assets, and limited marketing on Cambodia’s other provinces and tourist attractions.

Due to these challenges as well as the lack of modern and well-maintained airports, ports, roads, sanitation and solid waste management facilities, Cambodia’s ability to stand out against competition in the region is challenged.

The World Travel and Tourism Competitiveness Index in 2019 ranked Cambodia 98 out of 140 countries, while Thailand and Vietnam ranked 31 and 63, respectively. It was also among the lowest ranking in the region.

For the record though, post Covid-19 efforts are being made by the government, one of them being the recently completed $150 million road infrastructure refurbishment project in Siem Reap.

The government also launched a three-phase National Tourism Recovery Roadmap (2021-2025) and the Siem Reap Provincial Tourism Development Master Plan (2021-2035).

Pointing to the Siem Reap masterplan, ADB noted that it had “ambitious” targets of attracting 10.9 million domestic tourists by 2023 and 7.5 million international tourists by 2025.

The masterplan aimed at creating 940,000 jobs and generating an additional $6 billion in revenue for the province’s economy.

Siem Reap governor Tea Siha acknowledged that tourist numbers have dropped significantly but hoped that the recovery plans prescribed in the policy documents would improve the industry.

He believed that the new international-standard Siem Reap airport, the rejuvenation of Siem Reap’s infrastructure as well as a peaceful and stable government will serve as a catalyst to bring back tourism to pre-Covid-19 days.

For the first four months of 2022, Siem Reap received a total of 92,205 national and international tourists, an increase of 672.40 per cent compared to the same period in 2021, which was only 119,783.

Under current circumstances, Siha felt the situation is changing for the better for the province as rising tourist numbers are reinstating jobs, improving livelihoods and helping to reduce poverty.

“Provincial authorities have been expanding and strengthening tourism services through the construction of infrastructure facilities, electricity supply, clean water, public lighting, and security to make sure tourists feel safe when visiting Siem Reap,” he said.

‘Don’t lose focus’

The anticipation for travel to return to normal remains uncertain, particularly with global challenges like inflation and fuel prices likely to impact consumer sentiments going forward.

Closer to home, the Cambodian government, aware of external challenges, has set a target of one million foreign tourists and eight million domestic trips by the end of this year, with “robust” recovery projected from August.

It continues to bank on domestic trips, with 11 million trips anticipated by 2023 while seven million international tourists are expected by 2025.

For now, it’s a numbers game. Domestic travels would be the most important market, not just for Cambodia but region-wide, Pearson, founder of Kuala Lumpur-based tourism strategy and representation firm Pear Anderson, mentioned.

“As an increasing number of countries throw open their borders to tourism worldwide, travellers have more options for where they can holiday. [Thus] destinations must work hard to raise and keep awareness of their destination,” she said.

The government must accordingly ensure that support for the tourism sector continues throughout 2022, and come up with innovative schemes to incentivise domestic tourism.

“At the same time, the private sector must also work hard to not lose their focus on the domestic market, and be pragmatic that the volume of inbound travellers will take months to accelerate,” Pearson said.

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