Luxury Hotel Asks for Help During Slump

Suffering from an onslaught of cancellations and a trickle of incoming reservations, Phnom Penh’s Hotel Inter-Continental has issued a plea to all of its suppliers to provide a discount in services until business picks up again.

The request comes as the hotel and other tourist industry officials search for ways to shift marketing focus and absorb the worldwide tourism downturn.

A public shaken by the Sept 11 terrorist attacks in the US has resulted in “many cancellations,” Inter-Continental general manager Edwin Bucher wrote in a letter to business associates on Oct 22. “As a result, whilst our hotel tries to find other markets to replace the lost business and return to the customary revenues, we would like to ask for your support.”

Bucher asked suppliers—such as dry goods, wine and produce distributors—to consider giving the 5-star hotel a discount on services over the next three months: 15 percent for November, 10 percent for December and 5 percent for January.

The Inter-Continental is a partnership between the Six Conti­nents international hotel conglomerate and the Thai Boon Rong Group, which is chaired by Cambodia business tycoon Teng Boon Ma.

“Due to the severity of the issue…I kindly ask for you to please reply and let us know by the 27th of October of your decision,” Bucher wrote.

The hotel has so far received few replies to the request, Bucher said by phone, though a few business associates had offered discounts from 2 percent to 5 percent to help the hotel.

“Some of the suppliers are in a similar situation” after the attacks, he said.

According to Bucher, business at the hotel has fallen off about 8 percent since the attacks.

“But what’s more worrying is that we have had very few bookings,” he said.

With the monsoon rains receding and the weather cooling, Cambodia is entering its typical high season for tourism. But in Phnom Penh and in Siem Reap, hotels, restaurants and other businesses that rely on tourism are idle, as potential visitors from the US, Europe, Japan and other countries stay home.

Some hotels in Siem Reap have been forced to lay off employees until business returns.

“The high season is lower than the low season. It could go for six months; it could go for a year,” Bucher said.

Worldwide, the Six Continents conglomerate is changing its marketing strategy after the attacks to emphasize less overseas travel and more in-country road trips, Bucher said.

In Phnom Penh, other hotels, such as the 4-star Sunway, are also feeling the squeeze.

The hotel is experiencing the same drop-off in reservations as the Inter-Continental, Sunway General Manager Manfred Hager said. The hotel has not yet changed its marketing strategy, and did not plan any layoffs, he said.

“Maybe the worst is yet to come, but we don’t know. We hope for better times,” Hager said.

The Minister of Tourism has met with hotel owners and other private sector tourism businesses to try and find a way to cushion the impact of the attacks.

In two separate meetings with business owners earlier this month, Veng Sereyvuth called on them to find ways to work together, create tour packages and target more Japanese and other Asian markets.

“There are 17 million Japanese tourists spending money for traveling [and] at least 8 million tourists from the Asia Pacific. So how can we get them to come here?” Veng Seryvuth said.

The minister said he was negotiating with the government to lower costs to travelers, especially for visas and airport exit fees. Packaged tours and airline prices to Cambodia are too expensive, Veng Seryvuth said.

For example, a five-hour flight from Tokyo to Bangkok cost about $300, while a one-hour flight from Bangkok to Phnom Penh cost about $200, he said. A Japanese tourist traveling to Bangkok pays no money for a visa and only $12 to leave the country. On average, he said, a tourist in Cambodia pays $60 in visa and airport fees .

The Ministry of Tourism would also like to see direct flights from Japan, Korea and Taiwan, Veng Sereyvuth said.

Tourism for the month of September dropped about 30 percent compared to the same time last year, according to ministry figures. Numbers had been climbing higher in recent years, making tourism the fastest growing industry in Cambodia.

Tourism officials have said Asean countries will have to work together to promote the whole region as a destination for tourists within Asia.

“Both the service sector and the government are finding ways to turn the destination of tourists who used to go to Europe back to Asian countries—especially Cambodia—in this time of world crisis,” said Chung Chan Sophea, president of Apsara Tours and the vice president of the Tourism Association .

“I think people are afraid to fly. Even I myself have canceled a few trips. I’m afraid of it,” she added.

Right now, Japanese tourists want to take a trip to a place like Cambodia, but Cambodia receives a small percentage of travelers coming to Southeast Asia, Chung Chan Sophea said.

Of the 17 million Japanese tourists in the world market, she said, Cambodia receives just 50,000, compared to 1 million going to Thailand and 500,000 to Vietnam.

Packaged tours through Cambodia are more expensive, Chung Chan Sophea pointed out.

“Airline ticket fees, airport taxes, hotel rates, Angkor ticket, everything,” she said. “So we will wait and see how the government can help us.”

 

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