Long considered off-the-beaten-track by luxury tourists and hotels, Cambodia has quickly come into its own in the past five years. As large hotels go up slowly, new boutique hotels are constantly opening in the capital city of Phnom Penh as well as Siem Reap, the gateway to Angkor Wat.
On July 12, Cambodia and Thailand announced their “Two Kingdoms, One Destination” tourism agreement facilitating a single visa for both countries will effectively integrate Cambodia’s tourism market with that of Thailand. This will facilitate increased tourism to Cambodia by Chinese tourists, who are now spending nearly $500 billion on their travels abroad, more than any other outbound market.
Big players moving in
Demand for high-end accommodation is growing apace, and international investors are making moves.
“The Cambodia luxury hotel market continues to enjoy notable expansion, driven by increasing international tourist arrivals and growing domestic prosperity,” Chris Hobden, surveyor at CBRE Cambodia told Hotel Management.
This February, Japan-based Hotel Okura signed an agreement to manage The Okura Prestige Phnom Penh, a 45-story hotel that will open its doors in 2019 as part of The Bay, a $500-million mixed-used development at the confluence of the Mekong and Tonle Sap rivers.
In 2014 Shangri-La International Hotel Management signed a memorandum of understanding with a Cambodian partner to launch the kingdom’s first Shangri-La Hotel in Phnom Penh, also slated for 2019.
In the nearer future, this year Rosewood Hotels & Resorts will open a 148-room ultra-luxury hotel on the top 14 floors of Vattanac Capital Tower in the heart of Phnom Penh’s rapidly evolving CBD.
Asia driving growth
Cambodia’s hospitality industry appears to be in the eye of a perfect storm, with 4.5 million international arrivals in 2014, compared with 2.5 million in 2010. A pro-investment government, improving transport infrastructure, rapidly growing tourism and the year-end launch of the ASEAN Economic Community (AEC) also bode well. The AEC will create a single market consisting of the 10 nations of Southeast Asia, which will boost intraregional travel as well as cross-border investment.
For the time being, the East Asian powerhouses of China, Japan and South Korea are still vital to Cambodia’s hospitality sector. According to statistics from Cambodia’s Ministry of Tourism, 73 percent of international arrivals to the kingdom in Q1 2015 were from the Asia Pacific region. Of those nearly 1 million visitors, 226,000 were from neighboring Vietnam, 187,000 were from China and 160,000 were from South Korea. Many analysts predict the number of Chinese visitors to Cambodia will double by or before 2020.
This February during Chinese New Year, CDF Mall, the world’s largest Chinese-invested duty free shopping complex, opened its first location in Cambodia in Siem Reap. The project targets Chinese tourists visiting Angkor Wat.
Investment looks to the coast
Hotel investment is moving beyond Siem Reap and Phnom Penh, with the coastal city of Sihanoukville a rising star, due to its secluded tropical islands nearby. Its airport will launch international services this year, with its first international flight arriving from Singapore.
Song Saa Private Island, Cambodia’s first luxury island hotel and resort destination continues to receive widespread recognition. Alila Villas Koh Russey, Cambodia’s first internationally branded resort destination, to be operated by Alila Hotels and Resorts, is set to open early next year.
‘’With 2015 set to witness the launch of direct international flights to Sihanoukville, Cambodia’s main coastal city and gateway to the country’s islands, we expect both the hotel industry and resort property market to enjoy increased occupancy rates and, in turn, an uplift in capital values,” CBRE’s Hobden said.