The boom in total foreign arrivals into Myanmar in 2012 is bumping into the lack of hotel rooms in the former capital Yangon as well as at main tourist destinations.
YANGON- While Myanmar is experiencing a boom in tourist arrivals (+35% for the first half year 2012), the shortage of hotel rooms is worsening as almost no new hotel has so far opened. According to the report of Colliers International Thailand over Myanmar’s property market for the second half of 2012, construction of hotels in Yangon is now at still stand. No new supply is scheduled to be completed in 2012, due to one hotel in the Downtown Area rescheduling its completion date to 2013. Two other hotels are in the pipeline and are expected to be finished in 2014 in the Inner City Area. According to Colliers International Thailand, the downtown, inner city and outer areas of Yangon have a total of 1,730 upscale hotel rooms, three times less than Bangkok city centre.
The property market in the country encounters however weaknesses which generates difficulties for foreign investors desiring to move into the country. One of the biggest difficulties is the implementation of a new legal frame for investors. New laws on private investments have been voted early November 2012 but more steps will be necessary to ensure a complete transparent business environment. Under the new law, foreign investors can lease land from the government or from authorized private owners for up to 50 years, depending on the type and size of the investment, and the deal can be extended twice, for 10 years each time. Foreign companies can also benefit from tax exemption for a period covering the first five years of operation.
Other problems subsist however such as the lack of education in the local population due to the country’s isolation during half a century. While the rest of Asia went on a modernisation path, Myanmar which makes local population more resilient to changes. Human resources remain deficient as the government invested very little into its education system. The currency needs also a more stable environment as risks of devaluation remains high. The financial system is however already being improved with reforms on currencies and international payment likely to be completed by the middle of next year. And finally, the lack of good infrastructure translates into higher costs for transportation.
Myanmar authorities are now working on a new Yangon urban development strategic project which includes a master-plan to develop new hotel zones between Yangon International Airport and the future Hanthawady International Airport, according to a spokesperson from the Yangon regional government. The future airport is built in the Bago Region, some 80 km from Myanmar’s largest commercial metropolis. Lands in the district of Mingaladon, Htaukkyant and Hlegu, which are within Yangon region, have now been allocated for the new hotel zones. Most of the lands belong to the government or the military.
Myanmar now has about 25,000 hotel rooms across the country. Most are three- to four-star establishments, while five-star ones account for 5 per cent.
Luc Citrinot a French national is a freelance journalist and consultant in tourism and air transport with over 20 years experience. Based in Paris and Bangkok, he works for various travel and air transport trade publications in Europe and Asia.
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