Collier Property Report – UPPER-SCALE HOTEL Q4 2017

New Supply to Bolster Pressure in the Market

Yangon’s upper-scale hotel segment has trailed a bumpy road as of Q4 2017. Occupancy levels continue to weaken despite further reductions in the average daily rates. To gain leverage over the already stiff competition, Colliers advises hotels to continually differentiate and shape their offerings in line with the guests’ changing needs and expectations. Technology-focused services and features designed for business travellers are value-added essentials. Meanwhile, future projects should also veer towards modern quality mid-scale hotels. Basic hotel offerings but of cotemporaneous designs are attractive draws for both the fit and young travellers.

Forecast at a glance


In the long term, Colliers sees positive demand prospects for the mid-tier hotels catering both to frequent business and independent travellers.


The total upper-scale hotel stock is expected to significantly grow in the next three years. In 2018 alone, Colliers expects the completion of almost 1,400 new units, the largest estimated annual addition recorded to date.

Occupancy Rate

The citywide occupancy rate as of Q4 2017 reached a 43% mark, lower than Q3 2017. Further declines are expected given the strong supply pipeline forecasted for the immediate year.

Average Daily Rate

In Q4 2017, the average price has further decreased by 26% YoY. Daily rates are likely to become more competitive as future supply becomes considerable in 2018.

Supply Pipeline in Strong Upward Trajectory

Yangon’s upper-scale hotel supply reached more than 4,500 units as of Q4 2017, up by 7% and 18% on a quarterly and annual basis, respectively. This increase is driven by the debut of Shwe Taung Group’s Pan Pacific Hotel which consists almost 340 rooms. Integrated in the Junction City mixed-use development, this newly completed project is the latest luxury hotel introduced in Downtown, following the introduction of Sule Shangri-la Hotel (formerly known as Traders) since Q1 1996.

Yangon Upper-scale Hotel Supply

Unlike in the past wherein upper-scale room stock was unchanged for more than a decade, the market is now heading for a surge in new developments. In fact, about 16 upper-scale hotel projects are estimated to be completed within the next three years, translating to about 3,300 new rooms. For the immediate year, Colliers is expecting six projects of more than half of which are located in the Inner City Zone. Wyndham Hotel by Asia Myanmar Consortium Development Co., Ltd., and Sheraton Yangon Hotel by Family Business Group Hotel are some of the sizeable projects expected in the area, collectively representing more than 620 units. Also in the pipeline are two Downtown developments — Pullman Hotel by LP Holdings, and Hotel Kempinski by JL Group — anticipated to operate in H1 2018. Overall, we expect almost 1,340 additional units to be concluded in 2018, the highest projected annual addition recorded to date.

Noticeably, there is a significant build up in upper-scale hotel supply, more so with the evident rise of modern hotels posing array of offerings. Given that competition is predicted to further intensify, Colliers encourages investors to veer towards the untapped midscale hotel category instead. Besides defining the right hotel design and features, appointing suitable international operators will also enhance the marketability of the development.

Underserved Mid-tier Market

As observed by Deloitte in their recent travel and hospitality outlook1, global hoteliers are quickly becoming more experience driven, but most are focused on innovating the upscale market — leaving the mid-tier segment untapped and in need of an experiential facelift. While Myanmar’s hotel industry still lags behind modern global practices and given the stiff competition in the local upscale market, Colliers sees promising potential for Yangon developers to introduce international standard mid-scale hotels instead.

Forward-thinking hotels in the neighbouring ASEAN countries are already taking advantage of the opportunity delivering travellers some of the offerings of a luxury lifestyle hotel in reasonably priced packages. Modern comfort designs including green features are in fact strong draws to the young and free independent travellers seeking unique guest experiences. Colliers also suggests hotels to start investing in technology-focused products and services e.g. tech lounges, mobile convergence, guest apps, integrated communication and remote control systems, “Plug and Meet” meeting spaces, etc. to enhance Yangon’s predominantly business traveller’s experience. In fact, these technological features are now becoming popular regionally, viewed to ease inconveniences in travelling.

Further Declines in Rates Witnessed

As a response to the weakening performance over the past years, the majority of the upper-scale hotels were pressed to further lower their room rates, resulting in to a major decline as of Q4 2017. The citywide daily rate ended at USD 112, down by almost 26% YOY. Notwithstanding the reduction in rates, average occupancy further dropped 9% YOY. Colliers supposes that the entry of more modern hotels will likely exert further downward pressure on the daily rates with newer developments predicted to offer competitive prices. Adjustments in ADR levels are foreseen to continue especially as supply becomes considerable in the next three years.

Yangon Upper-scale Hotel ADR & Occupancy

Nevertheless, we think that the market’s potential still outweighs the existing challenges in the long run. In fact, Myanmar’s hotel and tourism industry is projected to grow at above the country’s GDP rates for the next decade, with Yangon’s tourist arrivals forecasted to double in size as reported by the World Travel and Tourism Council (WTTC) in their latest economic analysis2. For this growth to stir across the industry going forward, Colliers believes that innovation will have to come sooner or later.

Source : Colliers International Myanmar

For more information:
Karlo Pobre
Associate Director
Research & Advisory
+95 (0) 979 573 3378
The Htet Oo
Assistant Manager
Research & Advisory
+95(0) 943 190 707

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