With more visitors to Siem Reap coming from within the region, the industry must adapt or risk losing out
In Siem Reap last year, the hopeful idea ran that there was no such thing as high season and low season anymore. Yet in 2015 hoteliers across the board appear to be in crisis as empty rooms and diminishing balance sheets define their days, despite the fact that the number of tourists coming to the Kingdom continues to rise.
According to David King, general manager of Trails of Indochina, the current dearth of customers is a sign of a fundamental change in the nature of the market. He also says that it’s going to get worse and that businesses need to adapt, or die, even in the face of predicted continuing increases in the number of tourists.
“Record numbers do not equal record profits,” said King, who has worked in the region eight years. “We’re at a turning point where the traditional ‘Western’ markets are being sidelined in favour of local and regional markets. We’re still trying to figure a lot of things out, but we need to get used to smaller margins than before, and there’s going to be lot of attrition.”
The biggest changes come from the rising numbers of Chinese visitors to Cambodia. Representing 14.3 per cent of the market for the first quarter of 2015, their numbers mask what is happening elsewhere.
While the overall number of visitors from January to March this year rose by 4.2 per cent against the same period in 2014, the number of Chinese visitors increased by 15 per cent — 25.8 per cent if you look at March alone.
Behind those numbers, once you take Chinese and Vietnamese visitors out of the equation, the number of visitors dropped by 2.2 per cent. And King predicts more of the same as austerity in Europe, falling house prices in Australia, and the falling Euro and Australian dollar continue to have their effects. Even the currently buoyant American market, up 11.3 per cent against last year’s first quarter, is not immune as presidential elections — due in 2016 — tend to have a chilling effect on financial decision-making, he said.
“I’m seeing people reporting revenue drops of 15 to 30 per cent,” said King. “There is a lot more going on.”
The owner of one popular, high-end hotel, who wished to remain anonymous, confirmed the trend in his operation.
“Our revenue is down 45 per cent on the same time last year, despite strong reputation management. I can’t imagine what it is like for those with less experience.”
Problems include the number of hotels opening - while Siem Reap offered 9,200 room nights in 2011, as of May 2015 that number has doubled to more than 18,000 – along with a lack of coherent planning, quality control and strategic management across the industry and from government.
“Most cities realise that you need a balanced mix of luxury, mid-market, and backpacker lodging,” he said. “In this city, we have nothing close to that, and definitely no quality control.”
But there could be a silver lining to the shifting clouds.
The Chinese market has traditionally been regarded as sealed off from local industry as “canned” shopping tours siphon off revenue and shut out not-affiliated suppliers.
However, Kurt Xu Jiantian, a tourism app developer, believes that’s changing. He says the Chinese government actually banned organised shopping tours in 2013, and that operators who continue to run them are taking big risks.
“They’re gambling, and they’re on borrowed time,” he said. Xu Jiantian is already working to help businesses bridge the gap between local suppliers – hotels, restaurants and shops - and the Chinese market through Wow!, a mobile-based platform that allows businesses to market directly to arriving Chinese visitors and negotiate language barriers.
According to Xu Jiantian, as of July last year more than 50 per cent of Chinese visitors to Cambodia were actually independent travellers, contrary to many perceptions, and it’s not always easy for them when they arrive.
“It’s difficult for them when they get here. Some of them may speak English, but often they can’t read it. If they go to a restaurant, they literally can’t read the menu. It’s very isolating.”
Businesses can do more to reach out to that market, though Xu Jiantian advises against advertising in China. “There’s no cost-effectiveness in it. You need to look at platforms like WeChat and social media instead, and sites Mafengwo and qyer.com
They’re similar to TripAdvisor, but based on blogs rather than individual reviews.”
Sara Walliman, from training restaurant Haven, has seen the benefits of a social media presence in China.
“We started getting a lot of Chinese guests, and one day one showed us on their smartphone that Haven was quite high up on a Chinese version of TripAdvisor,” Walliman said. “And ever since we have had a steady flow of great and very kind Chinese travellers. I think they really appreciate the extra help we provide to help them through the language barriers.”
For King, these travellers are the key to the Siem Reap tourist industry’s future success. “The old markets are dying – in the case of the baby boomers, literally so,” he said. “The future is Asia.”
“The Chinese market is not yet fully developed, and they still tend to travel en masse, much like northern Europeans used to travel to Spain, and Americans to Mexico,” King said. “But that mass market will start to break up. How we respond to that is key.”