Next hurdles awaits

Infrastructure and new promotion strategies vital to sustain growth

“It is very tough to do business here,” said William Costley, Hilton Worldwide’s vice president for Southeast Asia operations.

“How to sustain the growth is very important. The government and related ministries should focus on infrastructure and connectivity rather than expansion of destinations. At the same time, they should find ways to attract visitors to come back again,” he told the audience at the third Myanmar Hospitality and Tourism Conference in the capital, Nay Pyi Taw.

Human capital and electricity supply were equally important, he said. As the first Hilton was opened in Nay Pyi Taw, the company faced difficulty in recruiting skilled personnel. In-house training was necessary to ensure employees met international customers’ expectations, he added. Although many power generators were installed, he said it was necessary to improve the supply.

At the same conference, Goh York Lin, president of Keppel Land Myanmar, part of Singapore-based Keppel Corp which is operating Sedona hotels in Yangon and Mandalay, echoed Costley’s view.

“Myanmar is only at the beginning of a long economic growth trend. Investors with a strategic entry plan will be better rewarded than those here for opportunistic ventures. We are also preparing ourselves to drive growth. We are looking into other sectors like real estate and oil and gas,” he said.

Their comments sum up the challenges that the tourist industry has to overcome in the years ahead if the country really wants to catch up with other countries in Southeast Asia as nearly all of them welcome more than 10 million tourist arrivals each year.

Welcoming 3 million visitors in 2014, Myanmar’s target for this year was initially set at 4.5 million but the actual numbers are expected to be 5 million thanks to the surge in foreign direct investment which will bring more business travellers. As of May, Myanmar has witnessed a 12 per cent growth in tourist arrivals compared to the same period last year, with over 1 million visitors.

Currently, the main market is East Asian, mainly Thailand and China, according to the Hotels and Tourism Ministry. Following the e-visa system launched in 2014, the number of visitors from the United States has increased. More needs to be done as the country woos more European visitors particularly from Germany, Italy and France, known for their long-stay preferences.

Tourism minister Htay Aung told more than 200 hospitality professionals from 15 countries that the sector had bright prospects. In his speech, he acknowledged the need for a sound hospitality infrastructure to meet the ever-increasing demand from both business and leisure travellers.

Sustainable growth

Hilton’s Costley said that the key to sustainable tourism growth was improving access to all the important destinations, including Mandalay, Bagan, Nay Pyi Taw, Ngapali and Inle Lake.

“The authorities need to ensure that low-cost airlines open in all the key destinations. For example, Mandalay, Bagan and Nay Pyi Taw are very near as they are situated with 300 kilometres from each other. But it takes too much time if one travels by car. As foreign visitors usually do not have much time, it is better to have airlines that fly at an affordable price,” he said.

To him, difficulties that hotels were dealing with suggested that Myanmar was a place where investors must consider a long-term presence.

It is the most important to find the right partner for sustainable growth. Hilton has teamed up with the Eden Group owned by Chit Khaing, a famous businessman in Myanmar, to operate its business in the country.

Keppel’s Goh urged the government to focus more on infrastructure like airports and roads. Other challenges include a limited number of flights to key destinations and the cutting the time-consuming process of communicating with government ministries. Information about its key destinations should also be more widely spread among visitors.

For long-term growth, he highlighted the importance of conservation and preservation of historic buildings in downtown Yangon.

“We hope to see a very different Myanmar in the near future. The situation in Myanmar right now is very similar to Vietnam 20 years ago. It is only a matter of time [before things change]. Even the MPT [Myanma Posts and Telecommunications] has changed to improve its services,” he said.

Seeing access to electricity as an urgent issue, Alexander Bock, managing director of Tangram Hotels Myanmar, a newcomer in the market, also saw the need to create new attractions to lure visitors.

“Everybody knows Myanmar has abundant cultural and natural heritage. Accessibility to great destinations is vital. The key is not to rely on those sites only but on creating new attractions. It should be both knowledge-based and services-based. Otherwise, there is no more reason to come here again,” he said, adding that Myanmar needed to attract more European and US visitors for further growth.

Foreign investment

According to Tourism Highlights 2014 by the United Nations World Travel Organisation, the total number of global tourist trips grew by 5 per cent in 2013, crossing the 1 billion record mark. Within that, the Asia-Pacific region emerged the strongest with a 6 per cent growth. In Myanmar, tourist arrivals have witnessed unprecedented growth, with more than 2 million arrivals in 2013, up 93 per cent from the previous year and 158 per cent from 2010. Nearly 820,000 travellers entered through Yangon, which is a 46.1 per cent increase year on year.

This encouraged foreign investment and drew international hotel chains to the country.

Aung Naing Oo, secretary of the Myanmar Investment Commission (MIC), said that the tourism sector was one of the key drivers of economic growth, along with oil and gas, power, manufacturing and real estate.

According to the MIC, as of April 30, foreign investment in the hotels and tourism sector accounted for 3.91 per cent of the total approved foreign direct investment with 57 enterprises which have been allowed to bring in the capital of US$2.21 billion. MIC has permitted a total of 124 hotels and tourism projects, 57 foreign and 67 domestic.

Singapore topped the list of foreign investors in the industry in terms of the number of projects and volume of investment or capital inflow, followed by Thailand, Hong Kong, Japan and Vietnam.

In an exclusive interview, Hlaing Oo, deputy director general of the Hotels and Tourism Ministry, said that Myanmar was set to enjoy further growth in foreign-invested hotels. Of all foreign projects approved, 33 are completed and 11 more are due to open before 2018. Four were recently approved by the MIC. The confirmed 48 projects, in Yangon, Mandalay, Tachileik, Kawthaung, Myeik, Bagan and Nay Pyi Taw, offer a total of 9,955 rooms with a combined investment capital of $2.85 billion.

“The majority of the foreign-invested hotels are located in Yangon with some in Mandalay and along the Thai border. There is only one foreign hotel in Bagan with Japanese investment … there are still increasing rates for hotel rooms in Yangon as there are many hotels under construction.”

As of today, there are 1,186 hotels and guesthouses which provide 46,690 rooms across the country.

Yangon tops the list with 306 hotels and 14,251 rooms, followed by Mandalay with 8,468 rooms, Shan State has 6,116 rooms, Nay Pyi Taw 4,994 and Bagan 3,146.

He noted that most domestic investors focused their investment on Bagan.

“The government is currently undertaking a heritage impact assessment with the assistance of an international organisation. There has been a zoning control. It is important to comply with existing laws and regulations for the preservation of the cultural heritage by the Ministry of Culture to construct not only hotels but also other buildings in the area,” Hlaing Oo said.

Nay Zaw Aung, managing director of Clover Hotels, expects more foreign investment after the general election. This would require domestic companies to prepare for higher competition which would lead to Myanmar becoming a world-class destination in the coming years.

“As locals, we do have a few advantages such as a better understanding of the culture, human resources, logistics and supply chains. In order to survive the competition we have to leverage such advantages to give us a competitive edge. It is also very important to be up to date with all the changing trends in the industry and be ready to meet any new demands arising from such changes,” he said.

Capital destination

Among the top destinations, Nay Pyi Taw proves the least attractive to tourists. Yet Hlaing Oo is optimistic about the city’s opportunities in terms of MICE (meetings, incentive, conference and exhibition) events.

“Nay Pyi Taw is centrally located and accessible from all parts of our country with its international airport. The population is about 1 million. One can visit the Parliament with prior permission. For the time being, there is no place in Myanmar like the convention centres for holding events at both national and international level. That is why we are promoting Nay Pyi Taw as a MICE destination,” he said.

Although there are only two foreign airlines flying directly to Nay Pyi Taw, including Bangkok Airways, there are 62 hotels with thousands of rooms.

Franck Droin, general manager of Kempinski Nay Pyi Taw, said his hotel was located near the conference centre and equipped with function rooms.

“The capital is also studded with many grand buildings and supported with new infrastructure, including the grand majestic Parliament, world-class stadiums, international-standard hotels and vast highways. It is also surrounded by the bluish Shan mountain ranges and the beauty of the peaceful up-country adds to the splendour of the capital. As the market is booming, Nay Pyi Taw has also become an important destination not only for holidaymakers but also for business people,” he said.

According to Thomas Kyaw Min Htin, managing director of Myanmar Polestar Travels and Tours, more activities would draw visitors to the capital.

“Many foreigners tell me the same thing: your capital is like a resort but we have nothing to do at night. So we need to create nightlife with a lot of bars if we want to transform Nay Pyi Taw into an attractive destination. Of course, there are shopping places but they are yet to attract foreign visitors.”

Source: Eleven Myanmar

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