Myanmar Strategic Holdings looks for investments in budget hotels, tourism

Enrico Cesenni, CEO of London-listed Myanmar Strategic Holdings (MSH), an investment holding company, is eyeing investments in budget hotels and tourism in Myanmar. “We feel that there is room to grow in the budget category rather than in the more expensive categories,” he told The Myanmar Times during a recent interview.

Tourism is also interesting. “The challenge now is that there iare not enough activities available for tourists who visit Yangon and Bagan. Unlike Chiang Mai in Thailand, which offers cheap food and massages as well as beach activities and sports, there is no reason for tourists to come back to Myanmar,” Mr Cesenni said.

“If you stay in Yangon, after visiting the Shwedagon Pagoda in the morning, there is little to do in the afternoon due to the heat and traffic. These things need to be better thought out and organised to draw more tourists,” he added.

Getting started

MSH is headquartered in Singapore and Yangon and listed on the London Stock Exchange. It is headed by Mr Cesenni, a former investment banker and now the largest shareholder of the company.

MSH first invested in the Myanmar hospitality market in August 2014 with the acquisition of the development and management rights of Ostello Bello Bagan, a boutique budget hotel located in Bagan. Its portfolio has since expanded to include three more Ostello Bello hotels in Bagan, Mandalay and Inle Lake. The hotels have 500 beds in total.

In 2016, MSH diversified into the education market by acquiring the rights from the UK’s Pearson Education to open English language centres for adults in Myanmar. It opened its English language centre in Yangon last February 2017, spanning over 800 square metres over five floors. Backed up by strong interest, MSH opened a second Yangon centre last November.

The schools now have 1,000 students in total, with MSH targeting 150 new enrolments per month across both centres. “Many locals see the value of learning English in Myanmar. The English language is a great enabler here. By being able to speak in English, the average accountant can double or even triple his salary. As such, education is a good investment in Myanmar for both students and investors,” said Mr Cesenni.

Asset light strategy

MSH’s focus on hospitality and education stems from its strategy to stay asset-light. “We prefer smaller projects with minimal capital expenditure that require a short time to market and which we can scale over time,” said Mr Cesenni.

By acquiring the rights to manage existing hotels for example, MSH can start business right away, as there are no additional approvals or investments in equipment and infrastructure needed. “We prefer to projects that require minimal time to market and which we can replicate multiple times. By taking over the rights to existing hotels and schools, we lower our risk and minimise the capital outlay,” he said.

Moving forward, MSH intends to grow its portfolio by adding 2-3 new hotels every year as well as partnering with operators to develop the tourism sector, such as adding new activities and tours.

It is also planning to open a new English language centre every year, and already has plans to launch a third and fourth centre in Yangon and Mandalay in the quarters ahead.

Shares of MSH last closed at $15 each, with just 140 shares traded, according to the company’s website. At those levels, it has a market capitalisation of $34 million. MSH has around 2.2 million shares issued, with Mr Cesenni holding around 50pc.

Source : Myanmar Times

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