From boom to bust for Bagan hotels

The humanitarian crisis in northern Rakhine and jailing of two Reuters journalists have hit hospitality businesses in Bagan hard, industry players admitted. But the problem goes beyond these two factors, they said. The government’s lack of law enforcement and absence of infrastructure support have throttled hotels and tourism.

On a recent visit, a herd of cows were seen grazing on land meant for building hotels in “Hotel Zone 4” in New Bagan, which – along with Old Bagan and Nyaung-U – constitutes the tourist area.

There have been only two or three hotel projects under construction and only three hotels are operating within a 500-acre site with 120 plots sold out 12 years ago. Hotel Zone 4 is located along the route to Chauk from New Bagan. From the zone, it is just a six-minute drive to Lokananda pagoda, 10 minutes to New Bagan, and 15 minutes to Old Bagan.

Very few landowners are opening hotels within the hotel zone areas because the authorities are still allowing developers to open new hotels and extend buildings within the monument zone in the ancient city of Bagan.

Last month, the Department of Archaeology and National Museums in Bagan withdrew charges filed against Myat Min Company, which was building a 384-room Novotel hotel in the cultural zone. This allows Myat Min Company to resume construction work, according to the rules and regulations of department.

Gracious Bagan hotel is one of three open hotels in Hotel Zone 4 and has been operating since 2015. However, their room occupancy rate is often under 50 percent.

“The problem in Bagan is that the authorities are allowing the building of new hotels in the ancient city. Some of the hotels had been built long ago, but some started being built only this year. Travellers prefer staying in hotels nearer the monuments and only the overflow of people come and stay in the hotel zones slightly farther away,” U Moe Wai Yan Myint, operations manager of Gracious Bagan told The Myanmar Times.

Look East

The hotels in Hotel Zone 4 are also feeling the impact of the Rakhine crisis and jailing of two Reuters’ journalists and have received booking cancellations from western and European tourists, prompting them to follow the Ministry of Hotels and Tourism’s “Look East” policy.

“Between January and May, we had less than 15pc room occupancy and it has been hovering at around 30pc since June. Most of our clients now are old customers and Thailand, China and Myanmar,” U Moe Wai Yan Myint said.

According to the Ministry of Hotels and Tourism, there are 85 licensed hotels and guest houses with 3,019 rooms in the Bagan region today, but that does not include hotels and guest houses operating under regional municipal licences.

Bagan received only 300,000 international visitors last year, which breaks down to an average of roughly 800 people a day. This number is far lower than what is required to fill the 3,019 rooms available in the Bagan.

Gracious Bagan had its best year in 2015. Then the number of competitors began increasing and developers began building near the Bagan-Nyaung U Highway Bus Station and other areas, U Moe Wai Yan Myint went on.

“Tourism has been declining since 2017, following the Rakhine crisis. The rising number of competitors also makes it hard for us to reach our targets. We have only been able to increase occupancy rates through special efforts such as creating themed rooms. Our Hello Kitty room is very popular among the local visitors,” U Moe Wai Yan Myint said.

The Department of Archaeology and National Museums submitted its final nomination dossier for Bagan to be declared a UNESCO World Heritage Site in January, and the government has pledged to implement a management plan for the site.

According to the nomination dossier, the hotels in the monument zone must be relocated out of city by 2028 but developers and existing hoteliers are still building the new hotels and room extension today.

Lack of infrastructure

Businessmen are trying to take advantage of the current situation and maximise their gains. The government should do more by improving basic infrastructure such as roads, electricity distribution and drainage systems if it really wants to attract more developers to operate from the hotel zone, he said.

“Here, in the hotel zone, we get less support from government. We ourselves had to build lamp posts, electrical wiring, drains, roads and other basic infrastructure. The hoteliers in town don’t want to be moved if they have to start like us. If the government supports us more, the move would be easier,” he said.

U Thain Htut, the owner of a plot in Hotel Zone 4, said he provided K800,000 to the government for the implementation of roads, pipes, lamp posts, drains within the zone 12 years ago.

“Back then, we could apply for a plot by submitting K800,000 to the government as funds for infrastructure development. But we had to build a hotel within the zone later on. That is why I applied for one plot then,” U Thein Htut said.

“Today, the price of land in the hotel zone ranges from K200 million to K400 million for 200 square feet depending on the location, but there have been no property transactions recently,” he said.

U Thein Htut currently has an 18-room facility called the Kyaw Hotel in New Bagan and a 16-room property called Oasis in Nyaung U as well as a restaurant in Lokananda Sanctuary.

“Business has not been good recently no bookings have been made for the coming tourist season. Two years ago the situation was not like this and tourism was quite good,” he said.

However, U Thein Htut said he still intends to build a new traditionally styled hotel with 15 bungalows and 30 rooms by 2019 or 2020 in Hotel Zone 4.

Hoteliers have to invest millions to set up a business, but they have to wait more than 15 years to see the returns, U Moe Wai Yan Myint said.

The 80-room Gracious Bagan Hotel has to take in K60 million and maintain an occupancy rate of at least 20 percent per month just to break even, and it has been mostly running at a loss this year, he said.

“Hotel business is not lucrative. We are struggling not for profit but just to see a return of investment,” U Moe Wai Yan Myint said.

The 43-room Hotel Union (2) Bagan was the first to open in Hotel Zone 4 in 2001. In the recent past only seven or eight rooms have been occupied at any one time.

“Very few people come and stay with us due to the increasing number of hotels and home-stay operators in New Bagan and the ancient city itself,” U Swe Thin, proprietor of Hotel Union (2) Bagan told The Myanmar Times.

The Mandalay regional government and Ministry of Hotel and Tourism first set up Hotel Zone 4 in 1996 for the purpose of relocating hotels away from the ancient city.

“Over the years, the authorities announced three times that they would take back the land if the owners of hotels didn’t relocate to the hotel zone. Either the authorities didn’t revoke the plots or no enforcement was carried out,” U Swe Thin said.

“The hotels in the ancient city must be relocated to Hotel Zone 4 according to regulations, but new hotels are being built event today. This is not fair for the hoteliers in Hotel Zone 4 and it is also causing us to suffer losses,” U Swe Thin said.

Although Hotel Union (2) Bagan is suffering losses it has no plans to shut down yet, he said.

Long-lasting damage

Hotels in Old Bagan are also suffering from the drop in tourists following the Rakhine crisis and the jailing of the two Reuters journalists.

Some hotels have cut costs by reducing their staff numbers in order to stay open. Among them was one of the more famous hotels in Bagan, The Hotel @ Tharbar Gate, which cut its staff numbers by 10pc after suffering months of losses.

“While we absolutely did not want to reduce our staff numbers, we had to do so in order to stay open. We have been suffering losses since April because our occupancy rate has been under 30pc percent,” U Khin Aung Htun, a senior member of the staff at The Hotel @ Tharbar Gate, explained.

“While hotels in the area have suffered dips in business in the past due to flooding and an earthquake in 2016, the slowdowns lasted just four or five months. The Rakhine issue is different and we can’t tell how long it will affect tourism,” he said.

“The impact of the Rakhine crisis on tourism will not be over after two or three months. The international community is increasingly critical over the Rakhine issue and the jailing of the Reuters journalists. We realised that tourism in our country would suffer after attending world’s largest tourism trade fair, ITB Berlin, in March,” U Khin Aung Htun observed.

In an effort to help tourism, the government has begun offering visa-free entry to visitors from Japan, South Korea, Hong Kong and Macau, and visas on arrival to visitors from mainland China.

The authorities have also ditched the requirements that East Asian visitors have to bring US$1,000 in cash upon arrival.

However, the latest change in the length that tourists can spend in Bagan (from five days to three) without a reduction in entrance fees has been widely criticised as a poor marketing strategy.


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