Rakhine crisis takes shine off Myanmar tourism

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A fisherman on Inle Lake, one of Myanmar's top picturesque tourist attractions. Photo: iStock/Getty Images

if you don’t like maddening crowds of tourists and seek good value for money, now is a good time to visit Myanmar.

The Rakhine incident – i.e. the brutal military crackdown on Rohingya Muslims in Myanmar’s western Rakhine state launched last August that sent 700,000 refugees across the border to Bangladesh and renewed the country’s pariah status as a serial rights abuser – is starting to take a toll on the tourism sector.

Official tourist arrival figures are always a bit dodgy in Myanmar, but even the state-run Global New Light of Myanmar recently acknowledged that arrivals had fallen 3% in the first three months of 2018, especially among Westerners.

The latest international arrival figures at Yangon International Airport showed a slight decline of 1% during the January-April period, but big drops from North America (17%), Western Europe (27%) and Oceania (18%).

The three regions have traditionally been Myanmar’s main source of high-paying tourists interested in the cultural attractions the country has to offer. Big tour operators, meanwhile, are reporting a more alarming slippage.

“In terms of our turnover, we had a drop of 30% (during the first quarter),” said Phyoe Wai Yar Zar, managing director of Diethlem Travel Myanmar, a well-known travel agency that specializes in high-end European, American and Australian markets. “Of course, it was mainly because of the Rakhine – it is not out of concern for security, but just on ethical grounds.”

Western tourists in particular are sensitive to the charges of “ethnic cleansing” and “genocide” that the Rakhine crackdown has elicited from the United Nations and rights groups, industry sources say. “It’s an ethical issue, especially for the Western market,” said Philippe Arnaud, general manager of the soon-to-be-opened Excelsior Hotel in Yangon.

Earlier there were high hopes that the tourism sector would boom after former President Thein Sein launched political and economic reforms that led to the end of most Western sanctions in 2012. But those hopes were tarnished somewhat that same year by the first outbreak of anti-Rohingya riots and a subsequent military crackdown in Rakhine.

Myanmar governments, past and present, have been remarkably slow to curb the fallout on the tourism industry, one of the few sectors that promises a trickle-down effect on the masses of unemployed and underemployed Myanmarese across the country.

Nor is Myanmar’s tourism industry a newcomer to the adverse impact of bad publicity and poor policies. The military regime of strongman Ne Win (1962-88) banned tourist arrivals in its start-up years and later restricted visits to a week.

After Ne Win’s fall, follow-up military regimes (1988 to 2011) opened the country to international travelers, but faced severe challenges including economic sanctions, pariah status in the West for flagrant human rights abuses and, not least, calls by “democracy icon” Aung San Suu Kyi and her National League for Democracy (NLD) followers tourists to boycott travel to the country.

The industry has been a rollercoaster ride since the country started to open up in recent years. According to United Nations data, tourist arrivals jumped from 800,000 in 2010 to a peak of 4.7 million in 2015, down to 2.9 million in 2016 and up again to 3.4 million last year. Of that number 1.1 million arrived at Yangon International Airport, up 7% year on year, driven mostly by greater Asian arrivals.

Protesters hold placards and chant slogans during a demonstration against government officials attending the one-off summit of 10-member Association of Southeast Asian Nations (ASEAN) in Sydney, Australia, March 17, 2018. REUTERS/David Gray

Protesters in Australia hold placards pillorying Aung San Suu Kyi during an ASEAN summit held in Sydney, Australia, March 17, 2018. Photo: Reuters/David Gray

Suu Kyi became State Counsellor in early 2016 following the NLD’s triumph at the November 2015 polls, giving tourism a new “political correctness” that fast disappeared in August-September last year with the military’s crackdown in Rakhine and Suu Kyi’s reluctance to openly condemn the violence.

“We have seen an impact from the Rakhine incident,” acknowledged Dan Davies, managing director of Colliers International Myanmar, a property consultancy. “The area that has been hit the most this year has been in the tourism industry, which is not huge as a percentage of GDP.”

Industry sources say the true impact of the Rakhine situation on the sector will only be felt later this year, as many hotel and tour bookings had already been made in August when the Rohingya refugee saga was just starting to unfold.

“Indeed first quarter from 2018 was not good, but the rest of 2018 actually looks far worse” said Edwin Briels, managing director of Khiri Travel-Myanmar, a tour operator. “In the first quarter we still had people arriving who booked long ago before the troubles started…We see for the rest of the year simply less new bookings coming in.”

Tourism may not be the same huge contributor to GDP it is in neighboring Thailand, which received 35.4 million tourists in 2017, but it was becoming a valuable source of employment and investments in hotels, restaurants and entertainment venues.

Traveler walking along the road to the Htilominlo temple in Bagan, Myanmar

A tourist walking along the road to the Htilominlo temple in Bagan, Myanmar. Photo: iStock/Getty Images

The Rakhine effect comes at a time when Myanmar, and Yangon in particular, is enjoying a boom in new luxury hotels opening.

Pullman Yangon Centrepoint Hotel opened its doors, partially anyway, for business in downtown Yangon on February 24, after a two-three year delay and a couple of name changes. It will only operate 66 of its (290) rooms because of a licensing snafu with city authorities. The limited number of rooms may be a blessing in disguise, though.

“Prices are coming down. They are crazy [low] at the moment. We are lucky we only have a certain amount of rooms to fill,” Marshall Orton, operation manager of the hotel, said.

Excelsior Yangon, a boutique heritage property in the downtown district with 74 rooms, plans to open by the end of June, while the 166-room grand Heritage Hotel Kempinski Yangon on historic Strand Road hopes to launch some of its facilities later this year.

The Pullman, which is also offering several international standard restaurants and bars and plenty of convention and meeting-room space, is already giving the Sule Shangri-La Yangon – once the only international standard business hotel in town – a run for its money.
The combination of more rooms and fewer tourists is pushing down rates across the board.

Colliers’ Davies notes that the Shangri-La’s rates have fallen from around US$300 a night three years ago to around US$120-US$130 now.

Yangon, Myanmar downtown skyline.

Yangon’s emerging skyline with new high-rises under construction. Photo: iStock/Getty Images

The pending advent of the Excelsior and Kempinski properties, both built in refurbished British colonial era heritage buildings, will challenge the existing heritage hotels – The Strand and Governor’s Residence – that were able to charge top dollar rates during Myanmar’s mini-tourism boom.

If the Rakhine incident not happened last year, it is likely the mini-boom would have continued well into the coming peak season that starts with the cooler weather in November.

While Western tourist arrivals have dropped steeply so far this year, Asian arrivals from China, Japan, South Korea and Thailand have seen a slight uptick, especially from China.

Several of the new luxury hotels are now directing their marketing strategies at well-heeled travelers from China, Hong Kong, Japan, Singapore and South Korea, in lieu of the expected decline in interest from Myanmar’s traditional markets in Europe and the US.

Unlike some Western tourists’ ethical concerns, “the Asian market doesn’t care,” said Arnaud, the Excelsior Hotel’s general manager.

Still some operators still hope to draw interest from a niche, contrarian Western market segment. “There is a syndrome: tourists don’t want to see other tourists,” noted Diethelm’s Phyoe Wai Yar Zar. “So they will not see lots of tourists when they come here and they will get good value for their money.”

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