Wednesday 24 April 2013

Hotel zones hold promise but acquiring land difficult

Hotel zones in Myanmar’s tourism destinations are being built to increase the supply of rooms and, at the same time, solve the problem of expensive land for investors.

However, the challenge is obtaining agreement from local villagers who have to move out, and ensuring they receive appropriate prices for their land.


The country’s rapid opening to the outside world has led to a surge in tourism that has exposed the severe shortage of quality accommodation. The government has moved aggressively by announcing plans for purpose-built hotel zones with roads and infrastructure in many areas, including Yangon, Mandalay, Bagan, Taunggyi, Chaungtha, Inle Lake, Rakhine, Mawlamyine, the Golden Triangle, Bago, Ngwe Saung and Nay Pyi Taw.

However, local residents in some areas are wary. Some fear the development will result in land grabs by the rich and connected, a common occurrence across Asia.

Recently, seven local residents of Nyaungshwe township near Inle Lake were charged as they protested against land acquisition by the government for a 600-acre hotel zone near the famous lake. In some other areas to be built as hotel zones, villagers are resisting relocation and use of their land for the tourism.

Myanmar Tourism Development Co, the investment arm of the Myanmar Tourism Federation (MTF), is proceeding with the Tada-U hotel zone near Mandalay. It has acquired land on which eight villages are currently located. The company has started negotiating the compensation paid to the villagers, and five or six have already agreed, said Kyaw Htun, joint secretary-general of the MTF.

“We earlier thought that getting approval from the government (to invest in the project) would be the most difficult part of our project development, but actually it was very easy. This is because the government also has the same goal: that is to develop the tourism industry and create jobs,” he said.

“Rather, the most difficult task is to get the local villagers’ agreement and make them understand that the project will eventually benefit them, not us.”

Mr Kyaw Htun said the company believed it would take about eight months to negotiate compensation with all the villagers in the planned zone.

Myanmar Tourism Development is also in the process of becoming a public company and will sell shares, which are currently valued at US$12 apiece.

The Tada-U hotel zone covers around 2,000 hectares of land. Myanmar Tourism Development needs to invest $560 million in building the necessary infrastructure and facilities, including electricity, utilities and roads.

The project, which Mr Kyaw Htun said would be a new township, focuses on positioning Mandalay as the main tourism destination of Myanmar. It will comprise hotels, commercial and financial areas, and a residential zone, with both local and foreign investors.

He said the company had received around 2,000 proposals from investors around the world who want to take part in the project. The company has divided the development into three phases; each will take three years for development.

As many as 300 hotels are planned in the zone, and proposals are being screened to ensure that investors have genuine experience in hotel development or management. The company does not want amateurs or investors interested only in profiting from land speculation.

“After the project is completed in the next decade, we will add 10,000 hotel rooms to the market and create at least 50,000 jobs for local people employed by both local and foreign hoteliers,” said Mr Kyaw Htun.
Kyi Thein Ko, secretary-general of the MTF, said Myanmar urgently needed to add more hotel rooms, but land prices, particularly in Yangon, are very high and infrastructure lacking. As a result, foreign hotel investors have yet to arrive.

He said the hotel zones were intended to help solve the land price problem. One of the zones is located between Yangon International Airport and the new Hanthawady International Airport, which is around 80 kilometres from the existing international airport and in Bago province. The government has to negotiate with farmers living in the area to move and accept compensation.

Around 1,000 hotel rooms are now being added in Yangon, which by the end of this year will have around 9,000 rooms, Mr Kyi Thein Ko added.

In the capital Nay Pyi Taw, rooms are in high demand for a World Economic Forum event in June and the SEA Games in December. It has 4,000 rooms now and is expected to have 10,000 b y year-end.
“We’re not worried about the hotel rooms in Nay Pyi Taw. Only those in Yangon are our concern,” Mr Kyi Thein Ko said.

He said that the government and the MTF were also in talks with Thailand’s Dusit Thani College and Singapore’s Shatec Institute to set up international hotel training schools in Myanmar to meet demand for qualified staff in the fast-growing business.

source: Bangkok Post

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