Myanmar hotel sector to soar

MYANMAR — The hotel sector in rapidly-emerging Myanmar will continue to be supported by strong growth in the number of visitors to Yangon as a result of accelerated foreign investment, the boom in leisure tourism, as well as a lack of quality apartments.

Myanmar is similar to Thailand 30 years ago in terms of tourism development, and even if it achieves only a fraction of the latter’s success, it is still set to experience explosive growth. Hotel room rates will remain very high because new projects being announced will take several years to hit the market.

The most anticipated new hotel opening this year is the Novotel along Pyay Road, a joint venture between Max Myanmar and Accor.

Although there are several large, mixed-use projects that have commenced construction, they will not be completed until 2016 to 2017 and the expected strong growth in the number of visitors to Yangon will easily soak up all of the new completions.

A successful completion of the much-anticipated elections next year could herald a sharp acceleration of foreign direct investment, and a surge of foreign professionals and business visitors is expected as more projects become established.

Meanwhile, leisure tourism is expected to maintain its strong upward momentum. Leisure tourism increased at a compounded annual growth rate of 34 per cent since Myanmar opened up in 2010. As tourism infrastructure improves amid co-ordinated efforts by the government and private sector, tourist arrivals are expected to grow at a CAGR of 25 per cent from 2013 to 2020 as a base case.

Thanks to this heavy demand, hotel room rates will remain high in the near-to-medium term. A lack of quality apartments for rent also supports high hotel room rates. Business visitors are likely to stay longer as their exploratory trips evolve into material business development and this will provide an added boost to hotel demand.

In addition, the setting of an official room rate ceiling of US$150 (S$190)has failed to dent rates, with a standard room in a four-to-five-star hotel averaging about US$200 a night. Little effort has been made to enforce these rules, which are in any case almost unenforceable. Should the government push towards heavily regulating the industry, the hotels will simply drive their costs underground and visitors may be charged indirectly via payments for ancillary services.

Source: Today Online

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