Myanmar has emerged in recent years as a sought-after tourist destination in a region known for its tourism attractions. Since the country opened its doors through political reform in 2011, many have been attracted to its diverse landscapes, rich culture and heritage. While infrastructure challenges remain, and low hotel occupancy rates affect many small businesses, a decline in visitors from Western countries has had the biggest impact on the industry recently. However, damage has been limited by an increase in tourist numbers from elsewhere in Asia, which has been aided by policy developments offering visas on arrival and visa-free entry to visitors from many Asian countries. The next phase of growth will require better marketing of Myanmar’s attractions, with the suggestion that visa-free entry be extended to more countries a promising option. Sitting at the crossroads between India, China and South-east Asia, Myanmar is well positioned to capitalise on tourist flows from and through these huge markets.
Government Participation
Tourism development is considered a priority in Myanmar. “The government now understands the importance of the sector and sees tourism as one of the major motors of the economy in the coming years,” U Win Aung, chairman of tourism group Amata Holding, told OBG.
To attract more tourists from within Asia and increase tourism expenditure, the Ministry of Labour, Immigration and Population has rolled out a series of initiatives, offering simplified visas on arrival to tourists from China and Macau and visa exemptions to Japan, Hong Kong, South Korea and – on a one-year trial basis – Taiwan. These policies were approved in July 2018 by the Central Committee for the Development of the National Tourism Industry (CCDNTI) and took effect on October 1, 2018. At the close of the year it was too early to evaluate the impact the policy would have on arrivals, but it is expected to be popular with tourists from some of Myanmar’s biggest source markets. The initial announcement of the policy stated that tourists from China, Japan and South Korea must show that they are carrying $1000 in cash on arrival; however, this requirement was waived after widespread criticism from the industry. Further efforts to ease travel procedures were evident with the cancellation of the arrival and departure card system in September 2018.
The Ministry of Hotels and Tourism (MoHT) is tasked with overseeing the systematic development of the tourism industry in Myanmar. The main structural policy guiding their work is the Myanmar Tourism Master Plan 2013-20. It acts as an overarching framework to direct policy development and implementation for the industry, aiming to steer the country towards sustainable and responsible development, and ensuring tourism has positive economic multiplier effects. The plan also identifies areas that need to be addressed, such as inadequate tourism infrastructure and the protection of cultural heritage. Also playing a key role in tourism management is the Myanmar Tourism Federation (MTF), a group of 11 tourism-related business associations that facilitates communication between the government and the private sector, promoting Myanmar abroad as a tourist destination.
Legislative progress has occurred with reforms seeking to attract foreign investment in travel and tourism, and other promising sectors. The Companies Law came into effect in August 2018, permitting foreign ownership in any Myanmar company up to a threshold of 35% (see Trade & Investment chapter).
Tourism Growth
Tourism continues to grow in Myanmar, with the overall number of visitor arrivals on the rise. According to the MoHT, Myanmar received 3.44m international visitors in 2017, an uptick of 18% compared to 2016. As of October 2018 the total number of arrivals for the year stood at 2.84m, a slight increase when compared to the 2.81m who arrived over the same period in 2017. However, this figure includes a significant number of day-trippers who cross from neighbouring China and Thailand for shopping visits and visa runs. In terms of longer visits, the MoHT noted approximately 1.24m visitors for the first 10 months of 2018, up 1.4% year-on-year (y-o-y).
While tourism is still at a nascent stage, the rate of growth notably slowed in 2017/18. State Counsellor Daw Aung San Suu Kyi addressed the slowdown in a speech to local media outlets in August 2018, stating the need for easier visa processes, an expansion of transport infrastructure, more low-budget accommodation such as guesthouses and cheaper hotels, and further diversification of activities and dining options for tourists. The relatively small number of international air carriers serving Myanmar have a tendency to operate at overcapacity, with the consultancy group CAPA – Centre for Aviation finding that international load factors averaged 60% in 2017. Yangon International Airport recorded the slowest growth rate in air passenger traffic for five years in 2018. Progress in addressing these challenges is already being made through the offering of visas on arrival and visa exemptions, while the passing of the Tourism Law is expected to address many other areas of concern (see analysis).
Rise & Fall
The composition of travellers to Myanmar is changing. According to data from the MoHT, most of the increase in tourism is stemming from Asia. Between January and November 2018 total visitors from this region equalled 945,022, a y-o-y increase of 10.91%. This included a 38.1% surge in arrivals from China, and a 7.2% jump from Thailand – the country that the largest proportion of visitors originate from, at 27.7%. Conversely, the number of arrivals from Western countries has decreased, with Western Europe and North America recording a y-o-y fall of 25.33% and 13.81%, respectively. Arrivals from the Middle East also fell by 15.1%.
The decline in Western visitors can be partly attributed to the fallout from unrest in Rakhine State, which has generated negative international media coverage. The impact of their shrinking numbers is being especially felt by small and medium-sized businesses, which depend on Western markets. The director of the MoHT, U Myo Win Nyut, told local media that over 100 small tour operators had halted business and returned their operating licences. Nevertheless, the Rakhine crisis has not had the impact expected due to increasing demand for hotels and tourism services from Asian travellers. “Actually, we did not suffer much since the number of tourists did not decrease, just their origins varied,” Daw Tint Tint Lwin, CEO of tourism and transport company Tint Tint Myanmar, told OBG.
Expenditure & Employment
Data from the MoHT shows that tourists spent a total of $1.96bn in Myanmar in 2017, with an average of $153 per person per day, a drop from the 2016 figures of $2.19bn and $154 per person per day. The decline in expenditure is understandable due to a drop in tourists’ average length of stay from 11 nights in 2016 to nine nights in 2017. According to Oriol Mayol, sales and marketing manager at tour operator Pegu Travels, this can be attributed to the fall in Western visitors. “Western tourists tend to stay longer, while tourists from within Asia only stay for three to four days, which is not as beneficial for the sector,” he told OBG. Furthermore, many tourists from Asia arrive on low-budget tour packages and do not hire local tour guides or use local operators. While such groups do not create substantial economic multiplier effects, they help to keep the industry ticking over. “This market has shorter length of stays, but they are repeat customers,” Daw May Myat Mon Win, chair of the Myanmar Tourism Marketing Association and vice-chairman of the MTF, told OBG.
According to the World Travel & Tourism Council (WTTC), in 2017 the total contribution of travel and tourism to Myanmar’s economy was $4.9bn, or 6.6% of GDP. Its direct contribution to GDP was 2.7%, which the WTTC expects will grow to 2.9% by 2028. Considering the wider effects of investment, the supply chain and induced income, the sector’s total contribution is forecast to expand by 7% per year to $10.1bn, or 7% of GDP, by 2028. There were 570,000 people working in tourism-related jobs in 2017, making up 2.5% of total employment. This number was expected to rise by 2.2% in 2018 to 582,500. By 2028 the sector is forecast to directly account for 914,000 jobs, an average increase of 4.6% annually over the next decade.
Poor quality and low-capacity infrastructure continue to be a barrier for the further development of tourism, but the government is hoping that public-private partnerships will help to fill financing gaps. The Directorate of Investment and Company Administration (DICA), tasked with promoting and managing investments, recorded $116m in foreign direct investment in the hotel and tourism sector in FY 2016/17. However, the DICA’s director-general, U Aung Naing Oo, commented to local media in September 2018 that the country had initially underestimated the economic impact of the Rakhine crisis, adding that prompt action was needed to address investors’ concerns.
Hotels
The hotel industry, for its part, is undergoing a rebalancing scheme. Following a boom in hotel construction in 2012 and continued development of projects thereafter, many in the industry are facing low occupancy rates, especially given the downturn in the number of Western visitors. According to a second quarter 2018 report by Colliers International Myanmar, the room rental occupancy rate in Yangon was 47%, which, while low, is a six-percentage-point increase from the same period the previous year.
Despite low occupancy rates, investment continues to rise in anticipation of future growth. According to the MoHT, there are 1676 hotels and 67,350 rooms available across the country for tourists. In 2017 there were 33 completed foreign hotel and commercial projects, creating a further 6241 rooms. Another 11 projects were under construction and 20 received permits to progress. Most of these investors were from Singapore, accounting for 32 of the projects, with 12 from Thailand and six from Japan. The majority of new hotel builds and new room additions have been for 4 and 5-star hotels, such as the 74-room Yangon Excelsior, which opened in July 2018 after the renovation of a heritage building once housing a British colonial trading firm. However, this has left a gap in the market for more affordable accommodation, which there is high demand for. The 3-star Hotel G Yangon, has proved successful despite opening in a difficult period in September 2017.
The Directorate of Hotels and Tourism oversees the development of hotel zones and hotel project developments, and issues licences for accommodation and tour businesses. The hotel zones were initially set up to shift developments away from the ancient city of Bagan and culturally protected areas, although developments are still commencing within these cultural zones. The Department of Archaeology, National Museum and Library, a division of the Ministry of Culture, requires that all hotels be relocated to hotel zones by 2028.
Locally Attractive
Domestic tourism in Myanmar has expanded greatly, with the volume of domestic tourists far exceeding the inbound total. The Domestic Pilgrimages and Tour Operators Association calculates the total number of domestic travellers by collecting figures from checkpoints in the most visited cities. Numbers have jumped from 3.1m travellers in 2011/12, to 7.1m in 2016/17, including those on both package tours and private trips. According to the WTTC, domestic travel spending generated 32.4% of direct travel and tourism GDP in 2017, and is expected to grow by 5% in 2018 to MMK1.6trn ($1.1bn).
The rise in domestic tourism can be attributed to an expanding middle class and the increasingly sophisticated consumer tastes of citizens as they become more exposed to global trends. “Many locals have changed their lifestyles and mindsets to seek out adventure, so both domestic and outbound travel has increased substantially,” Daw May Myat Mon Win, told OBG. This has even impacted the religious travel market in the predominantly Buddhist country, as pilgrims increasingly prefer to stay in hotels, rather than monasteries, and combine pilgrimages with holidays.
Most Visited Destinations
The most popular destinations for tourists include Yangon, Bagan and Inle Lake. Mandalay, the last royal city of Myanmar, also attracts many local and international visitors, especially from neighbouring China. Beach resorts on the southern coast have likewise experienced higher visitor numbers with the development of luxury resorts.
Most visitors to Myanmar enter through land border gateways, which accounted for over 2m arrivals in 2017, followed by 1.14m airport arrivals in Yangon. Naypyidaw continues to expand, with the capital being promoted as a meetings, incentives, conferences and exhibitions destination. Tourism facilities in the capital cater to visitors from Asia and to business travellers, with venues such as the Myanmar Convention Centre and an ample supply of hotels. Although some challenges remain, such as the relatively high cost of accommodation and local transport, an increasing number of activities are being offered to encourage more tourists to visit the capital. New restaurants and shopping areas are also opening, and a greater number of organised packages are being made available for attractions such as elephant camps, hot springs and Nant Mon Gyi waterfall.
Promotions & Taxes
Myanmar has expanded and revamped its tourism promotion with a presence at many trade fairs in 2018, and promotions are planned for Spain, Italy, the UK, Germany and Scandinavia. New branding was rolled out in 2018, with the “Be Enchanted” campaign replacing the “Let the Journey Begin” campaign that had been running since Myanmar opened its doors to tourism in 2011/12. The new campaign seeks to promote a positive image of Myanmar abroad. The slogan was chosen through a survey conducted in April 2018 at Yangon International Airport; respondents agreed that the campaign encapsulated the “mysterious, curious and magical” image of Myanmar, as well as the kindness and warmth that visitors receive. The MTF named Yangon-born Japanese singer and actor Win Morisaki a brand ambassador in August 2018, with his promotion of Myanmar as a travel destination expected to boost visitor numbers from Japan to 200,000 per year, according to U Ohn Maung, minister of hotels and tourism. This would be a substantial increase from the 93,294 Japanese visitors who arrived in the first 10 months of 2018, a figure up 1% y-o-y. The MoHT had a total budget of $1m for tourism promotion in 2018. The MTF has asked the state to impose a bed tax on visitors to fund tourism promotion, equivalent to $1 per night for international tourists; however, this is likely to displease budget hotels and may deter visitors.
Source Markets
The largest source markets for Myanmar are Thailand, China and Japan, accounting for 20.1%, 15.6% and 7.45% of arrivals in 2017, respectively. However, ties with its nearest neighbours are progressing, and there is potential for Myanmar’s tourism industry to capitalise on the large flow of international tourists through South-east Asia, as well as the substantial rise in outbound travel from China and India.
While Indian visitors accounted for 3.05% of arrivals in 2017, the signing of the Land Border Crossing Agreement in May 2018 officially opened the land border that Myanmar shares with India, which should see more Indians travelling to the country for business and tourism. The Indian government is undertaking construction work and upgrades on 69 bridges from the Second World War era that stand along this border. The agreement not only increases trade and commerce opportunities for Myanmar, but also expands India’s ties with South-east Asia. However, more work is needed to ease travel flows, including the signing of a motor vehicles agreement, so that citizens of both countries can drive across the border. Headway has been achieved on other fronts, with visas on arrival extended from Indian business travellers to tourists following a deal penned on December 1, 2018. Under the agreement, visas on arrival will be granted to all Indian travellers arriving through the Naypyidaw, Yangon and Mandalay airports. This follows a reciprocal visa-on-arrival policy agreed in September 2017 for Myanmar tourists visiting India. Connections between Myanmar and Laos, meanwhile, have also progressed with the opening of the Myanmar-Laos Friendship Bridge in 2015 and other checkpoints, allowing both nations’ citizens to move more easily. Tour operators are thus developing itineraries that include travel between Myanmar and Laos.
Many in the industry are pushing for Myanmar to extend visa-free entry to Western countries to boost their visitor numbers, with the MTF having put the proposal to the CCDNTI. “Asia is our test run for new visa exceptions, but we are lobbying for these to be extended to more countries,” Daw May Myat Mon Win told OBG. Speaking on behalf of the MTF, she said opportunities in new markets were being explored, with many tourism firms looking to start promotion campaigns in Australia, New Zealand and the US.
Niche Segments
Efforts have been made to develop responsible tourism initiatives, most notably with the Ecotourism Policy and Management Strategy for Protected Areas 2015-25. As of yet, little progress has been made in developing this in practice and more awareness is needed locally. However, initiatives are under way, such as the UN Environment Programme’s partnership with Myanmar Responsible Tourism Institute and Thant Myanmar, which provided training to hoteliers on plastic reduction. The training, which took place in Bagan, Mandalay and Naypyidaw, helped hoteliers identify their individual plastic footprints and set up ongoing action plans and commitments for 2019. “Myanmar holds a great deal of promise in ecotourism, and therefore the focus should be on developing unique tourist resorts, experiences and itineraries that can showcase the country’s pristine natural attractions,” Stewart Tong, general manager of strategic investments at the Myanmar tourism-focused Memories Group, told OBG.
Amendments to the Gambling Act are also being discussed by the government and industry stakeholders, which could potentially lead to the proliferation of casino venues and create new tourism revenue streams.
Outlook
After years of rapid growth, the recent moderation provides an opportunity for the industry to consider how tourism can contribute further to the overall development objectives of the country. While the government has taken steps to improve infrastructure, more needs to be done to upgrade airports, roads and public transport to ease domestic travel and extend the length of stay for many tourists. Arrival numbers vary greatly in high and low season, but tourism operators have begun to offer green season promotions to attract tourists throughout the year, and travel options have diversified to cater to different budgets.
The tourism and hospitality industry needs to ensure that it is generating demand at the same rate it is generating supply to combat low hotel occupancy rates. While the new visa conditions promise further arrivals from key source markets in Asia, there is no easy solution to Westerners’ reluctance to visit during a time of conflict. Improving visa conditions for these visitors would most likely help, alongside renewed efforts in the West to promote the country’s wide-ranging tourist attractions.
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