Price gouging due to hotel room shortage

Myanmar needs hotel rooms and it needs them fast.

One hears complaints of excessive price gouging and of guests being bumped when others were willing to pay more but – however crudely accomplished – supply and demand dynamics are clearly in play.

For now, there are only 787 hotels (23 are either four or five star) and roughly 28,000 hotel rooms in the entire country. By way of comparison Bangkok alone has 42,000 registered rooms and many more when those not registered are factored in.

It does look like at least some help is arriving in the form of international hotel chains setting up shop. Changes in the nation’s foreign investment law this February, in particular about the degree of ownership allowed, and tax benefits on offer, may be prompting the big hotel brands to have a closer look.

Accor, a French hospitality group, set to open three new hotels in Myanmar is no small player. The company is already active in 92 countries with over 3,500 hotels and some 450,000 rooms. Already in the Asia-Pacific region – from India and China to Fiji and New Zealand – it has 96 hotels and 23,425 rooms.

First to open in Myanmar this year will be the 168-room McGallery Hotel in Naypyitaw, which will be Naypyitaw’s first internationally branded upscale hotel. By the end of 2013 Accor expects to have finished building the 366-room Novotel Yangon Max and in 2015 there will be the 366-room Novotel Mandalay Mingalar.

A Western tourist pours water at a Buddhist shrine in Myanmar for good luck and prosperity.

On March 6, 2013, Hilton Worldwide signed an agreement with LP Holding Ltd for the latter to manage the 21-storey, 300-room Hilton Yangon, due to open next year in LP’s Centrepoint Towers at the corner of Sule Pagoda Road and Merchant Street, across from the High Court Building.

Best Western International Inc, with over 4,000 hotels and currently operating in 8 out of 10 ASEAN countries, is also coming in. The company is looking for local partners and is considering Yangon, Naypyitaw and Mandalay as possible locations, along with Sittwe, Bago, Bagan and Inle Lake and figures, of its three brands, to use its mid-scale Best Western one.

And Vietnam’s top construction group Hoang Anh Gai Lai Co Ltd, received permission in December 2012 from the Myanmar Investment Commission (MIC) to construct two buildings, one of which will be a 400 plus-room five-star hotel on Kaba Aye Pagoda Road in Yangon. At that time Vietnamese news sources said that there were 35 hotels projects in Myanmar with a projected 6,235 rooms.

Smaller fry are joining in as well. Myanmar national Serge Pun’s Singapore-based Yoma Strategic Holdings is considering buying a plot of land in Bagan to develop a luxury boutique resort.

Source: Mizzima

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