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Updated: Feb 16


Following the organization of the Asean Tourism Forum from January 16 to 22, 2022, it is time to review the main tourism development issues for Cambodia.

Will Cambodian tourism get stronger from these difficult times? There are a few encouraging signs that the Kingdom could be a top winner for South East Asia tourism recovery. One of the most recent remarkable assets is surely a strong collaboration between Ministry of Tourism (MOT), governmental agencies and the private sector to define Cambodian tourism strategy.


Nevertheless, some issues and challenges remain and have to be resolved to ensure sustainable development.


In this new insight, b. Consulting & All Dreams Cambodia experts analyzed the following topics :

  • One of the highest vaccination rates in the world

  • Sustained investments despite a historic crisis

  • Cambodia must become a standalone destination

  • Private and public initiatives to boost tourism promotion

  • The incredible boom of domestic tourism


 
Valuable good crisis management

The Cambodian government's management of the crisis is certainly one of the main assets in the race to reopen to tourists.


source : ourworldindata.org


The Royal Government has conducted a voluntary and effective vaccination campaign. According to the Khmer Times newspaper, 91% of the population is now fully vaccinated (85% according to international institutes)*, allowing free movement throughout the country.


In addition, the continued operation of Phnom Penh airport even at the peak of the health crisis and the recent reopening of Siem Reap airport (definitively reopening on December 15, 2021) are encouraging signs of the country's willingness to open up.

At last, the recent decisions to ease the entry conditions makes Cambodia one the easiest destinations to travel. This strategy is much clearer than those of neighboring countries.

The Asian Tourism Forum, held in Sihanoukville, is a perfect example as it is one of the first regional events to be organized in person.


 
Steady public & private investments in infrastructure despite Covid 19

Many successful projects for transportation infrastructure upgrading throughout the country have been supported since 2020, showing the authorities' will to be ready for future challenges. In a very uncertain Covid-19 time, decisions to invest in existing or new infrastructure were made, to cite a few: the ambitious renovation of Siem Reap's 38 roads, the development of bicycle paths along the river, the expansion of national and main roads serving the country's major cities, the construction project of Sen Monorom (Mondulkiri) airport, the development of the Kampot deep water port…


Siem Reap, new roads project


In this momentum, other projects are being studied for the coming years such as the upgrading of the existing train routes (PP/ Sihanoukville - PP/ Poipet) into express railways and the opening of new railroads especially towards Siem Reap.

Small downside: in several provinces, road construction projects have been delayed and travel times with the capital remain long. In terms of national transportation, Cambodia has to catch up to neighboring countries like Thailand (roads and domestics flights) or Vietnam (domestics flights).


In addition, the construction of the 2 new international airports in the regions of Phnom Penh and Siem Reap are well advanced, Dara Sakor is already open, which suggests an increase in passenger traffic.


New Phnom Penh Airport project


The number of airports under construction necessarily implies the creation of a leading national company providing long-haul flights. It will take many more months of work to obtain IATA certifications and compliance before it is put into service. However, Cambodia is still dependent on international companies serving the country and still has no direct lines.

Meanwhile, Singapore Airlines, Asiana & Korean Air, Thai Airways & Bangkok Airways, Lanmei Airlines, Eva Air,... to name but a few of the airlines that serve the Kingdom which has just taken over the presidency of Asean for one year.


Continuous private investment in hotels has enabled a considerable improvement in Cambodian hosting offer. The recent arrival of international brands in Phnom Penh such as Marriott, Novotel, Hyatt, Ibis Budget, M Gallery, completes an already wide choice for tourists, from dormitories to all-inclusive luxury resorts. Chinese investment in Sihanoukville is just as remarkable. Surely a strong sign of international hospitality groups' interest to develop their portfolio in Cambodia.

In fine, these recent additions to the existing hotel accommodations will launch a new touristic image with upgraded international standards.


Click on the image to access the document


 
Towards a standalone destination

Today, as the return of international tourists is still in its infancy, it seems that the first requests are for an average stay of 10 days compared to a previous 4.5 days in 2017. An encouraging sign!?


The ecotourism development in addition to urban tourism is the winning package.


Wild landscapes, authentic rural way of life, white sandy beaches on preserved islands, cultural heritage sites... Beyond the iconic Angkor temples, "the little country with the big heart" has a lot to offer to visitors and is no longer considered as a simple 3-day extension in an Asian tour.


The country is now riding the wave of this “new green trend” and is multiplying sustainable tourism development projects such as the "Cambodia Sustainable Landscape and Ecotourism Project" planned for a period of six years (2020-2025) and aiming to improve the management of protected areas and enhance ecotourism opportunities through the Cardamom landscape and the Tonle Sap Lake.


In view of the multiplication of studies in this field (AFD, European Union, JICA, World Bank), this sector will be in very strong development in the years to come.


During the last 2 years that have deprived tourists of travel, professionals from the public and private sectors of tourism have relied on the Internet (digital campaigns, virtual tours, webinars ...) to highlight the assets of Cambodia and show that the country offers a complete experience and a diversity of landscapes and activities.

Yet, Cambodia will not be able to become a standalone destination, without developing long haul flights.


 
Private and public initiatives to boost tourism promotion

The Ministry of Tourism (MOT) has recently started with the support of Agence Française de Développement (AFD) to develop studies and actions such as campaigns with communication agencies, to promote Cambodia throughout the world. Among these positive indicators, we could cite the signature for a state-of-the-art international marketing campaign with the worldwide leader company MMGY Hills Balfour involving both MOT and Private Sector, the creation of Beyond Media Cambodia, a France-Cambodia press agency (which already led to a series of articles and shows) or the collaboration between MOT and Redhill Communications for the “Rediscover the Wonders of Cambodia” campaign aiming to increase domestic tourism.


The incredible boom of domestic tourism

Speaking of domestic tourism, this segment has seen a meteoric rise since 2020 and Cambodians who could no longer travel abroad have taken great pleasure in rediscovering their country.


The latest data show that provinces welcomed 1 million visitors during the 3 days Chinese new year holidays (February 1st, 2022 - respectively accounted for 931,308 and 16,189 trips to Phnom Penh (258,069), and the provinces of Battambang (193,567) Kampot (66,534) and Siem Reap (58,953). An increase of 6.15% compared to the same period last year.


Cambodia has seen its domestic tourism in steady rise over the last 2 years. It is now a real target segment to take advantage of.


With a young generation eager to discover new leisure activities, new concepts have blossomed in the country : camping, trekking, hiking, cycling are now activities appreciated by all.


Besides, b. Consulting recently conducted feasibility studies on all inclusive resorts and eco-farm in Mondulkiri and Kampot provinces, which clearly shows the interest of investors in the development of the rural tourism sector.


Yet, despite all this pretty good news, Cambodia will have to face many challenges to ensure sustainable development.


 

This article is co-written with All Dreams Cambodia, leading receptive agency in Cambodia.


For more information :


Benedict Ravel,


Senior Consultant,

Market trend analyst


benedict@bconsultingcambodia.com


Linkedin











In 2022, our experts team will regularly publish and analyze articles and reports on the latest trends in Food & Beverage and Hospitality industry in Cambodia and South East Asia region.


This month, discover how Covid 19 has deeply changed our ways of consuming food, how it may affect your business and which opportunities it could create for your company to grow.


This first article is based on a note published by the Australian Trade & Investment Commission.

COVID-19 has changed the way people buy and consume food and agricultural products.


Consumers are increasingly looking for food with health benefits. There has also been a substantial increase in online food buying. Demand for premium food, usually consumed in restaurants, has fallen. Meanwhile, takeaway food consumption has increased.


Parts of the world are now moving from acute pandemic responses to ongoing disease management.


Implications for trade


These consumer food trends are likely to affect trade.

  • Buying food online is likely to remain above pre‑COVID‑19 levels. This trend will be particularly strong in markets with young populations (such as Cambodia). It will also be strong in markets with high online transactions (such as Korea and China and also Cambodia). Advertising and selling products online are essential in these markets.

  • Food with credible health claims will continue to attract premium prices, particularly in China, Japan, Taiwan and Korea.

  • Reduced international travel, risk aversion and capacity limits will slow the global hospitality sector’s recovery. This will suppress demand for certain products, such as premium wine and fresh seafood.

Food sales go online


In April 2020, consumers in Asia-Pacific countries reported a 16 to 70% increase in online spending on food (Source: McKinsey 2020, Reimagining food retail in Asia after COVID-19). Markets and food retail stores are reopening in many countries. However, there is evidence that online food purchases will remain at elevated levels.

  • China’s leading e-commerce platforms collectively made more than RMB 315 billion (A$68 billion) in sales during this year’s Singles Day event. Singles Day is an online shopping carnival on 11 November. Shoppers from smaller cities outnumbered those from larger cities. “Food and drink” was the eighth largest category (Source: Syntun 2021, The e-commerce platforms sales report).

  • Monthly online shopping transactions in Korea reached an all-time high of KRW 16.19 trillion (A$13.8 billion) in July 2021. Agricultural, livestock and fisheries, and food and groceries grew to A$3.1 billion (Source: Statics Korea 2021, Online shopping statistics).

  • The number of Southeast Asian consumers who tried online grocery shopping doubled in 2020. More than 75% said they would continue buying groceries online post-COVID (Source: Facebook, Bain and Company 2021, Southeast Asia, the home for digital transformation: A SYNC Southeast Asia report).

 

In Cambodia, like everywhere, Covid 19

has definitely boosted online purchasing trend!



Buying food in Cambodia is no exception: ordering a meal or having your groceries delivered at your home in a click on your phone has never been easier. Our bet is that this new habit is here to last, especially among Phnom Penh's young and active population. E-Commerce should definitely be part of your business plan and the development of your own app is a must.


One good example of successful development is EFG - Pizza Company, Dairy Cream, Bar B Q Plaza etc. - which very quickly offered an online application at the end of 2020.


Having your application online will reduce your costs. At all levels, even for a small structure, intermediate solutions exist. B. Consulting has worked on a project to strengthen direct deliveries for Tipsy Seafood restaurants.


Finally, being present on local platforms (Nham 24, Food Panda, Bloc, E Get etc.) means controlling production costs and reviewing your sales model.


The systematisation of online payments (ABA app) facilitates these deployments at a reduced cost.


 

From eating out to eating at home


COVID-19 closed restaurants around the world. Consumers turned to takeaway food, meal kits and home cooking. Persistent outbreaks have prevented venues returning to full capacity. In some countries, consumers may continue to eat at home to reduce their risk of infection.

  • In the 3 months to 30 September 2021, Uber’s food delivery business booked a total of US$12.8 billion. This was up 50% from the same period last year (Source: Uber 2021, Uber announces results for third quarter 2021).

  • Food delivery grew by 183% in Southeast Asia in 2020, led by Indonesia, Thailand and Singapore (Source: Momentum Works 2021, Food delivery platforms in Southeast Asia).

  • In August 2021, the South Korean Government announced it had set aside A$23 million to re-introduce a cash-back scheme for consumers ordering food via delivery apps. The program aims to assist the hospitality industry amidst a fourth COVID-19 wave. It underscores the growing importance of food delivery services (Source: The Korea Herald 2021, Government to bring back cashback scheme for food delivery service amid fourth wave).

Restaurant closures and reduced tourism are an ongoing challenge for premium food exporters.

Exporters should consider partnering with local premium food distributors and meal-kit providers. They can also redirect food into the retail sector. Food sold in the retail sector often needs different packaging and may attract lower prices compared to the hospitality sector.


 

Pandemic were a race to adapt.


After the rapid growth of scooter and moped deliveries,

will green delivery be a new trend in Cambodia, as elsewhere in the world?


As the Australian Trade commission underlines, the food delivery grew by 183% in Southeast Asia in 2020.


During months, restaurants had no revenue except from takeaway and delivery. Some venues were very reactive while others had trouble adjusting to this new way of serving food. The very first months of the pandemic were a race to adapt.


Now is the time to make the best of this lasting trend. Review your menu, target new segments, make sure transportation or packaging do not alter the quality of products and services you aim for, optimize your team’s time and production with a specific training for the entire delivery process from ordering to handling the meal at your guest’s door.


Where can I source the right packaging ? How can I handle the cost of packaging ? What can I offer for a better experience to my guests ? Can I develop a loyalty program ? How can I collect and use data while using 3rd party delivery ? How can I optimize my costs ? All these questions and many others should be asked to make sure you are making the best of this new way of consuming food meals.

 

Increased focus on health and sustainability.


COVID-19 has amplified consumer preferences for foods with health, freshness and sustainability credentials. With COVID-19 still affecting many countries, this trend is likely to continue over the coming years.

  • Chinese e-commerce platform Tmall registered a 56% rise in sales year-on-year to May 2021 of healthy foods that are packaged to eat on the go (Source: Alibaba, 2021, Online healthcare spending in China surges).

  • 87% of Malaysians reported they would choose a brand with environmental, sustainable and governance credentials built into their business. More than three-quarters were willing to pay a 10% premium (Source: Facebook, Bain and Company 2021, Southeast Asia, the home for digital transformation: A SYNC Southeast Asia report).

  • Health and environmental concerns are shaping Korean dairy consumption. The organic milk market reached KRW 104 billion (A$122 million) in 2020. This was up from KRW 5 billion in 2008 (Source: USDA 2021, South Korea: Dairy and products annual).


 

In Cambodia, the global disruption in supply chains

will definitely help local products to impose themselves.


Organic products -Lucky supemarket - Phnom Penh


Organic Khmer food was already a hot topic before 2020 (Ibis Rice, Khmer Organics, IPG). With the pandemic, our health has become the core issue.


Eat healthy to stay healthy is now a motto well known by Cambodian consumers. As this trend coincides with the arrival of a variety of mart and supermarket brands, local and organic products benefit from new displays and recognizable signaletics, making them easy for the consumers to purchase. (see photo display Lucky Express). Short supply chains with local suppliers are also being favoured as we are experiencing global disruption in our traditional supply routes.


The use of local products may also be an additional guarantee of trust for consumers. Supporting local producers, buying local, communicating local is a winning combination in the long run.

 

Loyalty disruptions


COVID-19 restricted physical movement and the availability of goods (particularly fresh produce). This, and changing preferences, led consumers to try new brands.

  • Surveys in early 2020 found 68% of Thai and 80% of Filipino consumers tried new brands (Source: McKinsey, 2021, Five areas of growth for digital marketing in ASEAN).

  • Sustainability and social responsibly was one of the top 3 most cited reasons for switching brands in Southeast Asia (Source: Facebook, Bain and Company 2021, Southeast Asia, the home for digital transformation: A SYNC Southeast Asia report).

Disruption to regular brand preferences presents opportunities to gain market share and reach new consumers. It also emphasises the importance of ongoing engagement with current customers to maintain their loyalty.


 

Show your "made in Cambodia card"


Kirisu Farm - Press article - Khmer Times


As global supply chains are still suffering from disruption, food products shortage may be the new norm. While it may trigger some headaches to source ingredients and build a sustainable supply chain, now is a great opportunity for new brands to arrive and seduce consumers.


And good news, one of the main reasons to switch brands is sustainability and social responsibility. Cambodian local products are already well known thanks to flagship products such as Kampot pepper and some of them even encounter real success at international level.


In this post covid period, local brands have a real chance to win the race, especially when they manage to build trust using international standards while showing their “made in Cambodia” card. Plan your branding to make sure you get your communication right.

 

For more information :


Julie Thai,

Food & Beverage Consultant for b. Consulting Cambodia

julie@bconsultingcambodia.com

Linkedin



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