Hosting Disaster


Tourism in Trouble as Growth takes a Holiday

By An Sithav, Economics Today

As the worsening financial meltdown leads many to opt for a static ‘staycation’ rather than a holiday, tourism, a pillar of Cambodia’s economy, is crumbling.

After growth of 18.5 percent in 2007 and around 5.5 percent last year, Ministry of Tourism figures show that the number of international visitor arrivals to Cambodia has been decreasing since October, with a 2 percent loss in January year-on-year.

Though the numbers seem in-significant, a small contraction could have serious effects, with a 3 percent annual loss translating to 63,000 less tourists, a US$50 million reduction in revenue and 10,000 lost jobs.

“Tourism numbers are down with Siem Reap being hit harder than Phnom Penh,” said Mark Ellison, managing director of Asia Adventures. “Some hoteliers in Siem Reap are reporting occupancy levels of only 25 to 30 percent in what is still the high season, and many travel agents are reporting that the low season has come early and forward or series bookings have dropped markedly. What bookings there are tend to be more last minute, rather than the usual months in advance.”

Regional Factors

Incredibly, even in the face of such damning statistics, some claimed that the tourism sector still could stabilize or even grow in the short term if obstacles are removed.

Ang Kim Eng, the current president of the Cambodian Association of Travel Agents (CATA), cited the dearth of direct flights to Cambodia as a major constraint. “Making more direct flights to Cambodia is important,” he said.

Ho Vandy, chairman of CATA’s steering committee, told Economics Today that the factors hampering tourism are complex and will take time to resolve. “I agree that limited direct flights to Cambodia are a problem…but we need more time to do this,” he said, suggesting that resolving a smoldering border dispute with neighboring Thailand would better help the sector in the short term, especially given the large number of visitors who arrive in Cambodia via Thailand. “If it is solved, the number of tourists could increase, but the Cambodian government has to negotiate with the Thai government about tourism connections.”

Director of the National Association of Tourism Enterprises Moeung Sonn agreed that solving the Thai dispute would help increase the number of tourists but said better air links are also a must. “Cambodia has a small amount of direct flights from [elsewhere in] the world and Asia compared to neighboring countries such as Vietnam and Laos,” he said.

No Substitutes

Replacing visitors from the re-cession ravaged EU and US, who are now staying away in droves, is a priority, said Ho Vandy, adding that “to attract the tourists from ASEAN countries is important.” He claimed that increasing numbers of tourists from Asia could provide vital support to the sector. Many middle-to high-income Asian families who would previously have traveled to the US or EU will now choose cheaper Cambodia as the global economic crisis bites, he argued.

“I absolutely agree with this,” stated Ang Kim Eng, predicting greater thrift would benefit developing countries across Asia, including Cambodia. He advised tourism businesses to reduce prices in order to cash in on the coming bonanza.

According to the Ministry of Tourism, Chinese tourists should help keep the wolves at bay. There is even an official plan to double the number of Chinese visitors by the end of 2009. “We do it step-by-step,” Tourism Minister Dr. Thong Khon said late last year.

“We expect that a lot of Chinese tourists will visit Cambodia soon,” he added, claiming that advertisements on the CCTV1 television in China would attract more Chinese.

“Through this plan, we expect that big Chinese airline companies will increase their activity,” Thong Khon said, noting that there are already four air routes between Cambodia and China, from Beijing, Hong Kong, Shanghai and Guangzhou.

Thong Khon cited China, a market savaged by stalled exports and now at risk of deflation that will cause further economic stagnation, as a growing tourism market.

Mark Ellison was ambivalent about claims the Asian market could replace Western visitors. “Asian countries are also suffering from the economic downturn,” he noted. “There could be some benefit as people in Asian countries choose to travel regionally rather than internationally. The biggest single drop in visitor numbers to Cambodia is from an Asian country, South Korea. However, there has been an increase in visitors from Vietnam. Thus, the chances in the short term of Asian visitors making up for lost international visitors in terms of visitor numbers is slim, and in terms of revenue generated unlikely as international tourists tend to spend more per person.”

Certainly the beleaguered Koreans, who account for around 12.5 percent of the tourism sector, are taking less holidays, with Korean arrivals down by around 20 percent in 2008 year-on-year, according to Ministry of Tourism figures.

Even the staunchly positive Moeung Sonn admitted that “because the Korean currency has depreciated recently, it makes Korean have to spend more than be-fore…They just visit their own country.”


While the short term prospects are undeniably grim, the global downturn may be the perfect opportunity for Cambodia to consolidate and innovate.

“It could be argued that the current crisis should be seen as an opportunity rather than a problem,” said Ellison. “Tourism in Cambodia has grown exponentially over the past 5-6 years, and careful planning, strategic thinking, professional management, quality control etcetera has not always been incorporated, as there was a mad dash to provide for these growing numbers of visitors irrespective of the consequences. Whilst a slow year or two may be painful for some in the industry in the short term, in the long term it could prove beneficial. The advantage to the tourism industry as a whole of a slow year or two is it will allow time for decision makers, strategic thinkers and planners to re-evaluate the direction of tourism in Cambodia, focus on what its current and potential strengths are, and develop a realistic tourism development and marketing master plan. As much of a cliché as it is, if the tourism industry makes effective use of this slow period, the tourism industry as a whole could emerge from it stronger and with a more clear future direction.”

Peter Bolster, chief technical advisor for private sector promotion for GTZ, an organization backed by the German government, hopes that Cambodia will move towards tourists staying longer, and taking in more than just Siem Reap and the south coast.

“Cambodia has to build more infrastructures and diversify the tourist destinations and promotion,” he told Economics Today. A partnership between the public and private sectors is needed to enable Cambodian tourism to progress, he claimed.

“Nowhere can avoid from the global economic downturn,” Bolster said, so Cambodia should concentrate on improving security, education, social infrastructure and transport links to make more destinations accessible. A more diversified tourism sector spread across the nation would help more tourist dollars reach the poor, he added. “We have to intensify marketing and make them stay longer.”

The recent Kingdom of Wonder international advertising campaign is a good start, he said, and should be followed by greater attention paid to alternative destinations that are often overlooked.

A GTZ project to promote at-tractions in Kompong Thom province, home to the ancient pre-Angkorian city of Sambo Prei Kuh, ensures that local people benefit from tourists, Bolster said, as op-posed to the Siem Reap industry that mainly benefits big business.

“Definitely, the poor will benefit from GTZ’s project but we have to upgrade the local restaurants, food, security guards and handicrafts,” he explained. Organizing tuk-tuks, taxi-drivers, and ensuring that rustic guesthouses are suitable for tourists, especially given that conveniences such as toilets, showers and running water are unfamiliar in rural Cambodia, will be a challenge, he warned.

But even pro-poor community tourism has “minimal” potential to replace recent tourism losses, said Mark Ellison. “At the end of the day there are just less people traveling. There is some evidence to suggest that niche markets, which eco-tourism can be classed as, may withstand the downturn better than traditional ‘sightseeing’ or ‘beach-lying’ tourism. However, community based and eco-tourism is still very much in its early days in Cambodia: not a lot of travelers are aware of the possibilities, and it certainly cannot yet compete with the offerings of its neighbors; Vietnam, Laos and Thailand.”

The nascent Cambodian ecotourism sector so far lacks the high-priced luxury destinations that are the real earners, Ellison said.

“[I]n terms of the tourism dollar, for example the revenue generated by 5 people spending 4 days trekking in remote forests, sleeping in hammocks and US$5 homestays, and eating US$3 meals—with little opportunity to spend much else— is not going to replace 20 people paying US$60 for a 4 day Angkor Wat pass, staying in 5 star US$250 plus a night hotels, eating US$25 plus meals, and spending hundreds of dollars on high-end quality souvenirs in the plethora of Siem Reap stores.”

— Additional reporting by Sam Campbell

Tourism Stimulus

The government has revealed a five-point strategy to support the tourism industry consisting of:

1- Facilitating travel and transport, especially through cross-border agreements

2- Reducing the price of package tour, through a public-private partnership to identify products and services and bringing leisure prices down

3- Proposing quality tourism product by continuing to improve cultural tourism and eco-tourism, enhance food safety and hygiene, and maintain security and social order

4- Diversifying the country’s tourism markets by promoting visits from ASEAN nationals, Indian, Cambodian expatriates, as well as promoting domestic tourism

5- Conducting a marketing campaign, especially through the Cambodia, Kingdom of Wonder campaign, and tourism representatives delegations abroad to promote the country.


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