As the number of boutique hotels rises rapidly in Phnom Penh, hoteliers say they have seen their occupancy rates drop this year due to the increased offerings – as well as the economic downturn in Europe and terrorism scares in the region.

Nicole Rachle, manager of The 252 hotel in the capital’s Daun Penh commune, said the mid-range hotel’s average occupancy throughout the year has been down 40 per cent, as compared with last year.

She attributed the decline to the rapid growth in the capital’s total available hotel rooms, coupled with economic troubles in Europe that was reducing the number of Europeans travelling.

“It is all over Cambodia actually, other people we know with hotels are having the same issues,” Rachle said yesterday.

The falling occupancy rates come as tourist arrivals to the capital enjoy double-digit growth. Phnom Penh and the surrounding area saw 1.8 million tourist arrivals during the first 10 months of the year, up 23 per cent compared with the same period in 2014, according to Tourism Ministry data.

Yet the capital’s exponential growth of boutique hotels – largely frequented by foreign travellers – has served to spread out tourists across the increased number of hotels.

According to a recent report by the Bonna Realty Group, Phnom Penh has 317 hotels with 15,000 rooms as of the third quarter this year, with occupancy rates hovering around the 68 per cent for the first 11 months of 2015.

Carrol Sahaidak-Beaver, director of the Cambodia Hotel Association, said that while the number of tourists visiting the capital has increased, hotels are having to use creative marketing to attract these tourists.

“Hotels that are in the game for the long term, have strategies and good planning that will keep them in the market,” Sahaidak-Beaver said.

She added that hotels are having to keep their room rates low, which not only affects their revenues but also income sector-wide.

“It is important for hotels to ensure that their room price reflects the quality of what they are offering,” she said.

While tourism numbers may be up in the capital, there is a palpable change in clientele, according to hoteliers, who said less Europeans are in the mix as a result of the weakened euro.

They also attributed the decline to the August terrorist attack in Bangkok, the main transit hub for Cambodia-bound travellers, which resulted in many cancellations.

Ros Sovann, a receptionist at the Rambutan Resort in Boeung Keng Kang 1, said he suspects the European Union’s economic troubles are behind the hotel’s 30 per cent decrease in hotel reservations this year.

“Last year in this high season, we had a lot of guests every day, which left only two to three rooms open, but this year we have at least 10 left,” he said.

Duy Sophal, manager of the Anise Hotel, also in Boeung Keng Kang 1, said that while they have not seen a decline in occupancy rates, achieving 85 per cent occupancy as of November, there has been a distinct change in clientele.

“Last year we had a lot of tourists come in, but this year I have mostly NGO workers,” said Sophal. “Businesspeople have also increased, but tourists have decreased.”

According to Sophal, another smaller factor is the large number of construction sites in Phnom Penh, which affected occupancy rates in the last few months.

Additional reporting by Cheng Sokhorng