Thursday, September 21, 2017

New look for old hotels as rivals roll in

Its sidewalk teashops crowded with construction workers and more than a dozen cranes towering above, the corner of Kabar Aye Pagoda Road and Industrial Road 1 by the banks of Inya Lake has become ground zero in Yangon’s increasingly competitive hospitality arms race.

A woman walks past a barrier erected to enable renovations to take place at Yangon’s Parkroyal Hotel. (Thiri/The Myanmar Times)A woman walks past a barrier erected to enable renovations to take place at Yangon’s Parkroyal Hotel. (Thiri/The Myanmar Times)

Between the expansion and renovation of the Sedona Hotel and a new mixed-use development from Vietnam’s Hoang Anh Gia Lai Group (HAGL), this corner alone represents more than half a billion dollars of new foreign investment in the sector.

International hotel chains have arrived eager to enter the under-supplied market. Yangon has fewer than 2000 hotel rooms of an international standard, according to hotel and hospitality real estate advisory Jones Lang LaSalle, and demand is sharply increasing – along with the amount hotels can charge desperate visitors.

Myanmar has set a target of attracting more than 3 million arrivals in 2015 and 7.5 million visitors by 2020, and the vast majority of these are likely to enter the country through Yangon airport.

Just in the month of December, France’s Accor doubled the size of its Myanmar portfolio, announcing it would oversee three new properties in partnership with Myat Min Co. US-based Best Western, meanwhile, opened its first hotel shortly before the New Year and has a property in Nay Pyi Taw in the pipeline.

For long-established hotels like Sedona, the new competition means expansion and upgrades are needed just to keep up.

“When the dark days were upon us with low occupancy, there was no money and no incentive to develop your hotels because nobody was staying there,” said Tony Picon, managing director at real estate services company Colliers International in Yangon.

“But then when you start to see people flooding in, as they have in the past two or three years, firstly you get more money but you also want to make your hotel nice ... Hotels are going to charge a high rate but they know they have to provide something in return.”

HAGL’s $440 million complex has turned a roughly 8-acre swath of Yangon into what looks like a child’s sandbox, albeit one on a giant scale. Dump trucks and excavators, many of them brought in from Vietnam in February 2013, rumble across the dusty site day and night, illuminated by racks of floodlights.

The first phase of the project, according to the company, will include a 480-room luxury hotel and a 27-storey office building. A second phase of apartments and more offices is estimated to be finished in 2016.

Across the road, the Sedona, one of Yangon’s first international standtard hotels, is watching its newest neighbour slowly rise, but is not sitting idly by.

After receiving approval from the Myanmar Investment Commission in May 2013, owner Keppel Land broke ground in October on an $80 million expansion that will add 420 rooms, with an estimated completion date of 2016.

Simultaneously, the older portion of the hotel is undergoing a $25 million renovation that will see guest rooms, common areas, and food and beverage services upgraded, along with mechanical and electrical systems, said Ng Ooi Hooi, president of regional Investments at Keppel.

“We believe that the Yangon hotel market still offers plenty of opportunities for early movers like Keppel Land. Sedona Hotel Yangon will remain one of the best hotels operating in Yangon,” Mr Ng Ooi Hooi said.

In what is perhaps a bit of “keeping up with the Joneses”, Sedona’s new wing will top out at 29 storeys, making it one of the tallest structures in Yangon when completed – and two storeys taller than HAGL’s hotel.

Sedona is not the only Yangon mainstay that has realised the need for expansion and improvement. Traders Hotel in Yangon, which opened in 1996, underwent a major overhaul in 2010.

“Not only was there an investment in hardware, a significant part of the work has included training, developing and grooming local Myanmar people for the industry as it grows,” Phillip Couvaras, general manager of Traders Yangon, said of the upgrade.

An office tower being developed by Shangri-La, which operates Traders, is under construction adjacent to the hotel. Mr Couvaras said that the new tower and the existing hotel will be linked by a shopping centre.

Just up the road from Traders, Parkroyal Hotel is undergoing extensive renovations as well. The hotel’s rebranded and refurbished restaurant, Spice Brasserie, opened to diners at the end of December. Its Chinese restaurant, Phoenix Court, will re-open this month after also being overhauled.

Spokesperson Michelle Win said the hotel is also undertaking extensive renovations to its lobby that are scheduled for completion this month.

The changes come after its high-end Orchid Club rooms and accompanying business facilities got a facelift last year.

As with the developments being undertaken by Traders and Sedona, Parkroyal’s upgrades make perfect sense, Mr Picon said.

“These are hotel people and they will upgrade their hotels when the time is right. They’ve got the cash and the reason to do it, because people are flooding in.” 

Additional reporting by Thomas Kean