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Collier Property Report – Ngapali Hotel & Resort Q1 2018

Loyal Guests Buoy Occupancy in Select Hotels

 

Political upheavals surrounding the state have taken a toll on the region’s most famous beach destination. In 2017, hoteliers in Ngapali witnessed sluggish demand as foreign booking cancellations became noticeable. Nevertheless, occupancy levels remained relatively healthy in older developments. Continuous arrivals from unaffected seasoned foreign travellers and local loyal guests have in fact helped buoy demand. Overall, while tourists remain drawn to Ngapali, ideally for rest and relaxation, opportunities for other activities are also promising. In our view, hotels should proactively introduce excursion programmes to highlight the area’s cultural and scenic offerings. Upgrading amenities and services which cater to groups and families should likewise facilitate marketability.

Ngapali (Thandwe) Hotel Zone

Design Aesthetics Improving; Offerings Still Need More Variation

 

Three more resorts have boosted Ngapali’s hotel stock: Pristine Mermaid Resort (Pristine Lotus Group), Jasmine Ngapali Resort (Jasmine Palace Construction) and Art of Sand Resort (a sister resort of Sandoway) together introduced close to 200 rooms in 2017. The number is the highest additional stock since the notable increase (of 162 rooms) recorded in 2014. As at the end of 2017, Ngapali’s total supply stock reached more than 900 rooms, mainly being represented by upscale hotels. However, smaller-scale mid-tier hotels have also been evident following stronger interest from local travellers of modest budgets.

Ngapali Hotel Supply Stock

Many of the resorts in Ngapali share a typical aesthetic feature, appearing heavy on wooden furniture and finishes along with outdated designs and interior decors. Some hotels, however, have started veering away from this style, aiming for a contemporary approach through a more modern tropical and minimalist look. Colliers advises developers to adopt an architectural style in line with modern comforts and local design sensibility. Also, given the effects of the harsh coastal weather conditions, the overall design should be deemed sustainable to minimise costs on repairs and operations.

Hotel utilities and some of the amenities are also improving. In contrast to two to three years ago, all of the resorts are now equipped with constant access to electricity, backed up with generators for occasional power shortages. WIFI connections are available in most common areas although they are still intermittent in the guest rooms. Credit card payments are now commonly accepted especially in upscale hotels; some with access to ATMs. According to several operators, Ngapali’s main foreign guests are adult travellers or retirees spending at least a week to at most two months. Colliers advises operators to further entice senior clientele by creating services that suit their needs and preferences. This can take the form of health and wellness-enhancing offerings (e.g. yoga and meditation, organic and healthy culinary options, and scenic and outdoor fitness activities.) Capitalising on the growing number of group and family travellers, amenities and facilities will also need variations. Provision of game rooms, mini theatres or libraries, and basic fitness centres along with outdoor team building recreational activities, should encourage social ties and develop more unique guest experiences.

Occupancy Rates Drop on Average

 

Political issues surrounding the Rakhine state have taken their toll on occupancy levels with the average occupancy rate declining by 11 percentage points in 2017, to 42%. Despite this, some resorts reported growth in occupancy. Colliers believes that the resilient performance of select resorts stems from the strong patronage of their more tenured and repeat guests. Seasoned foreign travelers and local guests, unaffected by the political situation, were also positive contributing factors.

Ngapali Average Occupancy Rate 2017

Likewise, hotels with established partnerships with travel agencies maintained a healthy occupancy rate. Looking forward, we recommend operators to adopt strategic measures such as building stronger ties with travel agencies and realigning marketing campaigns to encourage more group travellers.

Average Daily Rates Drop across the Board

 

Full-year ADRs dropped across the board and in all room categories. Colliers further observed that hotels with lower ADRs managed to reach high occupancy rates. This in exception to some established developments which have a loyal customer base, where despite competitive pricing, occupancy remained modest. This may be attributed to poor upkeep and outdated room amenities. Colliers stresses the importance of auxiliary components (e.g. landscaping, modern resort furniture, and well-curated decorations) that should complement the overall natural features in the premises. Many of the hotels in Ngapali appear to dismiss the value of such elements which in fact enhance the overall development offer as well as justify the room rates.

Ngapali Hotel Daily Rate 2017

Several hotel operators have attributed the decrease in prices to the improved access to electricity and other utilities given that most hotels in the past were heavily dependent on generators. In the medium to long term, Colliers expects improvements in infrastructure to boost development in Ngapali further with the potential for residential resorts for retirees or as secondary vacation houses. We also expect more developments to open up towards the north of Thandwe which the locals refer to as the “Second Ngapali Beach” given the limited available land in the currently established hotel zone.

Source : Colliers International Myanmar

For more information:
Karlo Pobre
Associate Director
Research & Advisory
+95 (0) 979 573 3378
Karlo.pobre@colliers.com

The Htet Oo
Manager
Research & Advisory
+95 (0) 943 190 707
Thehtet.oo@colliers.com

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