MANDALAY’S lacklustre performance as a destination is facing further challenge from an incoming supply of small-scale, independent hotels that could increase volatility in the market, according to new research by a hospitality consultancy.
“There’s a complete disconnect between the reality of Mandalay and the development of its hotel sector,” said Bill Barnett, managing director of C9 Hotelworks.
He pointed out that rampant hotel development is coming at a time when Mandalay is being passed over by high-end tourists in favour of Bagan, Inle Lake and the Irrawaddy.
Ministry of Hotels and Tourism data reveals a breakneck pace of development: in 2011, the city had 76 properties with 3,350 keys and by end-2014, this had risen to 135 hotels with 5,586 rooms. New supply in 2015 will see that surge again to 166 properties and 8,747 rooms with another 40 properties due to open next year.
International brands remain thin on the ground with only a handful of new properties entering the market, including Best Western, Pullman and ibis Styles this year, with Hilton due to open in 2018.
Barnett said government initiatives promoting tourism and hospitality had led to a surge in hotel investment from 2011–12, which saw numerous businesspeople from Mandalay, with no prior experience in tourism, entering the market.
“Mandalay is not self sustaining for commercial traffic,” he said. “Look at Vietnam with all the mini-hotels (which weakened overall hotel performance). Mandalay’s biggest danger is creating oversupply.”
Dino Anthonio, general manager of Sedona Hotel Mandalay, agreed that Mandalay as a seasonal destination is suffering oversupply. “Most hotels’ source markets are still from Europe, and these travellers tend to travel between November and February. The length of stay has also decreased from 2.3 nights in 2006 to 1.2 nights in 2014.”
However, hoteliers are seeking to create new opportunities by tapping Asian markets to drive demand, he added.
While a new hotel zone being developed in between the airport and city could counter the wave of smaller hotels currently entering the market, Barnett warned volatility in the market could increase if nothing is done to increase overall tourism demand in Mandalay.
