EU crisis to hit tourism again

Western tourists visit the Royal Palace in Phnom Penh. Cambodia could see a decrease in European travellers due to volatility in global markets. Photograph: Nina Loacker/Phnom Penh Post

Wednesday, 13 June 2012
Don Weinland
The Phnom Penh Post

The World Bank yesterday said developing countries should brace for a long period of volatility in global markets, which could impact tourism-reliant nations such as Cambodia.

A “serious deterioration of conditions” remained a possibility in Europe, according to the bank's Global Economic Prospects, although slow improvement was a likely outcome for the bloc.

The turmoil, which has been magnified recently by a Spanish bank bailout and the possibility of Greece's withdrawal from the eurozone, could further tighten the purse strings of European travelers.

Gauging Cambodia's market for European travelers has been difficult since numbers declined significantly during the onset of the global crisis in 2009, said Pierre Jungo, managing director of Diethelm Travel, a regional travel agency that caters largely to Europe.

Incoming tourists from the eurozone did increase during the first few months of the year, Jungo said, but from a very low base.

“We are not back to 2008 [levels] but we did see an increase on last year,” he said.

Cambodian tourism brought in an estimated US$2.5 billion in 2011, making the industry one of the country's biggest generators of gross domestic product, the World Bank report said.

In 2010, the sector accounted for 21.2 per cent of GDP.

About 515,600 European tourists visited Cambodia in 2011, a 10 per cent increase on 2010, according to data from the Ministry of Tourism.

Cambodia's tourism market has already started a regional swing toward visitors from ASEAN, as well as from Korea, China and Vietnam.

More than 1 million tourists from ASEAN member states entered Cambodia last year. More ASEAN tourists came to Cambodia than from any other region, according to the data.

East Asian tourist numbered about 778,000. At about 19 per cent growth year on year, the region's presence in Cambodian hotels and guesthouses saw the fastest growth.

“The EU and US made big contributions to this industry and the issue [of EU economic crisis] needs to be discussed. But if we look at the numbers, Asian countries are leading,” said Mohan Gunti, an advisor to the Cambodia Association of Travel Agents, said yesterday.

“These Asian countries are booming and Cambodia is already focussing on the Chinese market.”

Hopes for a increase in Chinese visitors were bolstered in early April when Cambodia and China pledged to double bilateral trade to $5 billion by 2017, a move that would see heavy marketing for Cambodian tourism in China.

As a bulwark against Europe's economic woes, World Bank Cambodia senior economist Enrique Aldaz-Carroll said the Kingdom should strengthen its connectivity with the region.

“The integration will enable Cambodia to benefit more from the growth in ASEAN economies and in the region. This will allow Cambodian firms to be more productive by reaping economies of scale and becoming part of production networks. It will also attract greater investment,” he wrote in an email yesterday.

The World Bank report also noted a possible impact on countries reliant on external remittance.

About 3 per cent of Cambodia's GDP in 2010 was via remittance from abroad, the report showed.

The percentage was low compared to the Philippines, however, where remittance accounted for 10.7 percent of GDP that year.