Myanmar is too hot

Without doubt, Myanmar is the ‘hottest’ word in the GMS right now. But new-found fame always comes with challenges. John Watson, CEO of Diethelm Travel Group, discusses a current hot-button topic with Raini Hamdi

John Watson
CEO, Diethelm Travel Group

Tell me about Diethelm’s history in Myanmar.
We commenced operations in Myanmar in early 1996. We have offices in Yangon, Mandalay, Bagan and Inle, and employ over 50 multilingual staff.

Is business practically ‘booming’?
Yes, it’s fair to say that. We are experiencing serious accommodation congestion in Yangon and Mandalay. As these two cities form a major part of many tour programmes, (the room shortage) limits the ability to confirm full itineraries.

I am concerned that things are moving so fast; there are problems right now and I expect more in the future.

For example, given the high level of demand for Myanmar, from both the corporate and the leisure sectors, we are finding that some hotels are tearing up their contracts and re-negotiating each booking – upwards, of course. Some hotels are taking a very short-term view which will certainly damage Myanmar’s reputation as a tourist destination.

Our customers, mainly from Europe and America, just cannot understand how hotels can change the rules of the game – we have to spend a lot of time explaining to them that certain owners are simply saying ‘take it or leave it’.

Supply and demand is now out of kilter and will remain so for at least the high season.

What are you doing about it?
There is little we can do with properties that are determined to maximise profits at this time. We point out to them that the current situation will not last forever and that overseas tour operators will remember when hotel stock increases over the next few years who played fair with them.

The management of the more enlightened hotels understand the point, but some will not listen. This is really sad, because it damages the country’s reputation. Perhaps media, such as yours, can help convince properties to honour commitments already made and in place?

Also, we are advising overseas operators to try to fill shoulder and low-season where availability is easier to obtain.
The Myanmar government is actively involved in trying to ensure there is a fair distribution of rooms for the various hospitality segments. We see some results in the FIT area, but the group and series business is proving harder.

I would also encourage the Myanmar government to ensure that Foreign Direct Investment hotels and local hotels follow the same rules in ensuring sustainable development of tourism to Myanmar.

Are you absorbing these unforeseen rate increases?
No, we are an agent already working on thin margins and cannot afford to work for nothing. Our costs are increasing rapidly due to fuel increases, general inflation and staff being offered increasingly-generous packages to move to the many new companies outside the travel sector establishing themselves in Myanmar.

How are the overseas operators reacting?
The operators who have supported Myanmar through the ‘difficult’ years are not reacting well to the current difficulties. They feel they should not be treated unfairly and their loyalty should be rewarded.

I am not sure how the ‘new’ overseas operators now trying to establish a presence in Myanmar are faring, as we are concentrating on our existing long-standing customers.

One obstacle facing operators is the increasing trend of hotels asking for pre-payment of rooms for high season, which means significant changes to the current arrangement which is basically open credit. In-country tour operators will be hard pressed to fund this investment from free cashflow and will need to make back-to-back arrangements with overseas tour operators who send them business.

All this leads to additional administration and cost burdens.

Your conclusion?
Myanmar tourism and the trade in general should learn from similar situations we have seen in the region in years gone by. Service providers should take a long-term view and bear in mind that supply and demand will, in the end, even out.

This article was first published in TTG Asia, May 18 issue, on page 10. To read more, please view our digital edition or click here to subscribe.

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