3-star hotels squeezed amid #Cambodia growth

An Influx of foreign investment into hotels in Cambodia is putting pressure on the country’s three-star hotel segment, with one long-time Thai operator having been forced to cut room rates in response to the competition.

The country’s strong economic growth over many years is unlikely to provide much benefit to Juliana Hotel Phnom Penh, founded by Sakchai Tangkoblap in 1993.

“The situation of the hotel business today is different from the past mainly because of new competitors who are five star and budget hotels,’ he said. “Also, we are facing new competitors from high-end condominium projects due the condominium buyers offering daily rentals to tourists.”

Compounding the problem, he said, was the fact that the high-end condominium segment in Phnom Penh was heading towards oversupply. 

The hotel sector in Cambodia has been dominated by high-end and low-end hotels. The all-important Chinese outbound tourist market has a preference for low-end hotels, with prices ranging from US$35 (Bt1,227) per night for a stay in a low-end property to $80 for medium-priced hotel.

The European Union economic slowdown resulted in more tourists from Asia opting to travel to the EU, and such travelers had typically made up the bulk of Juliana Hotel’s guests. 

As a result the hotel’s occupancy rate is low at present.

Sakchai said even though his hotel had a good reputation for its Chinese and European restaurants, that was not enough to survive.

He said the hotel needed to adjust to be better positioned to tap Asian travelers. especially Chinese.

“Today, Asian tourists have purchasing power and we want to tap them. This means we have to cut room rates by 40-50 per cent. 

“We can not be a high-end hotel because the hotel’s location does not support that.

“The locations of upper grade hotels in Cambodia should be near the rivers but Juliana Hotel is on an alley,” he said.

The lowest room rates for hotels in tourism magnet Siem Reap are lower than those in Phnom Penh, and Asian visitors have complained about the price gap between the two destination, he added.

However, the hotel business in Cambodia has room to grow due to the country welcoming investment.

, xxxx while the flow of tourists and business-people is showing no sign of slowing.Sakchai recommends that Thai investors keen on operating a hotel in Cambodia should focus on the upper or lower segments, but added that the lower segment has more potential.

He is considering launching a low to medium-end condominium project in Phnom Penh, where the room size would be around 35 square metres. This segment is in demand for people willing to spend between $1,500 and $1,800 per square metre.

With Phnom Penh’s traffic problem,He said condominiums in the capital have become popular.

Source: The Nations

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