1 April 2019

Growth in Cambodia’s tourism leads to HMA increase

According to recent statistics provided by the Ministry of Tourism, Cambodia welcomed 6 million tourists in 2018, 7% more than in 2017. Cambodia currently has more than 800 hotels and, following the anticipated exponential rise in the number of tourists in the next few years, this number is expected to increase.

Due to this increase in tourism, hospitality development projects are pouring into Cambodia’s three tourist hotspots – Phnom Penh, Siem Reap and Sihanoukville. Based on a recent hotel study by Bonna Realty Group, Phnom Penh saw a 23% jump in the number of hotels, from 355 to 437 in 2018; Siem Reap continues to have high numbers; and, in Sihanoukville the increased influx of tourists has made it the new bright spot for investment in the hospitality industry, especially from Chinese investors.

These developments have resulted in a significant increase of competition in the sector whereby hotels are more and more required to adhere to international standards in order to stay competitive in this ever more sophisticated industry.

Managing hotels inevitably gives rise to a wide range of commercial and legal issues. The most common way to structure a hotel business is through a Hotel Management Agreement (also known as a “HMA”), which is widely used in the international hospitality industry and its popularity is only increasing. A HMA is essentially a written agreement between the hotel owner and operator, whereby the operator is responsible for managing and operating the hotel in the name, and on behalf, of the owner in return for a management fee.  Now that the sector in Cambodia is growing exponentially, and demands for international standards are increasing, it is vital that hotel owners and operators have effective and legally enforceable HMAs in place in order to best protect their respective interests under Cambodian law and avoid future conflicts.

Tourism & Hospitality has been an integral part of our practice since the firm was founded and we represent domestic and international clients in a full range of tourism and hospitality related transactions. Our lawyers have extensive experience in drafting and negotiating Hotel Management Agreements, representing both owners and operators, enabling a balanced and fair relationship while protecting the interests of our clients.

Please feel free to contact Fausto Pavlovich and Lim Veasna from SokSiphana&associates should you have any queries, or require any assistance, regarding the hospitality related laws in Cambodia or Hotel Management Agreements.

This alert is for general information only and is not a substitute for legal advice.