Long-term strategy needed for Myanmar's hotel industry

The boom in tourism has been excellent news for hotels. The surge in tourism arrivals and a limited number of rooms have enabled hotels to triple revenues over a few years ago.

Myanmar’s undeniable attraction as a tourist destination is also luring foreign companies keen to invest in new hotels. The long-term outlook for the sector is bright.


But the short-term outlook is challenging. And one reason is that after years of very ordinary occupancy rates, hotels are revelling in the opportunities to cash in.

Maximising profit is important in every industry but it’s also important to consider long-term continuity and being prepared for increased competition in the future.

We have to realise that we are competing with the other ASEAN countries. While hoteliers in Myanmar were waiting and hoping for better times, hotels in other countries have been striving for years to increase standards and improve the quality of their service.

It is important to recognise that first-time visitors to Myanmar are probably not first-time travellers in Asia. They have been to other countries in the region and rate the satisfaction level of their Myanmar hotels against what they have enjoyed elsewhere in Asia. They have experienced standards of hospitality and room rates which are superior and cheaper, respectively, to what is available in Myanmar. Their expectations, therefore, of their Myanmar travel experience are high. And not necessarily likely to be realised.

Spoilt? Perhaps, but it’s a reality that negative publicity about disappointing travel experiences travels faster and reaches more people than the positive stories.

Under current circumstances, trying to attract the highest number of tourists might be counter-productive for the image of Myanmar as a travel destination. More visitors will mean even higher prices, more bad experiences and more negative publicity.

In this period of long-overdue euphoria, the hotel sector needs to adopt a long-term strategy aimed at ensuring that tourism in Myanmar will develop to its fullest potential.

As well as increasing the level of hospitality to justify the room rates, there is another issue for the hotel sector to consider. The existing hotels in Myanmar need to understand that the hotels built by foreign companies will have a focus on maximising return on investment and profitability.

The companies investing in these projects will employ modern management procedures, use state-of-the-art equipment and employ international managers with international experience. They will be able to provide service and standards that will be considerably higher than what is already available in Myanmar. It may be a few years before the new hotels begin opening, but existing hotels in Myanmar need to be aware that they need to raise their standards of service and start offering value for money.

To position themselves so that they will be able to compete effectively against the newcomers, there are a number of options that existing hotels can consider.

One is to enter into a management contract with one of the big multinational companies, such as Hilton, Accor or Sheraton, in which they run the business for a certain percentage of revenue and gross operating profit.

However, I have the impression that most Myanmar hotel owners would be unwilling to place their business under foreign management or hire an expensive, internationally-experienced manager.

Another option is third party intervention through a consultancy, which, for the owner, has the advantage of leaving him or her in charge of the property. The consultancy conducts an assessment of the hotel, recommends and supervises changes to increase efficiency and optimise the use of resources so that the property offers the quality of service expected by international travellers.

Another key issue is the marketing of Myanmar as a destination. Marketing campaigns have focused mainly on temples and pagodas. The travel experience of Myanmar has mainly involved Bagan, Inle Lake and Mandalay, and beach resorts such as Ngapali and Ngwe Saung.

But promoting a greater diversity of destinations makes good sense. Variety of choices will ease the pressure on transportation services and facilities and help to ensure that the revenue from tourism is spread more equitably throughout the country.

Offering a bigger menu of destinations will mean that travel bans on some areas should be reviewed. A good place to start would be Mogok, which I am told is one of the most scenically beautiful areas in Myanmar. And perhaps it’s time to lift the ban on travel in Chin State, at least for the more accessible areas.

Priority should also be given to promoting Myanmar as a year-round destination. There’s clearly potential for such a campaign to bring in more tourists because occupancy rates at Inle Lake and Bagan during the rainy season last year were sharply up on the previous year.

Human resources also need attention. Myanmar is fortunate in that work in the hospitality sector is highly regarded. But it is unfortunate that little advanced training has been available in recent years. Training schools for the hospitality sector were almost exclusively focused on preparing people to work in the Middle East and Singapore.

The opportunities emerging in the hotel sector in Myanmar will attract many of those who have found work overseas to return to their homeland. Their overseas experience will be invaluable, though some returnees will be frustrated by the traditional management style of many Myanmar managers, which is based on power and control and a reluctance to accept input from middle management.

There are exceptions and the managers who embrace modern management methods are more likely to get the best out of their staff, in terms of efficiency.

Myanmar hotel employees, at least the ones I have been working for many years, are confident and ready to take responsibility and to demonstrate initiative. They are creative and ready to be critical in the interests of raising management standards.

But back to the beginning: what to do about hotel rates? Nothing. In a free market economy prices should be determined by the forces of supply and demand in the market, a system which seems to work in most capitalist nations.

From my perspective, it is not room rates alone that are causing most of the complaints from visitors who were expecting better value for money; it is a combination of room rates, the level of services offered and the standard of the hotel.

The challenges are daunting but I remain optimistic that collective responsibility and a shared vision will ensure a bright future for the hotel sector in Myanmar.

(Frank Janmaat is managing director of Lighthouse Hospitality, a group of internationally experienced hotel managers and independent consultants working in a joint venture with KMA Group of Companies.)

source: The Myanmar Times
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