Tour operators barely surviving due to “incredibly shaky” demand

Small tour operators are on the verge of collapse as market demand in the tourism sector took a hit among Western visitors, as bookings for the impending peak season are “incredibly shaky”, according to a local company. In addition, hopes on wooing Asian investors were dashed by the now-abandoned “$1,000 in cash per tourist” entry demand, and it remains to be seen whether small players can be resuscitated by an increase in Asian travellers.

The government has vowed to focus on attracting tourists from Southeast Asian countries in order to bring hope to the embattled sector. According to the statistics from the Ministry of Hotel and Tourism until the end of July, Thai tourists topped the ranking, followed by the Chinese. More than 150,000 Chinese tourists visited the country from January to July, which reflects a 34 percent increase in comparison to the same period in 2017.

In contrast, the number of Japan and S Korea travellers remained stable, and the tourism ministry is betting that those numbers will double after the visa free process is granted.

For tourist arrivals in the country, there was a 2pc increase for travellers entering with visa, while there was a 5pc decrease for day-return visitor through the border gates. The total arrival number until the end of July was 1,970,013 people, in comparison to 2,019,752 international visitor in 2017 for the same period. This meant a decline of 2pc for the whole country.

The rate of travellers from eastern and western Europe, the Middle East, North America and other America countries are still falling.

The decrease in travellers from Western and European countries spells trouble for SMEs tour companies which are dependent on them. As a result, some companies have returned their licences to ministry of hotel and tourism, U Naung Naung Han, secretary of Union of Myanmar Travel Association, told The Myanmar Times.

“As far as I know, about 50 SME tour companies returned their licences to the ministry. I’m not aware of the exact reason about why they gave it back, but one thing for certain is that they are facing trouble,” he said.

Forever Top, a travel and tour company, commented that they’ve already stopped operations at their sub-offices in other cities owing to fewer European travellers. “Even bookings for the upcoming peak season are incredibly shaky, where they’re being flip-flopped between confirmation and cancellation”, U Aung Soe, managing director from Forever Top, complained.

Furthermore, the company has already stopped the outbound market since the value of the dollar is increasing and the market is becoming puzzled due to many competitors, he said.

“We don’t know what to do in the current situation. Some tour companies have completely halted their entire business. The reason why we continue operating is to keep our brand image even we’re facing losses,” he added.

According to the hotel and tourism ministry’s policy, they have a right to revoke the licence if the tour companies did not renew, within six months grace period, after their licence expire as well as some tour companies returned their licences, U Myo Win Nyut, director of the ministry of hotel and tourism, stated.

“We received around 100 licences returned by tour companies as of today, and they also have stopped their business operations. We revoked some expired licences every month. However, new tour operators are still applying for the licence, about 15 companies weekly,” he said.

According to the Investment Law enacted in August, all companies have to re-register at the Directorate of Investment and Company Administration, but some hospitality firms will not do so as the current market is difficult for business, U Naung Naung Han said. “There will be an increase in similar travel and tour companies where their licences are cancelled and their business terminated. Many more tour companies did not renew their licences, compared to last year,” he continued.

The outbound market seemed to be an alternative market for the survival of SMEs operators while experiencing fewer Western tourists. Nonetheless, the expectation has been crushed due to rising foreign exchange rates. “When an ordinary package priced at K130,000 climbs to K150,000, it becomes difficult to sell to local travellers. So their substitute outbound market doesn’t work well to meet their expectations,” U Naung Naung Han observed.

Policy backfires

Seventy percent of Myanmar’s tourism market demand comes from Southeast Asia countries, and this could be a ray of hope for the survival of SMEs tour operators.

Players were looking forward to the visa exemption for Japan, Korea, and VoA to China, Hong Kong, and Macau. Yet, a policy misstep backfired. The immigration ministry issued a policy on July 24 which requires Japanese, Chinese and South Korean visitors to bring US$1,000 in cash when they enter Myanmar under new visa arrangements. A week after the announcement, the government revealed they ditched that demand, following widespread criticisms from industry players and even the hotel minister.

However, an official announcement letter is still yet to be released by the government.

It was until September 3 that the website of Myanmar Embassy in Japan finally removed the cash demand. “That affected the customer trust because we already informed our agents in Japan that there was no need to show $1,000 in cash,” U Ye Tun Oo, CEO of Vivo Myanmar travel and tour company, explained.

“We want to release an official announcement soon, stating that the US$1,000 for tourists has been dropped, and hope there will be more coordination between the hotel and labour ministries,” he went on.

On the other hand, the Asia tourism market will act as a pillar for SMEs tour operators who had suffered losses in the Western and European markets. But, some of the potential Asia markets are not in the hands of local tour operators.

“Frankly speaking, some Asia markets are not in the hands of Myanmar people. For instance, Korea market is rarely operated by locals. They will open a nominal company and arrange for all itineraries including Korean guides instead of hiring domestic ones,” U Naung Naung Han said.

Chinese, Thai, and Vietnamese companies are following the Korean approach in the Myanmar tourism market, he said, adding that an infamous “zero-dollar tour” scheme in the Chinese market is planning to start here and that some Chinese investors have already opened substantial souvenir shops in Hlaing Tharyar township.

“This type of tour is worrisome for the ethnic tour operators. We don’t know the way how to protect our citizens. Our local tour companies are facing trouble and returning the licence to the ministry. Meanwhile, these types of tours are trying to set foot here,” U Naung Naung Han said. The sector will not experience massive changes until 2019 or 2020, and could continue spiralling down if there are no proper reforms.

“We want to provide protection just like parents caring for their children with existing rules and regulations. If someone is wrong, action must be taken, and if that person is right, support must be given. Also, we want to support SMEs tour operators in the process of acquiring loans, which the hotel ministry should be deeply involved,” he suggested.

SOURCE: MYANMAR TIMES

To see the original article click link here

NB: The best way to find information on this website is to key in your search terms into the Search Box in the top right corner of this web page. E.g. of search terms would be “property research report”, ”condominium law”, “Puma Energy”, “MOGE”, “yangon new town”,”MECTEL”, “hydropower”, etc.

.

Looking for foreign investors to invest in your business in Myanmar