Tough times for Mandalay’s hotels

A hotel building boom has resulted in empty rooms and hotel closures in Mandalay, compounded by the traditional slump in tourism during the low season, according to insiders.

The 2010 political reforms unleashed a sudden influx of tourists to Myanmar, causing room rates to skyrocket. But a subsequent hotel construction boom in Mandalay has put a lid on room prices, with many in the industry now scrambling to turn a profit in an increasingly competitive market.

The number of hotel rooms in Mandalay has more than doubled since the recent political reforms. In 2011 there were 64 hotels with 2274 rooms in Myanmar’s second-largest city, but there are now 120 hotels and 5073 rooms in the city, and businesspeople are offering discounts and upping services in a bid to attract guests and generate revenue.

After several years of rising room rates, hotel owners have been forced to lower their prices by 30 to 50 percent for the roughly March through September low season due to competition from all the new hotels, according to Myanmar Hotel Association – Mandalay Zone chair U Myint Aung.

Tourists now have many options for beds and particularly in low season hotels are rarely filled, while many move to slash prices and increase amenities to attract guests.

“It is true there are many new investments in the hotel industry. But for some hotels the situation is getting worse and they have stopped their business, and some continue, heedless to their losses,” said U Myint Aung.

Rooms at the top-end hotels in Mandalay can go for US$120, while local hotels often cost about K20,000 a night for Myanmar guests.

But hoteliers in Mandalay say they face less-certain returns on their businesses than their Yangon counterparts. While Myanmar’s commercial capital sees a steady flow of businesspeople and foreign officials in addition to tourists, Mandalay aims mainly for tourists, who fluctuate widely based on the season.

Ministry of Hotels and Tourism director general U Aung Zaw Win said there were relatively few tourists in Myanmar from 1997 to 2009, but by 2011 record numbers of foreign visitors started to arrive.

“The sweeping political and economic reforms in our country enticed investors and tourists,” he said.

Hoteliers claim they often operated at a loss prior to the recent political reforms, and the chance to raise prices with the subsequent tourism influx aided the bottom line. However, tourists were forced to pay rising room charges as demand suddenly outstripped supply for the period – though the situation is now changing as more and more projects open their doors.

“Tourists previously had little choice when room prices started rising,” said Ko Kyaw Myo Latt, operations director from Hotel Dingar in Mandalay. “As there was a severe hotel shortage, Yangon room prices started increasing, followed by Bagan and then Mandalay,” he said.

Businesspeople invested in sector with support from the ministry and high expectations for the ASEAN summits, said Ko Kyaw Myo Latt.

“But now there are many hotels, and the hospitality sector has become very competitive.”

Increased competition has led to better service as the hotels in addition to some price cuts, as businesspeople vie to attract customers, he added.

Myanmar still has few visitors relative to some neighbours. Thailand – the 10th most visited country in the world – welcomed 26.7 million tourists last year, while Myanmar had about 2 million visitors. France claims the top spot worldwide with about 83 million arrivals.

Myanmar had 762,000, 792,000 and 816,000 tourists in 2009, 2010 and 2011 respectively. In 2012 the number grew to 1.06 million, and it hit 2.04 million by 2013, according to statistics from the Ministry of Hotels and Tourism. Officials target reaching 3 million tourists by 2015 and 7.5 million by 2020.

While many hoteliers are complaining of squeezed profit margins at present, there are few signs the build in hotels will stop.

Ministry of Hotels and Tourism statistics show there were 34,800 hotel rooms in the country at the end of 2013, but U Aung Zaw Win said the ministry has long-term plans to improve facilities and add to the number of hotels in anticipation of even more visitors in the future.


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