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.

2
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

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.

3
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 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

4
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.

5
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.

Nationality Grouping
16
14
14
12
10
10
Number of participants
8
6
4
2 1
0
European Asian Oceania

6
 Age Groups
12 11

10

8
Number of participants
6
4 4
4 3 3

0
20-29 30-39 40-49 50-59 60-69

Accommodation Type of Participants

18 17
16
14
12
10 Number of participants
8
8
6
4
2
0
0
Budget Mid range Luxury

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

7
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 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.

Would You Visit Siem Reap Again?

16
14
12
10
Number of participants
8
6
4
2
0
Yes No

8
 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 tourists
wanted to visit other places around the world. These tourists are in the group of age 60
years old and above.

Average Score Rating

4.5 4.24 4.2
4 4.04
4 3.72
3.5
3.04
3
2.5
2
Average Score Rating
1.5
1
0.5
0
t
s

ts
n

on
ty

en
es
tio

tle
fe

ati
in

m
Sa
rta

ou
nl

in

od
ea
o

rta

B
m
sp

F&
Cl

m
te
an

co
En
Tr

Ac

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.

9
 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 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.

10
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 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

11
located in Angkor (Sharp, 2008). The influx 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 water supply. The extracting of water from
underground sources has led to instability within the ground supporting Siem Reap and

12
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.

13
 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.

14
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.
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

15
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.

16
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
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

17
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. 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.

18
 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.

19
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.

20
Reference

Central Intelligence Agency (2010), CIA - The World Factbook. Available from:
Government of United States of America, Central Intelligence Agency Web site:
https://www.cia.gov/library/publications/the-world-factbook/geos/cb.html
[Accessed: March 2, 2011].

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

Commodity Chain Analysis Study,1. Available from:
http://www.cosecam.org/publications/cambodia_commodity_chain_analysis_stud
y_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
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].

Orta, A. Issues with the hospitality industry in Siem Reap . [Interview] Le Meridien
Angkor with class of Bachelor International Hospitality Management 2008. 11 th
February 2011.

21