YANGON — Leading companies in Myanmar are building up the tourism industry in a bid to capitalize on the increasing number of foreign visitors to the Southeast Asian country since democratic reforms took place.
First Myanmar Investment signed an agreement in October with its Singapore-listed affiliate Yoma Strategic Holdings and other companies, including SHC Capital Asia, an investment company also listed in Singapore, to set up a joint company specializing in tourism work.
FMI and Yoma are both led by Serge Pun, an ethnic Chinese citizen in Myanmar, as chairman of their boards. FMI is a leading conglomerate focused on property development and became the first company to list on the Yangon Stock Exchange that opened in March.
The two companies manage hotels in Bagan and operate balloon tours over the ancient city in central Myanmar. They will spin off their tourism business to the joint company planned to be listed in Singapore.
The new tourism company will have a chief executive officer hailing from Kempinski Hotels, a German luxury hotel operator.
Pun said the joint company will generate synergy through the combination of the founders’ management resources and enhance its access to the capital market.
In a related development, United International Group, a Myanmar conglomerate primarily engaging in the forestry industry, recently borrowed $13.5 million from International Financial Corp., a member of the World Bank Group, for a plan to expand its hotel business.
According to the plan, Amata Hotels Group, which belongs to United International and operates resort hotels in three locations in Myanmar, will spend $30 million to expand those at Ngapali Beach and Inle Lake in the western and central parts of the country, respectively.
Another Myanmar conglomerate, Eden Group, acquired Sedona Hotel Mandalay in Mandalay, northern Myanmar, in October for about $40 million from Keppel Land, a conglomerate in Singapore.
Eden has been operating hotels in Naypyitaw, Myanmar’s capital, and other places including Ngapali under a partnership with the Hilton Group of the U.S. since 2014. The acquisition has given Eden a beachhead in Mandalay, a resort city that has many Buddhist temples.
On the Mergui Islands in southern Myanmar near the border with Thailand, Myanmar and Thai companies are planning to build resort hotels with support from the Ministry of Hotels and Tourism.
The number of visitors to Myanmar from abroad in the year through March more than doubled from the previous year to 4.72 million, according to the Central Statistical Organization. In recent years, visitors to regional tourist destinations, such as Bagan and Inle, have been increasing.
Building spree
Yangon, Myanmar’s largest city, has been on a construction binge by overseas hotel operators since the transition from military rule to a civilian democracy in 2011.
In August, Melia Hotels and Resorts of Spain opened a five-star hotel as a core tenant in a complex under development by Vietnam’s Hoang Anh Gia Lai Group.
Sheraton Hotels and Resorts, which belongs to Marriott International of the U.S., and Pullman Hotels and Resorts under the wing of France’s AccorHotels Group plan to open hotels with more than 300 guest rooms, starting in 2017.
Luxury hotels in Yangon had a total of around 4,300 guest rooms as of the end of June, up about 1.5 times from three years earlier, said Colliers International, a U.S.-based commercial real estate services organization.
As a result, the occupancy rate of hotels in the city has fallen below 50% from a peak of 70-80% in 2012, while accommodation fees per room have dropped to around $120 from the $200 to $250 range.
Compared with major cities in Southeast Asia such as Bangkok and Jakarta, however, Yangon still faces a shortage of hotels. Middle-grade and budget hotels will likely continue to open as well.
Source: Nikkei Asian Review
