Business

Hotels in Myanmar’s Capital Struggling to Survive

By Htet Naing Zaw 8 August 2019

NAYPYITAW—Hotels in Myanmar’s administrative capital of Naypyitaw are struggling to survive, hoteliers told The Irrawaddy.

Of 65 hotels in total, only 48 are currently operating, with most suffering annual losses, they say.

A price war has ensued as Naypyitaw hoteliers compete for a limited customer base, Chairman of the Myanmar Hoteliers Association (Naypyitaw) U Than Htut told The Irrawaddy.

Unlike other countries, where hotels raise prices when their cities host events, Naypyitaw hotels are asked to offer discounts when events are held in the capital; hoteliers have no choice but to comply when asked in order to survive, lamented U Than Htut.

“We are asked to reduce prices when there are events. We are asked to provide lunch and sometimes dinner. Under such circumstances, it is even difficult for us to cover operating costs. If this situation goes on, it will be difficult for us to sustain in the long-run,” he said.

In the Naypyitaw Hotel Zone, ‘doing fine’ generally means incurring small losses, said Ko Naung Naung, the manager of a 70-room Naypyitaw hotel.

Losses range from 5-10 million kyats or more per month, depending on the size of hotel, he said.

“There are only seven or eight hotels that are doing well. They can host events. Their losses are low. For example, our hotel has 70 rooms and the occupancy rate is just ten rooms. On average, we loss 4 to 5 million kyats a month,” he told The Irrawaddy.

“The losses grow heavier as the hotel size gets bigger. For example, we have reduced watts and the electricity bills only cost us around 2 million kyats per month. But electricity bills cost as much as 10 million kyats for big hotels, and besides electricity bills, hotels have to incur staff salaries and allowances and internet service charges,” he explained.

When there are no jade and gem expos in Naypyitaw, hotels there have to rely on meetings and seminars organized by government agencies and local and international non-governmental organizations, hoteliers said.

When former military regime leader Senior General Thant Shwe wanted to have a hotel zone in Naypyitaw to match the characteristics of a capital city, his cronies at the time built hotels without considering their potential profitability, said one hotelier on condition of anonymity.

The previous governments adopted the slogan “MICE (Meetings, Incentives, Conferences and Exhibitions) is nice,” hoping to build a booming hotel industry in Naypyitaw by hosting meetings and exhibitions, but the plan failed, hoteliers said.

The Naypyitaw Hotel Zone is divided into two sections, and in Zone II the majority of hotels never came into operation, with construction on some of them stalled.

However, many hoteliers run businesses outside of their hotels. Many are actually business tycoons driving Myanmar’s economy.

According to a survey of hoteliers, 30 percent of travelers to Naypyitaw travel on business, while less than four percent come through travel agents for pleasure.

U Thant Htut has called for promoting tourism in Naypyitaw and has called on the government to create a more tourist-friendly environment there.

“There are places [in Naypyitaw] that would be attractive to foreigners, but some places are not safe,” said Ko Naung Naung. “For example, there is a hot spring, but there is no guarantee of its safety. If the existing places are made more appealing, this will contribute to the hotel industry here.”

And, since hotels are not turning a profit in Naypyitaw, hotel employees are not making decent wages or receiving other allowances.

Only when hotels charge the appropriate amount proportional to the services they offer will they be able to offer decent wages to their employees, said U Than Htut, director of the Theingaha Hotel.

“Only then will hotel employees will be able to support their families well, and spend for their professional development. Otherwise, their living standards will decline in the long run,” he said.

The Naypyitaw Hotel Zone has seen a declining number of guests since 2013, after Myanmar hosted the SEA Games Naypyitaw.

The situation has gotten worse since Myanmar handed over its ASEAN chairmanship in 2015.

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