Collier Property Report – Yangon Upper Scale Hotel Market 2H2015

Surge in upper-scale hotel supply leads to further headwinds

  • The upper-scale hotel market expanded noticeably in 2015 to end with more than 3,500 rooms. The number is expected to double in the next four years on the back of a rising supply pipeline.
  • Occupancy rates further declined for the third consecutive year dampening average room rates. The rising competition from mid-tier hotels alongside the anticipated rise in new supply is likely to exert pressure to further reduce ADRs.
  • Demand prospects appear bullish amid government initiatives to introduce tourism-related and economic reforms. Yangon will remain a key commercial hub in the country, offering significant market opportunities for the sector in the long term.


More than 1,200 new rooms introduced in 2015, a new record high

Yangon’s upper-scale hotel supply stock reached an unprecedented level in 2015 following the completion of more than 1,200 rooms – the highest annual addition recorded to date. The room-stock grew by 27% and 55% on a half yearly and annual basis, respectively. The surge in supply was mainly driven by the debut of new developments along with the opening of hotel project extensions.


Since the delivery of Novotel Yangon Max and Rose Garden Hotel during the first half of 2015, three more upper-scale hotels were added for the year, collectively representing 758 rooms. In Q4 2015, Sedona Hotel’s room inventory expanded with the unveiling of the 29-storey Inya Wing – comprising of 431 keys, higher than its original stock of 334. During the same period, 231 more rooms were added to the market after the opening of Jasmine Palace Hotel by local developer Alinker Sabae Nandaw Construction Co., Ltd. Meanwhile, the previously completed Rose Garden Hotel, delivered an additional 89 new rooms. The hotel intends to open the rest of its inventory in 2016.

Once witnessing a dearth in supply for the past decade, the market is currently heading for a surge in new developments. About 16 upper-scale hotel projects are underway translating to about 1,000 new rooms annually in the next four years.

The Inner City zone will comprise half of the upcoming supply. Melia Hotel by Hoang Anh Gia Lai Myanmar Group, and Sheraton Yangon Hotel by Family Business Group Hotel Limited are some of the sizeable developments to complete in the area in the near to medium term. Also in the pipeline are Lakeside Shangri-La by the Shangri-La Group and Wyndham Hotel by Asia Myanmar Shining Star. The latter will be integrated in the 4-acre mixed-use development Kantharyar Myanmar Centre in Mingalar Taung Nyunt Township. Moreover, Summit Park View, in Dagon Township, recently announced its expansion plan for a 251-room hotel extension, projected to complete in 2017. The new hotel wing will consist of a ballroom and a serviced apartment component.

A sizeable increase in room stock is similarly geared in the Outer City zone to be led by Daewoo Amara Hotel; while Centre Point Grand Hotel, Pan Pacific Hotel, Kempinski Hotel, and Peninsula Hotel shall contribute to Downtown’s future stock.

Despite the strengthening supply pipeline, construction progress for the majority appears sluggish. Colliers expects delays in future completion, while some projects may temporarily be shelved given the recent market developments, especially the lowering levels of occupancy.

Occupancy dropped for the third consecutive year amid the rise in competition The upper-scale hotel occupancy continued to dwindle for the third consecutive year as a result of the high-base average daily rate, worsened by the surge in supply, and the rising competition from mid-tier locally developed hotels.


Based on the 11 upper-scale hotels tracked by Colliers, barely half were occupied from the 820,000 room nights offered in the full year of 2015. The city-wide occupancy declined by a substantial 12% and 17% versus 2013 and 2014 levels, respectively. The rate especially dropped in Q4 2015, which revealed to have fallen short of 34,000 (occupied room nights) compared to the same period in 2014.

Downtown Yangon continued to receive the highest occupancy which stood at 58% as the end of the quarter. Nonetheless, the rate remained far lower than in Q4 2014. Furthermore, the Outer City Zone witnessed the highest decline following the opening of the new Sedona Hotel extension, while a subsequent 13% drop YoY was recorded in the Inner City zone.

The increasing demand for lower grade and locally developed hotels have exerted downward pressure to the upper-scale market’s occupancy in the recent years. Mid-tier developments such as Green Hill and China Town are some of the most notable ones, being represented by international operator, Best Western. As a result of an improving performance and occupancy, the group plans to expand its portfolio, and is also set to bring in a new boutique lifestyle brand, Vib, in 2018. The hotel will feature better convenience and connectivity in a bid to accommodate the increasing number of independently minded travelers. This bodes well for the sector as there remains a limited supply of upmarket backpacker hotels in Yangon. In fact, some foreign investors are now taking particular notice on this opportunity, geared to venture in to this untapped hotel category.

Meanwhile, based on the 50 mid-tier hotels monitored by Colliers, the occupancy rate ended at 78% in 2015 – markedly higher than that of the upper-scale category. Both short and long term staying business travelers were the main guests – spending a considerable discount from the high room rates offered by most four and five star hotels.


As a response to the weakening performance witnessed over the past year, the majority of the upper-scale hotels were pressed to lower their room rates, resulting in to a major decline in Q4 2015. Compared to the same period in 2014, the average daily rate (ADR) dropped significantly by 17%, to USD 151. The figure was similarly reduced by USD 31 versus the corresponding period in 2013.

The ADR in the Outer City Zone declined by 22% YoY, as were in the Inner City and Downtown, albeit at a lesser magnitude. Downtown Yangon continued to post the highest rate at USD 179.

Despite the lowered rates, the occupancy has trended downwards over the last two years. A post-election euphoria may help buoy the sector in the near future, but a further reduction in room rates should be necessary in order to bolster occupancy.

Overall market prospects continue to appear encouraging. For instance, the record growth in foreign arrivals will most likely to continue in the near to medium term supported with key tourism development initiatives and economic reforms. Government data reveals that over 4.2 million foreign arrivals were recorded as of December in 2015, and is said to be on track with its target of five million by March of the following year. The demand should continually be spurred with the anticipated rise in business visits, on the back of a positive response to the recently concluded general elections. More international airlines are now being rolled out to enter Yangon and the expansion of the Yangon International Airport in Q1 2016 should support to accommodate up to 2.7 million travelers per year. To an extent, Yangon will remain a major commercial hub and key gateway to the country, paving robust growth opportunities for the market in the long term.

Source: Colliers International Myanmar


Hsan Pyae
Research & Advisory


Tin Thandar Oo
Research & Advisory
+95 (0) 9 781 251830


Karlo Pobre
Senior Manager
Research & Advisory
+95 (0) 979 573 3378


Tony Picon
Managing Director | Myanmar
+95 (0) 942 103 4026


Colliers International
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