Business

In Naypyidaw, Too Much Room at the Inn

By Kyaw Hsu Mon & Htet Naing Zaw 7 June 2016

RANGOON & NAYPYIDAW — As the expected tourists and delegations have failed to arrive, hoteliers in the capital Naypyidaw are facing a growing crisis and are calling for government assistance as losses mount.

The military and quasi-civilian governments both encouraged companies to build luxury hotels in the capital by providing land at low prices. After government offices moved to Naypyidaw from Rangoon in late 2005, many hotels started popping up with the expectation that international delegations would soon fill their rooms.

But that has not happened.

There are around 5,100 rooms in 63 hotels in Naypyidaw, but fewer than 1,000 rooms are occupied every day, according to hoteliers in the city.

Chit Khine, owner of the Hilton Hotel in Naypyidaw, told The Irrawaddy the previous development policy has been a failure.

“Many hotels appeared in the run up to the 2014 Asean Summit, but now demand has trailed off so there is oversupply,” Chit Khine said.

The previous government attempted in vain to promote Naypyidaw’s hotel industry with a slogan also used by some international conference groups: “MICE (meetings, incentives, conferences, and exhibitions) is nice.” They attempted to attract visitors through meetings, conferences, workshops and exhibitions, but the plan failed.

“It is hopeless now. The government needs to review this situation,” Chit Khine said.

Enterprises ranging from five-star to budget hotels had all anticipated more guests not only from government delegations but also from tourism.

Kyawswar Maung Maung, general manager of Thingaha Hotel in Naypyidaw, said: “Taking a look at a hotel industry in Naypyidaw, I feel like the Titanic is sinking. Nobody comes to save us, and we are going down slowly. If no one finds a solution for us, we are done for. [Naypyidaw] has around 5,100 rooms, but at worst we receive 350 guests and at the most around 800 or 900.”

Since Burma handed over its Asean Chairmanship in 2015, the number of visitors to Naypyidaw has declined rapidly. Meanwhile, hoteliers made huge investments in their facilities and are now not making enough profit to cover their costs.

To turn a profit, a hotel normally has to have over 35 percent of its rooms occupied, but at present, the rate is around 15 percent, and hoteliers are struggling as a result, Kyawswar Maung Maung said.

According to the hoteliers, businesspeople account for 30 percent of travelers to Naypyidaw, and the majority of visitors are from international non-governmental organizations. The number of tourists who come through travel agencies is less than four percent.

“The previous government’s plans to attract people through meetings and conferences did not work. MICE alone is not enough. More measures are needed to attract tourists,” Kyawswar Maung Maung said.

A hotel manager said that only five international hotels in Naypyidaw attract enough guests, and they offer cut-rate prices, putting the future of smaller hotels at risk.

“When big hotels offer very competitive prices, it has become a cause for concern for the small hotels run by Burmese businesspeople. If they charge only 40,000 kyats (US$34) for a room, what rates are small hotels supposed to charge?” he asked.

Although the hotels receive a larger number of guests in June and July when the jade and gems exhibition is held in Naypyidaw, the profits from that time period do not cover the year’s operation costs, said hoteliers.

And Naypyidaw is one of the least accessible capital cities in the region, with Bangkok Airways the only international airline running direct flights to the city. All other travelers must fly in and out of Rangoon.

“We want the new government to be made aware of this. We are in trouble. I’m afraid we won’t be able to survive for much longer,” said Kyawswar Maung Maung.

Aung Myat Kyaw, vice chairman of the Myanmar Tourism Federation, said the new government should look at ways to draw tourists to Naypyidaw by creating attractions like amusement parks and entertainment venues.

“In Rangoon, there are enough guests to fill the hotels, but in Naypyidaw, there are many hotels with very few guests, so now is the time to study why people are not coming,” he said.

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