The Myanmar government has announced a temporary suspension of new hotel developments in some of Myanmar’s most popular visitor areas in light of an accommodation supply glut in several of the country’s tourism hotspots.
Seeking to clarify local media reports this week of a blanket ban on new hotel construction in a handful of key regions, the Hotels and Tourism Ministry held a press conference on Tuesday announcing that it was applying tighter controls on new development requests from local investors in areas they said already had an oversupply, the Myanmar Times reported on Thursday.
“From Oct 30, 2016, we won’t just hand out hotel permits anymore in areas that are already congested,” Hotels and Tourism Minister Ohn Maung said.
“We will allow the construction of new hotels in places where there is more demand, like in Chin, Kayin and Kayah states,” he said.
A recent study by the ministry found that average occupancy rates were just 54% in Yangon, 51% in Mandalay, 28% in Nyang Shwe and 18% in Kalaw. Some local investors have loans from banks at 13% interest rate, Ohn Maung said. “That’s why we need to look at demand and supply, so that domestic entrepreneurs, as well as foreign investors, in the tourism industry can get a return on investment.”
Under the new directive, applications would be reviewed by regional governments, who would then make a proposal to the ministry for final approval, he said, adding that decisions would be made with an understanding of market needs.
“We are not restricting all areas for hotel construction. They will be granted in areas where there is tourist demand,” Ohn Maung said.
Industry bodies, who joined government officials at the press conference, said that even with international tourist numbers increasing by 50% each year, there was still an oversupply of lodging on the market.
“We have no concerns with room prices, which have already come down, even at some well-known five star hotels’ said Yan Win, chairmn of the Myanmar Tourism Federation.
But more planning is required to encourage construction in areas of higher demand, he said.
The news was echoed by officials in Mandalay, who attempted to allay any nervousness in the industry.
“Our ministry needs to work with hoteliers, tour companies and tour guides through negotiation,” said San Yu, deputy director of the Hotels and Tourism Ministry for Mandalay Region. “There is an increase in rooms but guest numbers are still low, so some hotels can’t provide good services, and if hotel services are poor, it may cause an inconvenience for guests,” he said.
The industry would benefit from more carefully planned development, he said.
“There are already enough hotel rooms in Inle and Taunggyi, but shortages remain in other areas,” he said. “Because there are too many rooms on the market, hotels don’t get the customers they expected.”
Ministry officials said the new directive would not affect any permits already approved.