Myanmar: Surge in tourism

International arrivals in Myanmar topped 1m in 2012, up an impressive 30% from the year before. The country, which was recently voted the “top travel destination” by readers of the British magazine Wanderlust, is also attracting the attention of international hotel chains.

Tourism still plays a relatively small role in Myanmar’s economy, at least compared to its neighbours. According to the ASEAN Travel and Tourism Competitiveness Report 2012, international tourism receipts in Myanmar were equivalent to just 0.2% of GDP in 2011, compared to a regional average of 4.6%. The majority of visitors are from Asia, mainly Thailand (16%) and China (12%).

A strict military regime with closed borders had discouraged tourists in the past, but economic liberalisation and political reforms have brought a new wave of curious visitors. This has accordingly created new opportunities for investors, some of which were highlighted at the Myanmar Hospitality and Tourism Conference held in Yangon at the end of February.

In his welcome letter posted on the conference website, U Htay Aung, the minister of hotels and tourism, pushed for the development of higher quality accommodation.

“People in the industry have demanded [that] international standard hotel rooms in Yangon should be developed to accommodate the influx of tourists coming to Myanmar. Therefore, as Myanmar opens her doors to both corporate and leisure travellers, it presents myriad opportunities for foreign investors to seek partnerships and collaboration to meet the immediate needs of the industry,” he wrote.

Currently, Myanmar has 787 hotels and guesthouses that can provide 28,291 rooms. Demand is already outstripping supply, pushing hotel prices up to many multiples of what they were only one year ago.

“Tourist infrastructure is very limited and all the hotels are full, which has led to a price hike,” Aung Myat Kyaw, the chairman of the Union of Myanmar Travel Association, told OBG in March.

But foreign investors are already moving to fill this market gap. Shangri-La, the Asian luxury hotel group, is developing two, 21-storey towers of 120 serviced apartments each. The project, which was started in the late 1990s but put on hold, is expected to be completed by the third quarter of this year. Shangri-La is also developing an adjoining 800-room hotel, as well as commercial tower adjacent to its Traders Hotel in Yangon.

Other projects are under way, according to data from the Ministry of Hotels and Tourism, which show that foreign investors are financing hotel developments that would add more than 6700 rooms. Investors are primarily coming from other Asian countries, with Singapore, Thailand and Japan leading the list.

But hotel space is just one gap needing to be filled. Paved roads and improved public transport, easy international banking and reliable telecommunication services are also in the works, all due for major upgrades this year in preparation for the South-east Asian Games, which will be held in December 2013.

Direct access to Myanmar by air is still limited, but this is changing. Last year Condor Airlines began offering direct flights to Yangon from Frankfurt, Germany, becoming the first European airline to do so. This was only the second route offered outside Asia, after Qatar Airways’ Doha-Yangon flight. Visitors who enter the country at Yangon International Airport can also take advantage of the newly available visa-on-arrival service.

With this sudden influx of interest in the sector, the government has recognised the need to develop a structure and guidelines for the industry, stressing an interest in socially inclusive and environmentally sustainable projects. A Myanmar tourism master plan is due to be published in April this year.

The ministry has expressed the need to consider all aspects of the tourism industry and manage the potential downsides as well as encouraging foreign investment.

“Myanmar is changing rapidly, but it is important we keep our roots,” Kyaw told OBG. “Our country is about people, culture and religion. We must move in the right direction.”