Cambodia attracted 4.5 million foreign visitors over the course of 2014, an increase of 5.9 percent since last year. The five year projection, according to an announcement from Prime Minister Hun Sen this year, will see 7.5 million annual inbound tourists come to the Kingdom by 2020. Of last year’s visitors, most were arriving from fairly close to home: about 20 percent came from Vietnam, followed by China at around 16 percent and Laos at 10 percent. With the ASEAN integration solidifying, this trend of inter-Asian tourism seems set to continue.
While the Kingdom clearly has its eyes set on maximising tourism with few qualifications, David King, General Manager at Trails of Indochina Cambodia, questions whether these increased visitor statistics are a valid indicator of the sector’s overall health in regards to the interests of locally based tourism and hospitalities vendors, and the Cambodian tourism economy as a whole.
The recent boom in Asian mass tourism is misleading in terms of the industry’s overall development, suggests King, because Inter-Asian tourism agencies are creating their own large scale tourism infrastructure inside Cambodia. For instance, Chinese tour groups generally take Chinese owned and operated chartered tours, stay at Chinese owned or endorsed hotels, eat at Chinese restaurants, and drink and gamble at Chinese endorsed casinos. It is not simply a Chinese trend either; the same can be said about Vietnamese and Korean tourism operators, and other regional tourism vendors from various nearby nations.
Ultimately, this phenomenon means that the local economy doesn’t benefit to the same extent it does with a more independent traveller: “Sometimes these monopolies suck resources away from the local/traditional markets, while keeping money in the foreign tour operator’s pockets,” says King. “Mass tourism statistics are then skewed, making it look like there’s all these tourists arriving in Cambodia and directly contributing to the local economy when, in reality, their spending is going to just a few foreign national businesses – and for the most part being siphoned out of the local economy.”
While King sees this trend clearly in Siem Reap, his home and place of work, he stresses it is far from unique—it happens in developing tourism destinations all around Asia. These Asian tour operators are able to offer extremely cheap package deals to their guests because of the economies of scale they achieve by monopolising the market.
The business risk, if this trend continues, is that Siem Reap could become known internationally as a ”cheap” destination, says King. This could result in a general deflation of the Cambodian tourism market as the bar rates on hotels and services decrease across board as competition increases to compete with the increased demand from the lower end of the market, dominated by these mass tourism vendors. King suggests this may dwarf traditional tourism markets in the near future.
Second to this, says King, suppliers will be tempted to sell out to unscrupulous operators who can guarantee big numbers over quality-assured higher spending clients. However, notes King, it remains to be seen how and when the market will reach an equilibrium between volume and quality, while trying to avoid a catastrophic devaluation of the market as a whole.
It may not be all negative for independent tourism vendors in Cambodia though. King adds that, currently, this mass tourism trend is actually keeping prices higher for non-affiliated suppliers because they can essentially ignore that sector of the market, the lower end. Non-affiliated vendors don’t need to provide services at low prices in order to keep Chinese and other Asian tour group customers happy because this market is well segregated from the higher end tourist market. This means independent vendors are free to raise prices higher for US, EU and other more affluent tourists as they are unlikely to want to join the same markets as the regional travellers. Yet, the problem remains: the reverse is also true.
And of course, adds King, all of this needs to be taken in the context of the broader economic climate of shifting markets, devaluing currencies, fuel prices and regional stability, as these are still the key economic factors influencing Cambodian tourism growth now and in the future.
Regardless, King suggests that those taking Cambodian tourism growth statistics at first glance need to think again.