Colliers Property Report – Myanmar Hotel Market Report Q3 2020

Summary & Recommendations

Despite calls to partially ease travel and flight restrictions amid stricter health and safety protocols, it has become clear that a full recovery is likely to be a tedious process, and the tourism industry, which contributed almost 7% of the total GDP in 2019, may not return to pre-pandemic levels, at least in the near term.

While foreign arrivals are expected to remain muted, Yangon hotels are encouraged to strongly tap on the domestic market instead. Though still insufficient, this may somehow artificially keep occupancy and revenue levels afloat. Over time, with the local tourism initially picking up pace, hotels are advised to gradually gear up. In particular, the lack of recreational activities following the impact of pandemic means that Yangon residents especially families are likely to find comforts through local getaway options. Hoteliers are then encouraged to develop staycation products, adopting urban sanctuary concept as a lifestyle offering. All these, while keeping hygiene and health standards at a high level.

SAFE MODERN URBAN OFFERINGS TO STIR LOCAL TOURISM

Over the past four consecutive quarters Yangon witnessed no new completion of upper scale hotels. Although construction activities have been permitted to resume amid stricter restrictions in September, projects slated to complete in 2020 have shown signs of limited progress and were either postponed or shelved further to the following year.

Rosewood Yangon by Rosewood Hotels & Resorts remains to be the most recent development over the past year. Should construction go full swing, Yangon may see an entry of the additional 1,300 rooms in 2021 alone, the largest annual addition to be recorded. Some notable projects in the pipeline include Sheraton Yangon by Family Business Group Hotel Ltd., The Okura Prestige Yangon by Hotel Okura Co., Ltd., and Peninsula Hotel and Westin Hotel by Yoma Land.

Meanwhile, the citywide average occupancy rate fell to 14%, down by 30% YOY. The lackluster occupancy levels will continue to be the mark of pandemic-induced downturn as the return of international travels remains uncertain in the near term. The average daily rate stood at USD82 despite the growing pressure for discounts following a significant decline in visitor numbers. The entry of more modern upscale hotels in 2021 will only likely to exert further downward pressure on the ADR going forward.

The Department of Immigration reveals that as of July this year the total visitor arrivals dropped by more than 65% YoY. Looking closely, the number of additional visitors arriving between February and July was merely 60,000 – stressing further strain on the already underperforming industry. With prolonged concerns, a full resumption of international flights will be unlikely in the immediate future at least until the vaccine has been completely rolled out. Nonetheless, Colliers advises hoteliers to remain cognizant for a potential pent-up demand as the industry may gradually emerge from a temporarily unfavorable state.

Hotels can likely begin with encouraging the widely untapped local tourism market to slowly help build up the pace. In particular, the effects of the pandemic meant that leisure activities have become limited and that residents are in sought for recreational havens. With availabilities of lifestyle hotels, operators can provide modern urban comforts especially for families seeking safe local getaway options. In fact, over the past two years, upscale hotels in the city have started providing packages along with bundled discounts for consumer groups opting for staycation activities in town. Hotels can further leverage on this by ramping up their overall offerings.

Ensuring guests safety will remain fundamental. Building consumer confidence should be coursed through stricter health and hygiene measures such as rapid tests and constant temperature checks for guests, intensive cleaning routines with limited exposures, and more spacious layout arrangements in common areas as new norms. Beside extensive discounts, hotels can also offer advance bookings with flexible check-in dates, additional vouchers for food and beverages as well as more in-room facilities and amenities to encourage indoor recreational activities, among others. Given the ongoing pandemic concerns, touting upscale hotels as safe urban sanctuaries may bode well for individuals seeking a worthwhile escape from prolonged restrictions.

Source : Colliers

For more information , please contact :

Hpone Myint Thu
Manager | Research | Myanmar
+95 (0) 9 425 006 777
hponemyint.thu@colliers.com

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