Hotel competition heats up

The competitive accommodation climate is showing no signs of cooling as new figures from Bonna Realty Group reveal the number of hotel rooms in Phnom Penh and Siem Reap continue to rise, with the increased supply placing renewed financial pressure on many hotels.

According to a recent hotel study by the real estate firm, the number of two-star accommodation premises in Phnom Penh increased 23 percent year-on-year when compared to June last year. Overall, the number of hotels in the city jumped from 355 to 437. The data revealed that 4-star hotels equate to supply of 6,158 rooms available in Phnom Penh while 5-star hotels occupy 2,830 rooms.

As for the hotel situation in Siem Reap, 3-star hotels increased from 5,987 rooms from last June to 6,709 rooms as of June 2017. For hotels deemed to be 4-star, rooms in this category jumped from 8,132 rooms to 8,962 year-on-year. Meanwhile, 5-star hotels witnessed a decrease in room numbers, dipping from 6,699 last year to 6,131.

Pen Sokea, director of evaluation at Bonna Realty Group, stated that the number of hotels in Phnom Penh was increasing at a significant rate when compared to Siem Reap. Despite the uptick in accommodation, Sokea said investors were still going ahead with new hotel projects due to tourist demand.

“There are a lot of risks involved from an investor stand point, and investing in the hotel industry doesn’t yield immediate benefits,” Sokea cautioned.

Ho Vandy, deputy secretary-general of Cambodia’s National Tourism Alliance, told Post Property that competition in the Kingdom’s hotel market is at an all time high due to more supply coming onto the market. As a result, Vandy said a lot of the smaller boutique hotels in Siem Reap and Phnom Penh were struggling to make a profit, with some having to resort to closing their doors.

“What is also concerning is that some wealthy hotel owners are dishing out rooms at such low and unfair rates, making competition in the market lack transparency,” Vandy said.

He continued, “Lack of transparency in a competitive atmosphere and grossly discounted rooms have become a huge challenge that associated institutions need to pay attention to.”

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