Collier Property Report – NGWE SAUNG HOTEL & RESORT 2017

Mid-scale Hotels
Dominated the Market

It was not until the easing of sanctions in 2011 that the pristine coastline of Ngwe Saung gained traction from both domestic and foreign travellers. Ngwe Saung remains an attractive holiday spot for most locals, especially families based in Yangon. Demand appears to be positive with year-round hotel occupancy and ADR settling at a healthy yet seasonal state. With the right infrastructure and strong consideration of differentiating hotel offerings and amenities, Colliers believes that Ngwe Saung can be a marked global destination going forward.

Ngwe Saung Hotel Zone

Mid-tier segment led supply tally; Differentiation of offerings necessary

The tourism and hospitality sector has played a crucial role in driving forward Myanmar’s economy since the start of national reforms in 2011. Endowed with rich ecological attractions, historical landmarks, and cultural traditions, Myanmar has earned the status of one of the leading tourist destinations in Southeast Asia. In fact, the influx of both foreign and domestic travellers in the country for the past decade has led the World Travel and Tourism Council (WTTC) to forecast Myanmar’s tourism industry to outperform 183 countries in 2017. Apart from the flagship destinations (Yangon, Bagan, Inle Lake, Mandalay, Kyaikhto, Ngapali, etc.) that have gained increased global awareness over the recent years, WTTC together with the Ministry of Hotels and Tourism has noted one more key location that has significantly contributed to the sector’s continuous growth — Ngwe Saung.

Ngwe Saung Hotel Supply Stock (No. of Units)

A coastline stretching 15 kilometres wide on the west of Pathein Township in Ayeyarwaddy Region, Ngwe Saung is among the more prominent beach destinations in Myanmar, alongside Ngapali and Myeik archipelago. As a result of the mounting traction from vacationers, Colliers has witnessed a growing number of hotels in the area. In the past, the hotel market in Ngwe Saung languished due to the country’s isolation with only limited supply of poor quality rooms catering to limited tourism traffic, mostly locals, as well as Chinese and Thai guests. The opening of the country led to a revival in the hotel sector and tourists started coming to Ngwe Saung as a springboard for discovering the island’s tropical beach spots. In turn, a surge in hotel stock took place in four years from 2012 to 2015. Moreover, the quality of the hotel rooms, especially with the predominant mid-tier hotels, significantly improved due to the demands from international visitors.

The earliest recorded development in Ngwe Saung was in 2000 with the opening of the first ever mid-tier hotel (Sunny Paradise Hotel) and 2-star hotel (Yuzana Resort), jointly launching a total of more than 170 units. The stock positively progressed until a bottleneck condition occured in 2008. The market witnessed no introduction of any new hotels from 2008 to 2011 until the debut of Hotel Lux in Q4 2012, adding 58 units in the overall room count. Following the easing of the country’s sanctions in 2011, the highest additional stock was recorded in 2013 due to the completion of two notable hotels— Ocean Paradise Hotel and Ngwe Saung Yacht Club & Resort, collectively representing nearly 215 rooms.

Ngwe Saung Hotel Type Configurations (No. of Units)

At present, the famed Ngwe Saung beach is offering a total of 25 hotels ranging from budget lodging to luxury hotel developments, overall representing more than 1,370 rooms. This stock grew by an annual average of 12% from 2000 until end-2017. K Resort, RIA, Hotel @ The Sea, and JL Lodge are the latest developments introduced in the market. While Colliers has not recorded any future notable hotel projects, we see a potential strong demand likely bolster growth if developers aim on constantly differentiating their offerings.

There remains a lack of modern hotel developments in Ngwe Saung with the big majority of the hotels adopting a tropical resort design defined with the use of more organic materials such as wood and lush greeneries. We advise developers to start incorporating contemporary yet sustainable architectural designs that capture both modern tropical and minimalist feel. Colliers advises hotels to start introducing more lifestyleoriented facilities and amenities like indoor fitness centres, spas, saunas, etc.

The inclusion of shuttle services and technology-focusedproducts and facilities e.g. electronic key cards, integrated communication, guest apps, remote control systems, etc. could also aid in providing guests with a convenient and an unforgettable hotel stay.

Rates Pose Seasonal Behaviour

Ngwe Saung Hotel Average Occupancy Rate 2017

As for Ngwe Saung’s hotel demand, it observes a seasonal trend whereby tourist arrivals only surge during the peak season, especially during December holiday breaks and during the Thingyan festivities in April. While most hotels temporarily shut down during the monsoon season (June September), some remain moderately operating, catering mostly to domestic vacationers taking advantage of the promotional packages and rates. In 2017, the low season occupancy rate hovered at 37% level, while the high season reached 89%. Overall, the average occupancy rate ended 2017 at 68%.

Ngwe Saung Hotel Average Daily Rate 2017

Meanwhile, the year-round average daily rate stood at USD110. Colliers supposes this rate will persist in the near to medium term as we have not documented any futuresupply to be built in the area. In turn, this should pose a green light for hotel developers to push for differentiation in terms of both services and offerings. Given the seasonality circumstances in Ngwe Saung, creative marketing solutionsare essential. Likewise, hoteliers should promote tour packages that maximise guest experiences. These can be in a form of excursion trips such as motorised boat tours,fishing village trips, as well as outdoor activities including windsurfing, scuba diving, etc. In general, these will help extend length of stay and repeat visitation from guests.

Source : Colliers International Myanmar

For more information:

Karlo Pobre
Associate Director
Research & Advisory
+95 (0) 979 573 3378

The Htet Oo
Research & Advisory
+95 (0) 943 190 707

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