Cambodia's Tourism Sector After the 2025 Border Conflict: Asymmetric Shocks and Recovery Pathways

Arnaud Darc
3 hours ago
2 min read

The July 2025 Cambodia-Thailand border conflict marked a structural discontinuity in Cambodia's tourism economy, far beyond a cyclical downturn. Thai arrivals plummeted 90.9% in November, confirming the near-total loss of the country's largest land-dependent source market amid physical closures and confidence suppression.

Cambodia's Tourism Sector After the 2025 Border Conflict: Asymmetric Shocks and Recovery Pathways

Yet air arrivals rose 21%, revealing deep asymmetries between physical access and traveler sentiment in a sector contributing 8% to GDP, exacerbated by pre-existing yield erosion (from $744 per visitor in 2019 to $541 in 2024).

Analytical Framework and Key Data

This analysis employs an innovative "gating functions" framework— institutional and behavioral filters shaping tourist flows: physical land border shutdowns, restrictive travel advisories, insurance exclusions, and operator withdrawals. Ministry of Tourism data (January-November 2025) records 5.17 million arrivals, down 13.8% year-on-year, following strong pre-conflict momentum (+11.7% January-May). The World Bank confirms a 27% drop in international arrivals, driven by Thai collapse. This model distinguishes supply ruptures (borders closed) from demand suppression (negative perceptions), explaining non-linear recovery.

Quantified Economic Impacts

H2 2025 tourism receipt losses range from $850M to $1.25B across optimistic ($650M), baseline ($950M), and pessimistic ($1.25B) scenarios. Siem Reap and Angkor Wat, the tourism microeconomy's heart, face amplified shocks: international ticket sales fell 18.1% in July and 25.7% in September, with 200,000-220,000 visits lost and local multipliers of 8-12x yielding $200-350M in indirect losses. Direct employment (630,000 jobs in 2024) saw 150,000-250,000 displacements, hitting hospitality, transport, and informal crafts hardest. The "volume-value decoupling"—arrivals rebounding to 6.7M in 2024 but receipts at $3.64B—means volume recovery alone won't suffice.

Scenario	Probability	2026 Receipts ($B)	Triggers
A: Rapid Resolution	15%	2.8-3.2	Full Border Reopening Q1 2026
B: Prolonged Talks	55%	2.0-2.5	Selective Reopening Mid-2026
C: Escalation	30%	1.2-1.8	Prolonged Closures

Market Dynamics and Angkor Vulnerabilities

Thailand (29% of 2024 arrivals, >90% land) leads losses, with 12-24 month recovery tied to reopening and political trust. Vietnam (17.4%) shows partial air substitution but at triple cost; China (16.6%, air-dominant) offsets just 7% of Thai shortfalls despite +335,000 arrivals. Western and Japanese markets, air-based and advisory-sensitive, lag 12-18 months. Angkor, physically unscathed, exposes its corridor dependence: as a "transmission node," it ravages Siem Reap (65-70% tourism-driven), with hotel occupancies down 45-60% and SME cascades.

International Lessons and Policy Roadmap

Sri Lanka's post-2009 surge (448K to 1.8M arrivals by 2015) shows rapid recovery via decisive peace and air diversification; Nepal's 2015 blockade and Myanmar's stalls highlight persistent confidence traps. Cambodia needs three phases: immediate stabilization (wage subsidies for 100,000 workers at $15M, $30M SME liquidity, tax deferrals); demand relaunch (air incentives, $3-5M Asia marketing); structural resilience (India/China direct flights for redundancy). Anchored in fiscal space (26% public debt-to-GDP), these target yield uplift (480-520 USD/visitor), not just headcount.

The 2025 shock's legacy hinges less on ceasefire than sequenced gate mastery: physical, then confidence. Arnaud Darc urges "systemic design" to turn vulnerability into strength, safeguarding Angkor not as isolated icon but resilient hub in a diversified, high-value tourism economy.

By Arnaud Darc, Chairman of Oudom Consulting, a leading expert in economic and strategic analysis of Southeast Asian tourism. Specializing in structural shocks and recovery dynamics, Arnaud Darc directs in-depth market studies to guide public and private decision-makers through geopolitical disruptions.