Friday, May 25, 2012

Thais enter Myanmar hotel market with $260m stake

Bamrung Amnatcharoenrit
The Nation
Publication Date : 25-05-2012

Thailand is the second-largest investor in Myanmar's hotel business after Singapore, but the Association of Thai Travel Agents (ATTA) has warned that the young country still faces many obstacles such as outdated legislation and political instability.

Sisdivachr Cheewarattanaporn, the association's president, acknowledged Myanmar's huge potential in the tourism and hotel industry, but said its business outlook remains unclear. Yet, several countries in the region maintain their interest in investing in the country.

According to Maung Maung Swe, chairperson of the Union of Myanmar Travel Association, hoteliers from Thailand had spent US$263.25 million in Myanmar, offering 1,896 rooms in total via 11 hotel brands, including Andaman Club, Kandawgyi Palace, Nikko (Chatrium), Mandalay Hill and Pearl Laguna.

Investments from Singapore were the highest in the hotel industry at about $597 million, followed by Thailand, Japan with $183 million, Hong Kong with $77 million, Malaysia with $20 million and Britain with $3.4 million.

In terms of investment from Thailand, the power sector ranked the highest with about $6 billion, followed by oil and gas at $2.19 billion, manufacturing at $630.84 million and then the hotel and tourism industry.

Swe said the tourism and hotel business in Myanmar had improved and would grow further as more investment flows into the country. Myanmar also has the competitive advantage of being rich in natural resources and having a strong cultural heritage, which is an attractive tourism product.

After recent political changes, the Myanmar government has been making a big effort in modernising the existing investment legislation to promote the tourism industry. Swe said the government had called on his association and its members to share opinions on how the law can be amended to stabilise the tourism and hotel industry.

For instance, he said, in relation to the land-lease law, the association had proposed that it be extended to 70 years, starting off at 50 years and then offering two extensions of 10 years each. The existing law allows a lease of 60 years, starting at 30 years and then two renewals of 15 years each.

In terms of hotel investment, the association will also propose that the government protect local operators. For example, foreign investors should not be allowed to invest in one- and two-star hotels. However, they could work in a joint venture with locals to build three-star hotels or invest fully in four- and five-star hotels. This way, Swe said, local operators can learn more about business practices from foreign operators.

Over the next three to five years, Sisdivachr said, Myanmar would start competing head-on with Thailand, as many European airlines are planning to launch direct flights from there. This means that many tourists will be lost because Thailand will no longer be the gateway to Myanmar.

Myanmar currently has six domestic airlines and an airport each in Yangon, Nay Pyi Taw and Mandalay. It also has 759 licensed tour companies, of which one is wholly foreign owned, 15 are joint ventures and 743 are local firms. At present, there are 16 international airlines flying into the country - 15 to Yangon and one to Mandalay.

Last year, Myanmar posted $319 million in total tourist revenue, up from $254 million in 2010. Average spending per head per day was $120 last year, with an average length of stay at eight days.

There were 816,369 foreign arrivals in Myanmar last year, up from 791,505 in 2010. Of the total last year, 425,193 were border tourists. From April last year to this March, 64,267 Thais visited Myanmar, compared to 59,692 in the previous year.

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