Introduction

Tourism in Siem Reap has been developing over the years due to their

attraction which is Angkor Wat and the surrounding temples of Angkor.

Although tourism has helped to develop the economy of Cambodia, it has

also brought negative impacts onto the country in terms of tourism

sustainabilty, culture as well as socio-economy.

This report is to cover five project scopes which are:

1. PESTLE analysis of Siem Reap’s tourism industry

2. Performance evaluation of Cambodia’s hospitality product

3. Sustainable tourism of Cambodia

4. Impacts of globalisation on Cambodia’s hospitality and tourism

industry

5. Harmonisation between tourism and the culture, religion and socio-

economy of the local commnuity

A research trip to Cambodia was organised on the 11th to the 14th of

February 2011 for the purpose of gathering information for this project.

Information regarding the project was gathered through an interview with

the Revenue Manager of Le Meridien Angkor, conversations with the tour

guide as well as observation.

1

Executive Summary

In relation to PESTLE analysis, the government is pro-business,

prioritising land for the development of business and encourages the entry of

international companies. However, the technology of Siem Reap is

insufficient to support the needs of the international hotel chains with the

Internet service being insufficient to allow connection to the hotel chain’s

server as well as the electrical grid of the country being unable to support

the demands of the larger industries.

In relation to the performance evaluation, the mid-scale and budget

accommodations are performing to the satisfaction of the tourists. However,

there are some limitations to the actual reflection of the performance of the

hospitality products.

Although preservation and restoration efforts are in place, the lenient

enforcement of regulations has led to the damaging of the temples. Also,

poor environmental management may lead to more damaging effects on

tourism.

Globalisation has changed the socio-economy of Cambodia with locals

moving

from agriculture to the business industries such as retail and hotels and

restaurants.

The tourism industry has also affected the culture, religion and socio-

economy of

the local community with celebration of new cultural events such as

Christmas and New Year’s which was previously not celebrated by the local

community.

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1.0 PESTLE Analysis of Siem Reap

1.1 Political

In the interview with the Revenue Manager of Le Meridien Angkor, Orta

(2011) stated that when the hotel was first built at that time, the

government was open and encouraged the entry of international companies

and chains into the country to develop hotels in order to boost the tourism

sector of the economy. If the company had the finances as well as a feasible

business plan, the government would approve the entry of the international

company into Cambodia. However, one condition to opening in Cambodia

was that the foreign investors cannot fully own the land they operate on in

the country, leading to international companies using joint ventures with

local operators to open up hotels.

The political situation with Thailand at the border has also affected the

industry. For one, Orta (2011) stated that there had been a decrease in

arrivals from Thailand to Le Meridien. However, the industry has not been

heavily affected by the war with Thailand and only the area surrounding the

temple at the border is affected by the fighting. Other areas of Cambodia are

safe for travel.

As the hotels employ Thailand as a supplier for raw materials, the

border war with Thailand may affect the supply of raw materials to the hotels

as Thailand may decide to stop supplying to Cambodia.

1.2 Economical

3

In view of the financial crisis, occupancy for hotels in the area fell by

20% for the same period as the year before due to cancellations of bookings

caused by the financial crisis (Orta, 2011). Orta (2011) further mentioned

that the financial crisis has made it more difficult for hotels to attract single

customers and frequent individual travellers.

The unemployment rate has increase from 2.5% in 2000 to 3.5% in

2007 (Central Intelligence Agency, 2010). This may suggest that there are

more workers available for the hospitality industry to employ.

1.3 Socio-cultural

According to the tour guide, Jet, education levels in Siem Reap are

generally low due to the quality of the national schools and the low level

expenditure provided by the government for education. This may lead to low

skilled workforce who requires training before being competent to work in

the hotels.

Health is also an issue in Cambodia with a lack of adequate sanitation

as well as low accessibility to clean water (UNICEF, 2010). Because of this,

diseases such as HIV/AIDS and malaria affect the local community of

Cambodia and will affect the productivity of the workforce.

1.4 Technological

Orta (2011) stated that the Internet service has improved within the

region of Siem Reap over the years. However, the Internet service quality is

insufficient for the hotel to be able to connect to the hotel chain’s server in

Bangkok which caters to 8 other Starwood Hotels in the region. Thus, Le

Meridien Angkor has had to run its own server in order to cope with their

Internet bookings and other uses.

The electric grid of Siem Reap is also insufficient to cope with the

demands of the hospitality industry (Orta, 2011). This has led to some hotels

to rely on diesel powered stations to generate electricity as the country’s

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own power grid is not sufficient to cope with the demands of large industries.

Another option is to obtain electricity supply from Thailand through

underground cables, which is the case with Le Meridien Angkor.

1.5 Legal

In order to obtain a license to become a tour guide operator, the

applicant must fulfil the requirement of having a high school graduation

certification and must be able to converse in English as well as in the Khmer

language. Furthermore, the license is valid for two years only while the

renewal period for the license is two years. If foreigners such as Japanese or

Koreans were to apply for a Cambodian tour guide license, they would have

to first apply to work with a local tour guide operator and will be required to

undergo the same process of obtaining the license as the locals.

1.6 Environment

Hotels in the Siem Reap area have to be aware of the problem

regarding the water supply. Orta (2011) stated that the underground water

supply within the area was unknown and that hotels have been digging

underground to obtain water. As more hotels build in the area, more water is

being used. Thus, hotels are unsure of the amount of water that is remaining

in the underground sources. There is a possibility that in the short run, hotels

in the area will have to find a new source of water in the event that the

underground water supply finishes.

Due to the usage of diesel powered generator stations for electricity,

pollution has increased as a result. The increase in large organisations

requiring the diesel station for electricity has led to an increase in air

pollution in Siem Reap.

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2.0 Performance Evaluation of Hospitality Products

This area is mainly focus and evaluate on the tourism industry’s

performance in Cambodia, and this evaluation has conducted in one of

Cambodia’s provinces, which it is Siem Reap. The result and conclusion of

this evaluation is mainly based on the answers and results that answered by

the tourists in Siem Reap through the questionnaires that had created earlier

before conducting this evaluation. Total number of questionnaires have

collected during the survey in Siem Reap is 25, and these questionnaires

were answered by different segments of tourists that consist of the groups of

segments mentioned earlier.

The tourists’ questionnaire was divided into three different parts,

personal details such as nationality, age and type of accommodation, the

reasons for tourists to visit Cambodia, and the rating for overall performance

such as transportation, cleanliness or hygiene, safety and security,

entertainment, accommodation and food and beverages outlets. These

segments were used to evaluate the overall performance in the city of Siem

Reap.

6

European Asian Oceania0

2

4

6

8

10

12

14

1614

10

1

Nationality Grouping

Number of participants

20-29 30-39 40-49 50-59 60-690

2

4

6

8

10

12 11

43

43

Age Groups

Number of participants

7

Budget Mid range Luxury0

2

4

6

8

10

12

14

16

18

8

17

0

Accommodation Type of Participants

Number of participants

Based on the data that has collected earlier in Siem Reap, there were

14 Europeans had answer the questionnaire. This number has included

various countries in Europe such as Britain, Denmark, France, Switzerland,

Germany and more. However, there were only 11 Asian tourists answered

the questionnaire in Siem Reap, and they are from countries such as China,

Indonesia, Korea, Vietnam, and New Zealand. The tourists that answered

these questionnaires were mostly backpackers, small groups and couples.

But based on the observation in Siem Reap, Korean and Japanese tourists

have the largest group of tourist amount, however, there was only one

questionnaire answered by one Korean tourist through all groups of Korean

and Japanese tourists, and it is because there was a language barrier during

the survey answer collection with them which they only able to understand

the very minimum of basic English, and this was the limitation for us to

collect the answers and data from these large group of tourist. This survey

were mostly questioned and answered by budget tourists or travelers as

most of them were backpackers or individuals.

Based on the findings and survey in Siem Reap, age group of between

20 to 29 years old was the largest age group during the data collection, and

they were mainly visiting Cambodia for leisure purpose. The age groups that

8

follow by the group of 20 to 29 years old is the age group of between 30 to

39 years old and 50 to 59 years, and each of these groups have four tourists

that answered the questionnaires. The least number of age groups are the

groups of age between 40 to 49 years old and 60 to 69 years old. There are

various and different types and groups of tourists in Siem Reap, however,

most of them preferred mid range or three to four stars hotels as their

accommodation during their visit in Siem Reap, which come with the number

of 17 tourists out of 25 tourists, other tourists which are the 8 tourists had

preferred budget or guest houses or one to two stars hotels as their

preferred accommodation during their visit.

Yes No0

2

4

6

8

10

12

14

16

Would You Visit Siem Reap Again?

Number of participants

According to the answers that have collected during the survey in Siem

Reap, 15 of the tourists would like to go back to Cambodia to have second or

more visits, the reason are due to local people’s friendliness and also the

Angkor Wat temples, and most of these tourists are in the group of age in

between 20 to 59 years old. However, the other 10 tourists would not like to

visit to Cambodia or Siem Reap again as it is because there is lack of

entertainment facilities such as night clubs and attractions which are the

younger generation’s main preferences during their vacation to other places.

Another reason to the declined offer to return to Cambodia was that the

9

tourists wanted to visit other places around the world. These tourists are in

the group of age 60 years old and above.

Transp

ortation

Cleanlin

essSa

fety

Enter

tainmen

t

Accommodati

on

F&B outle

ts0

0.5

1

1.5

2

2.5

3

3.5

4

4.54

3.04

4.043.72

4.24 4.2

Average Score Rating

Average Score Rating

Based on the ratings that have collected during the survey in Siem

Reap, the performance rating for overall performance in Siem Reap which

included the segments such as transportation, cleanliness, safety,

entertainment, accommodation, and food and beverages outlets, and above

all segments and areas, the area that has highest score in term of the most

happy experience that experienced by the tourists is accommodation, and

the area which has the lowest score, which it also gave bad experience and

impression to tourists is the cleanliness and hygiene of the area.

Transportations for tourists to travel around in Siem Reap is mainly

supported by the local tuk-tuk, due to it is easy to travel around the city and

price for tuk-tuk is very affordable for tourists at the lowest cost of 1 US

Dollar or more for one to another destination. However, the main concern for

tourists is the safety issue with the tuk-tuk. The tuk-tuk which resembles a

trishaw attached to a motorcycle does not have the safety equipment such

as seatbelts such as that of taxis and buses. Also, as roads are less

10

developed, the ride may be bumpy and unstable and may not be safe to use

a tuk-tuk to reach the destination. That is one of the reasons why some

tourists in Siem Reap would prefer walking to the destination instead of

taking tuk-tuk.

Based on the answers and ratings that given by the tourists in the

questionnaires, hygiene and cleanliness in the city of Siem Reap is the area

in need of improvement compared to all other areas that has mentioned

earlier, it is because there is no enforcement of having recycle bins or

normal dustbins on the streets in Siem Reap, and there is no proper area or

site which able to let local residents and tourists to dispose their unwanted

stuffs or rubbish, and this has led the people including tourists to dispose

their rubbish along the road side. According to the tour guide, Mr. Jet, the

local government has increase the amount of police in the city of Siem Reap

as it is because of the increase in the number of tourists’ arrival in every

year. Because of this enforcement that has been done by the local

government, the tourists feel safer walking around Siem Reap.

According to Orta (2011), occupancy for the hospitality industry is

estimated to be around 50% every year. This is due to the oversupply of

accommodation facilities in the area. Orta (2011) stated that in his

calculation previously, during the two week peak periods that the industry

experiences, if all incoming flights into Siem Reap were full, the number of

tourists that would arrive in Siem Reap would only be able to create 80%

occupancy for all luxury hotels in the area, not considering the other lower

rated hotels and guest houses that are existent.

3.0 Issues in Tourism Sustainability

One issue pertaining to sustainable tourism is the lack of restrictions as

to how many people can enter into Angkor Wat as well as the other temples

11

in the nearby area such as Angkor Thom and the Bayon Temple. There is no

limit as to the number of people who can enter into the area daily to visit the

temples. This has led to other problems pertaining to the preservation of the

temples as well as defacement of the temples walls. Due to the large

numbers of visitors visiting the temple daily, the enforcement of rules and

regulations pertaining to how visitors should dress or behave while visiting

the temples have been lenient.

The large crowds have made it difficult for the enforcement of

regulations such as the prohibition of touching the walls and artwork of the

temples which has led to the artwork of the walls to be discoloured due to

the visitors’ actions of touching the design of the artwork on the walls. Thus,

visitors are not fined or reprimanded by the local authorities when they do

not follow the rules to visiting the temples. It has become difficult for the

local authorities to catch visitors disobeying the rules due to the large

number of tourists that visit daily. The picture above shows an example of

the type of defacement tourists have done to the temple walls due to the

lack of strict enforcement of regulation.

Also, because there are no restrictions to the number of people who

visit the temples, the large crowds entering into the temples daily have also

caused damage to the archaeological sites of Angkor as tourists walk and

climb the sandstone monuments located in Angkor (Sharp, 2008). The influx

12

of tourists to visit the temples has caused extreme pressure on the temples

sandstone monuments, damaging the structure of the temples.

The movement of workforce from rural areas to the city may also affect

the sustainability of tourism. As the young adults move from the rural areas

into the city to find work, they no longer work in the agriculture industry.

This would affect the hospitality industry as the agriculture industry

represents a supporting industry for the organisations in the hospitality

industry in terms of supplying raw materials for food items. As the younger

generation move into the cities and away from the agriculture industry

areas, this leaves the older generation to work for the agriculture industry.

Thus, in the long run, the hospitality industry may no longer to be able to

rely on the local agriculture industry for raw materials as the agriculture

industry may not have the necessary workforce required to help support the

supply demands of the hospitality industry. In an interview with the Revenue

Manager of Le Meridien Angkor, Orta (2011) stated that the hotels as well as

restaurants rely on local suppliers for food materials. Thus, the movement of

workforce from rural areas to cities would affect the continuity of local supply

of raw materials to organisations in the hospitality industry that rely on local

suppliers.

Few hotels are involved in environmental management. For example,

Le Meridien Angkor annually sets targets for reducing their water and

electricity usage and intake. However, most hotels do not undertake

measures to encourage guests to care for the environment such as putting

up signs to encourage guests to reuse their towels or distributing brochures

to encourage tourists to partake in the hotel’s eco-tourism measures. As it

appears, recycling is not emphasised as there is no separation of trash bins

into the various recycling materials such as paper and plastics.

The development of hospitality and tourism in Siem Reap may also

affect the sustainability of tourism in the area. According to Sharp (2008),

the development of hotels in the area has led to decrease in underground

water supply beneath the urban areas as organisations dig underground for

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water supply. The extracting of water from underground sources has led to

instability within the ground supporting Siem Reap and in particular the

temples of Angkor. According to Jinnai (as interviewed in Sharp, 2008) and

Takahashi (as interviewed in Sharp, 2008), if the government does not

control the water intake of the hotels and organisations in the area, the

stability of the ground in the long run will be affected and may lead to the

destruction of the temples as the ground crumbles underneath the weight of

the temples.

The increase in tourism has also led to the pollution of the temples.

The large influx of tourists arriving in groups to Angkor Wat and its

surrounding temples have caused the walls of the temples to be discoloured

due to the pollution which is caused by engines of the tour buses of the

tourists. While the tourists walk through the temples, the engines of the tour

buses are left running in order for the air conditioning within the bus to work

to keep the bus cool. This has caused the walls of the temples to turn black

due to the pollution caused by the running engines of the tour buses.

14

In relation to the preservation and restoration of the temples, the

Cambodian government together with non-government organisations such

as UNESCO and the World Monument Fund as well as the funding from other

countries such as Japan and Germany, has cooperated to restore the

structure of the temples. Construction has already started on Angkor Wat.

The pictures from the previous page as well as above show some of the

preservation efforts of Angkor Wat and the surrounding temples by non

government organisations such as World Monument Fund and UNESCO.

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4.0 Impacts of Globalisation on Hospitality Industry

Source: Publication ASEAN, 2009

The table above shows the percentage of employment by industries of

countries involved with ASEAN. The employment of the agricultural sector of

Cambodia has been on a decline since year 2002 from 70.0% to 60.3% in

2004. In the same period of time, there has been an increase in employment

in the wholesale, retail trade, restaurants and hotels industry of Cambodia. In

2002, the employment rate of the industry was 10.4% but the rate increased

to 14.5%. This can further be justified from an interview with Orta (2011), the

younger generation (from rural areas), travel to Siem Reap and Phnom Penh

for job opportunities in the hospitality sector.

Thus, the increase in international hotels entering into the country due

to globalisation has led to the movement of workforce from rural areas

focusing on agriculture into the major cities focusing on business and

tourism.

According to Orta (2011), “Foreign labour is emphasised at

management level by the international hotel chains for managerial positions.

Fewer chances are given to the locals to be promoted.” Orta (2011) also says

that locals are at most promoted to the highest level of front office or human

resource in the international chain hotels.

16

Thus, globalisation has led to the increase in foreign labour into the

Cambodian economy. In the hospitality and tourism industry, these foreign

labour have been employed for managerial and senior management

positions, giving favour to foreigners over locals for those positions.

Globalisation may have caused local employees to be overlooked for

managerial positions even though the employees have the calibre for the

position.

Globalisation has also led to the increase in job opportunities for the

country. Emerging Market Consulting (2005) stated that tourism in Cambodia

has been growing by 30% each year which has encouraged the development

of hotels, resorts and guest houses. The opening of these hospitality

organisations has led to more job opportunities for the local community of

Cambodia.

Although the Cambodian government encourages the entry of

international businesses to set up in Cambodia, the ruling that the

international company must cooperate with a local operator may discourage

some international companies who wish to fully own land in the country. The

ruling, according to the tour guide, Jet, is that the local operator must own at

least 51% of the land that the international company is planning to operate

on. This may discourage certain international groups who prefer full

ownership of a business from entering into the Cambodia market.

Globalisation may also lead to a shortage in skilled labour. Due to the

low wages of Cambodia, skilled labour may be enticed to travel overseas in

search of work. Due to Cambodia’s membership in ASEAN, it is now easier to

travel to other countries in search of a better paying job. This may lead to

the country having a shortage of skilled labour, leaving the country with

unskilled labour which require more training.

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5.0 Harmonisation of Tourism and Local Community

5.1 Religion

In terms of religion harmonisation, Orta (2011) stated that there is a

small Christian community in Siem Reap which is apparent as there are few

small churches in Siem Reap. Majority of the locals are following the

Buddhist religion. The influence of Christians into Cambodia may be caused

by the employment of foreign managers in the international hotel chains who

are Christians.

The hotels and food and beverage establishment use Christmas as a

time to attract more tourists. According to the interview with Le Meridien

Angkor Revenue Manager, Orta (2011) says that the Christmas and New

Year’s holiday period is one of the peak times in the industry besides

Chinese New Year. According to Jet the tour guide, Christmas was not usually

celebrated by the locals in Cambodia. Thus, as tourists visit Cambodia to

celebrate Christmas as well during their visit, the celebration of Christmas

has been incorporated into the local culture as the Cambodians have also

started to celebrate Christmas as a holiday.

Some issue in term of religion is the non halal product in Siem Reap.

Siem Reap is not recommended for Muslim tourist. We hardly find Halal food

for the tourist. As a result, the most nation that tourist come from is non

Muslim country such as Japan, South Korea, China, and United States. Thus,

they may lose the market from Middle East.

5.2 Culture

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In Siem Reap, we may see that there is only little interaction between

the tourist and local community. Language has become the major barrier

here. Basically, the tourists just interact with the tour guide and the tour

guide will interact with the local community. As a result, the local community

may only observe the tourist without any communication.

There has been an influence on the dressing fashion of the locals from

the tourists that visit Cambodia. Prior to the development of tourism in Siem

Reap, Jet explained that one could hardly find local girls wearing short pants

and sleeveless shirts. However, due to the high arrival of tourist there and in

particular the increase in tourists from South Korea, the local girls have

started to imitate the way the tourist dressed. For example, the local women

are starting to wearing short sleeve shirts and short pants while the younger

generation have started to follow the Korean fashion of dressing. For the

older generation, they do not like this condition. There is a clash in Asian and

Western culture on the way of dressing.

In term of event, Chinese New Year has become another peak time for

hospitality industry in Siem Reap. The Cambodian culinary is affected by

Chinese culinary here. In order to accommodate the Chinese, Chinese food

can be found almost everywhere. The issue here is the number of Chinese

and Western food outlet may overcome the number of Cambodian food

outlet. For a long run, it may not be sustainable since tourist may find better

western and Chinese food in other country. It should expose the local food

more.

In terms of cultural events, some restaurants are offering free local

dance performances such as the traditional Apsara dance in order to attract

tourists to come and dine at the restaurant while watching the dance. Thus,

this has led to the traditional dances to be used as an advertising tool

instead of being used to remember special events.

Son and Suong (1995) also stated that the development of new

modern buildings such as hotels and restaurants have caused the

deterioration of the traditional Khmer culture of towns such as Siem Reap.

19

The introduction of the modern hotels and restaurants have led to the

damaging of the traditional town image of Siem Reap as the modern hotels

and restaurants do not have any traditional Khmer design in them.

5.3 Socio Economic

Hospitality industry may attract the local community more. The reason

is the income of the business. The average income for people in Cambodia is

1-2 USD per day. Meanwhile, a tourist may spend 3-4 USD per meal. Thus,

we may see a big gap between the income of hospitality industry and other

industry.

The issue here is the shifting of people from other industry into

hospitality industry. Thus, it may result in oversupply. According to interview

with Mr. Andreas Orta, Le Meridien Angkor Revenue Manager, there is

already an oversupply of hotel in Siem Reap.

Another issue is usage of foreign worker. This is due the education

level of Cambodia may be lower than other country. Even though the job

from hospitality industry offers a great salary, the employer sometimes

prefer to foreign staff in order to save training cost and time.

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Conclusion

In relation to the performance evaluation of Cambodia’s hospitality

products, it can be summarised that the mid-scale and budget

accommodation facilities are performing to the tourists’ standards of

satisfaction. One assumption is that the budget travellers may not be as

demanding as travellers who have a larger expenditure power, thus, may be

easily satisfied. However, cleanliness is an issue as most of the participants

stated that cleanliness of Siem Reap could be improved.

In relation to sustainable tourism, some issues have risen such as the

water supply issue caused by the increase in hotels in the area which can

cause several outcomes such as the destruction of the temples of Angkor if

the underground water supply is not managed properly. Also, the

development of tourism in the country has increased the level of pollution

due to the increase usage of tour buses for tour groups.

There has also been issues in relation to the harmonisation of tourism

and the culture, religion and socio-economy of Cambodia. For one, tourist

from Korea have led to a change in dressing fashion for the local community.

Tourism has also led to the change in the design of Siem Reap town as new

modern buildings such as restaurants and hotels are increasing and

changing the look of Siem Reap from traditional Khmer town to a modernised

town.

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Reference

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Emerging Market Consulting (2005), Comparative Industry Assessment. Cambodian

Commodity Chain Analysis Study,1. Available from: http://www.cosecam.org/publications/cambodia_commodity_chain_analysis_study_volume1_eng.pdf [Accessed: February 7, 2011].

Publication ASEAN (2009), ASEAN Statistical Yearbook 2008,7. Available from:

http://archive.asean.org/Publication-ASEAN-SYB-2008.pdf [Accessed: February 28, 2011].

Sharp, R. (2008), Heritage site in peril: Angkor Wat is falling down. Available from:

http://www.independent.co.uk/news/world/asia/heritage-site-in-peril-angkor-wat-is-falling-down-795747.html [Accessed: March 2, 2011].

Son, S. & Suong, L.H. (1995), Case Study on the Effects of Tourism on Culture and the

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Environment. Available from: http://unesdoc.unesco.org/images/0012/001226/122618eo.pdf [Accessed: March 2, 2011].

UNICEF (2007), UNICEF - Cambodia - Lack of adequate sanitation triggers child health

concerns in Cambodia. Available from: http://www.unicef.org/infobycountry/cambodia_39558.html [Accessed: March 2, 2011].

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