The supply of quality hotel rooms is expected to double in the next five years.
According to a new report by JLL, 4,518 new rooms are expected to open in Myanmar’s largest city, of which 95% will be international standard. This influx will more than double Yangon’s existing inventory of international hotel rooms. At present there are 9,163 rooms in the city, but less than a third of these are considered to be international standard.
“Ever since Myanmar embarked on its journey to democracy in 2011, Yangon has seen an incredible improvement in hotel market performance as demand continues to outpace supply,” said Andrew Langdon, JLL Hotels & Hospitality Group’s executive vice president for Thailand & Indochina.
“Over the past 12 months we’ve seen a number of international hotel operators, including Accor and Hilton, take advantage of these conditions with key projects slated to open later in the year.”
Demand for international standard accommodation is being driven by visitors from Thailand, Japan, China and South Korea, and the city’s occupancy has surged from 46% in 2009 to a record 80% in 2013.
Revenue per available room (revPAR) is also increasing dramatically, growing more than seven times to US$126 over the past five years. Due to the amount of extra room supply expected to enter the city in 2014, occupancy is set to remain stable at 80% this year, while average daily rates (ADR) are forecast jump 10% year-on-year to US$173.
“Recently unveiled plans from the Asia Development Bank coupled with the expansion of the existing international airport and the opening of a new airport near the City in 2018, means we don’t expect any let up in the growth of tourist arrivals to Yangon,” Langdon continued. “With the majority of future supply concentrated towards upscale and luxury, this presents a strong opportunity for the midscale brands where the market remains relatively untapped.
“Looking forward to beyond 2014, we expect occupancy to stabilise at current levels while a continued increase in supply will see ADR starting to moderate. The future remains bright for the Myanmar hotel market and opportunities await for investors and operators who are willing to take them.”
Accor has unveiled plans to introduce its Novotel, Pullman and Sebel brands to Yangon, while Hilton has committed to a new 300-room hotel in the city. Best Western has already opened one hotel in the city and expects to add a second later this year, while Asian brands including Pan Pacific, Peninsula and Shangri-La have all signed new projects in Yangon.
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