More hotels, more problems

As the construction sector continues seeing a dramatic surge with investment, capping at a record $8.53 billion last year, the boom has caused ripple effects within the hospitality sector, most prominently for boutique hotels across the Kingdom.

Din Somethearith, president of the Cambodia Hotel Association (CHA) told Post Property earlier this week, “Hotel marketing plans are currently competitive, especially boutique hotels that are now facing radical challenges. There are just too many boutique hotels currently, and some of them in Phnom Penh and Siem Reap are gradually closing down.”

Despite claims that small hotels and several boutique hotels are being overshadowed by larger, more renowned hotels, Somethearith could not confirm the exact figure, only saying: “Due to a large number of enormous hotels, small ones cannot compete. It’s like we do handmade crafts while they are like factories, so in economic sector the small ones can’t beat the big guns.”

While at first glance the hotel market is seemingly dandy thanks to the increase in the number of tourists – with 5.7 million entering Cambodia last year compared to 5.4 million in 2015 – and the simultaneous increase of the number of hotels, a deeper look reveals some fractures.

As pointed out by Em Bunny, general manager of the 3-star Cardamom Hotel in Phnom Penh said: “When the elites invest in apartments or condos and they want to generate quick profits, they change the direction by renting out those projects in short or medium term at a lower price than the cost of staying at a hotel. This, in turn, affects the hospitality sector.”

“Many international brand hotels and higher-starred hotels are entering the market, such as Rosewood and Marriot,” said Bunny.

Although the clientele for international hotels greatly differs from those opting to stay in 3-star and lower-grade hotels, “existing local 4-or 5-star hotels may face challenges, consequently leading to the lowering of their prices, which will then spread the smaller hotels,” he noted.