AS HOTELS clamour for a slice of Myanmar’s real estate, experts warn that those keen to invest should do so with their eyes wide open.

Benjamin Hirasawa, senior consultant at DLA Piper, a law firm specialising in hospitality and leisure, said it would be wise to go in with “patience and education”.

“There are a lot of people anxious to get into the Myanmar market now, but they should know that it is still a challenge inside. Many owners and operators will face problems if they do not understand what their investment really means, for instance how to get their money in and out of the country,” he told TTG Asia e-Daily.

For example, he said the Central Bank of Myanmar has “routinely attempted to limit the outflow of the already low levels of foreign currency reserves”.

John Koldowski, special adviser to the CEO, PATA, also cautioned it may be “too early” for investors to enter the market as there were still issues like telecommunications and infrastructure that have yet to be ironed out.

Myanmar’s shift to an open economy in recent years and room crunch are sparking a gold rush in its tourism sector (TTG Asia e-Daily, January 25, 2013). Hotel chains such as Accor, Best Western International and Hilton Worldwide have announced new properties for Myanmar (TTG Asia e-Daily, March 12, 2013).

Hirasawa said: “Myanmar offers tremendous potential, but before entering the market, it is wise to conduct thorough due diligence of all hotel developments to understand the risks involved.”

He highly recommended that owners and operators consider employing a local agent in view of domestic complexities. “It will be useful and will surely make a difference to have someone who knows the place and language well.”

THE Philippines has the largest pipeline of luxury and upper upscale rooms in Asia-Pacific after China, but industry watchers say what is needed is more branded accommodation that caters to its swelling domestic market.

According to data presented yesterday by STR Global area director – Asia, Jonas Ogren, about 50 per cent of the Philippines’ pipeline is in luxury and upper upscale, 30 per cent in upscale, 15 per cent in midscale and the rest in economy. This contrasts with its South-east Asian neighbours, whose pipelines of upscale and midscale rooms are as high as almost 70 per cent. The economy segment has the smallest pipeline across all countries.

Highlighting that the Philippines needed more supply in the middle, Narzalina Z Lim, president of Asia-Pacific Projects, a tourism and hospitality consulting company, said the country had about 35 million domestic travellers looking for affordable accommodation, with the figure growing by eight per cent every year and expected to hit 56 million by 2016.

The former tourism secretary of the Philippines said that since the government was in the midst of upgrading secondary airports to encourage direct flights from the region, hoteliers scouting for investment opportunities should consider locations “within an hour’s drive of these secondary gateways”.

These include hotspots such as Palawan, Cebu, Bohol and Davao, she said.

As for the popularity of China and India for future properties, hotel chiefs said these continued to be key markets, despite their challenges.

As of 2012, Asia-Pacific had 458,000 rooms in the pipeline, with the bulk headed for China (58 per cent), India (16 per cent) and Indonesia (seven per cent).

Speaking to TTG Asia e-Daily, Simon Cooper, president & managing director, Marriott International Asia-Pacific, pointed out that India’s lack of infrastructure was an issue.

“When you build a hotel, you need to build your own treatment plants, you can’t rely on 24-hour electricity and energy costs are also high.”

InterContinental Hotels Group chief executive, Asia, Middle East and Africa, Jan Smits, added that “developing talent” was his biggest concern, explaining that the company was investing a huge proportion of its resources in this area.

When asked if he was worried about last year’s negative RevPAR growth in China (-1.7 per cent) and India (-5.1 per cent), Smits said: “It takes a little time for demand and supply to catch up.”

In India, for instance, he explained that it was coming from a very low base. “It might have had one branded hotel in a city, then suddenly two or three…with such a big population, a huge middle class and 750 million domestic travellers, it’s all there.”

Thailand saw the highest RevPAR growth in 2012 (15.4 per cent), followed by Japan (13.2 per cent) and the Maldives (10.9 per cent). Singapore, Indonesia, Malaysia, the Philippines, Australia, South Korea, Hong Kong and Taiwan all posted single-digit growth. Vietnam, however, saw negative growth of 2.7 per cent.

Additional reporting by Lee Pei Qi