BANGKOK, 6 September 2013: The era of the ASEAN Economic Community,
due to begin in late 2015, will open the door for major hotel companies
to invest in Myanmar.
Speaking at Thai Hotels Association monthly general meeting,
Wednesday, the association president, Surapong Techaruvichit, said
Myanmar is now a country that will attract enormous investment in
hotels.
“Myanmar has the potential to tap AEC and it will give investors in
Thailand, who own medium to large hotel,s an opportunity to expand.”
The investment in the hotel sector appears attractive especially
given the current supply constraint and a sharp increase in room rates,
he added.
“Today, hotel business in Myanmar is booming … room rates over the
last two years increased from US$60 to US$200 or US$100 to US$300.”
Considering the trend, he advised members to check out the potential.
On the negative side, under-paid executives in the Thai hotel
industry could apply for executive posts in Myanmar at higher salaries
than they would earn at home once AEC kicks in. AEC frees up work
opportunities for nationals of all 10 member countries in the hotel and
tourism industries.
Tourism Authority of Thailand ASEAN, South Asia and South Pacific
region market division director, Pichai Raktasinha, said Myanmar’s hotel
sector has huge potential.
“On the back of easing of sanctions, Myanmar is poised to witness an
influx of foreign investors. They will fill the large gap in the four
and five-star segments that are more suitable for tourists.”
Apart from revising foreign investment laws to provide more tax
incentives and 100% foreign ownership, Myanmar is offering land plots in
prime locations in Yangon for investors to bid for hotel development.
However, the land plots are scarce and highly priced forcing some
investors to consider remakes of present buildings to transform them
into hotels.
There is considerable hype about the opportunities, but not much is
said about the escalating value of land in Yangon and the scarcity of
suitable land plots.
According to the law, investors can also lease land from the state or from private citizens who have permission to use land.
With strong hotel demand, first movers into this sector should gain a
significant advantage in commanding higher rates before the next influx
of hotels arrive.
Already Singaporean and Thai hoteliers are moving in and they will
bring with them global hotel chains such as Marriott, Sofitel, Hilton
and Accor.
According to the data released by the Myanmar’s Ministry of Hotels
and Tourism last June, there were 826 licensed hotels with 29,999 rooms
across the country.
However, there are only five five-star hotels in Myanmar and they are all owned by foreigners.
In 2011, hotel standards were identified and 11 hotels were awarded
four-star status, 56 hotels three-star level, 49 two-star level and 69
one-star level. The hotels in Yangon, Mandalay, Taunggyi and Bagan were
assessed by the Ministry of Hotels and Tourism.
Hotels have been accused of overcharging and delivering poor service
and this has prompted the government to establish hotel zones to
encourage international investment in new properties.
New hotel projects are also lined up in Yangon, Mandalay, Nay Pyi
Taw, Bagan and Ngapali. Big hotel chains such as Accor, Marriott,
Hilton, Best Western and HAGL have negotiated entry with new brands
unseen in the country over the last 40 years.
The Myanmar government projects 7.5 million tourists by 2020.
According to a tourism ministry report, last year’s arrivals passed 1
million for the first time and tourism revenue reached US$700 million.
source: TTR Weekly
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