Thursday, September 21, 2017

Room rate dispute harming industry

Traders Hotel in Yangon. Juliet Shwe Gaung / The Myanmar TimesTraders Hotel in Yangon. Juliet Shwe Gaung / The Myanmar Times

The tourism industry’s pricing war – which has operators and hoteliers at loggerheads over soaring hotel room rates – is damaging the industry’s reputation, industry experts say.

The influx of foreign visitors over the past six months – not only tourists but also foreign dignitaries and businesspeople – has exacerbated a shortage in quality accommodation. This shortage is most acute in Yangon, which has only a handful of international-standard hotels, but is an issue at all major tourist destinations.

While many foreign and local businesses are exploring opportunities to invest in hotels, new projects are not expected to be up and running for several years.

In response to the shortage, mid-range and high-end hotels have increased room rates by as much as 300 percent, refusing to pre-negotiate rates with agents for package travellers and failing to honour contracts with agents, industry sources say.

U Khin Maung Yin, a director of the Myanmar Tourism Board, told The Myanmar Times that pricing issues were causing headaches for agents and their clients and damaging the country’s reputation as a tourism destination.

He said the board had been trying to broker a solution between hoteliers and agents but could not force hotels to change their policy. However, stakeholders were unable to reach an agreement at an April 28 industry meeting.

“We don’t have the authority to fix prices – not even the Ministry [of Hotels and Tourism] can do that. But this issue is not good for the tourism industry and needs to be resolved soon,” said U Khin Maung Yin, who is also managing director of Andaman Resort.

“We have already developed a reputation as being the most expensive travel destination in Southeast Asia. Everyone in this tourism industry should think about whether we want this reputation or whether we can adjust prices so they are comparable with neighbouring countries.”

U Tin Tun Aung, secretary of the Union of Myanmar Travel Association (UMTA) and owner of Thingazar Travel and Tours, said travel agents were increasingly nervous about signing contracts with hotels because they were unsure whether they would be honoured.

“Normally, we sign a contract with the hotel for every package. But now they are changing the contract price, increasing it by two or three times,” he said.

“We confirm the price with the clients four months before the visit but now hoteliers are raising room charges immediately before the visit. How can we ask the clients to pay more in this situation?

“We have no idea if a room that is $70 will suddenly become $250 when our client arrives.”

Daw Kaythi Naing, managing director of Yuzana Garden Hotel, said it was widely known that some hotels were breaking contracts with agents.

“Some hotels are refusing to agree rates for packages. That’s why we are seeing conflict between hotels and tour operators.”

She said operating costs had increased but not enough to justify large increases.

“If the demand continues to rise prices will keep going up. We also increased prices about 50pc over the past 12 months but on the other hands, we also did major renovations and increased the salaries of our staff.”

But U Kyaw Htun, secretary of the Myanmar Hoteliers Association (MHA), said travel agents had benefited during the tourism industry’s lean years when they had the upper hand in negotiating room rates for packages.

He said the rate increases were the result of a lack of investment in new hotels over the past decade and sudden growth in demand.

“When we look back at the last 10 years for the tourism industry, it was not in a very good situation most of the time. Hotels did not have full rooms. During this time, hoteliers and tour operators adjusted the charges and sometimes we gave them discounts. Shareholders don’t get much profit from their hotel investment. So I think we should not blame either side for what is happening now,” he said.

Daw Lwin Mar Aung, public relations manager from Traders Hotel, said the increases were “just business”.

“We can’t have constant room rates, it will change depending on demand, so we don’t make contracts with every [tourism] agency. We are also giving more priority to online booking,” she said. “Agents also seem to think that we don’t want to sell bookings to them but actually we don’t have rooms left – all [of them] are full.”

Ma Tin Zar Myat Mon, communications manager at Chatrium Hotel, declined to comment when contacted by The Myanmar Times last week, saying only that the issue was “difficult to discuss”.

Nevertheless, the pricing dispute comes at an awkward time, with interest in the country increasing dramatically and many industry publications listing Myanmar among their “must-see” destinations.

“It will be a big problem if Myanmar cannot meet demand,” said Mr Jimmy Liu, managing director of Sydney-based China Bestours, which offers packages to Myanmar in cooperation with Pearl Nadi Travel and Tours in Pazundaung township.

“Of course, tourists really love to visit whatever the price but generally they still compare [prices] with neighbouring countries. At the end, when they compare the quality, the price, the costs, Myanmar is not in their top list,” he said.