Hotel room rate crisis rolls on

By Yu Yu Maw
Volume 32, No. 625
May 7 - 13, 2012

TOUR operators and representatives from Yangon’s foreign-owned hotels last week failed to hammer out a solution to a dispute over room prices and contracts but have agreed to continue discussions.

Highlighting the importance of the issue, Deputy Minister for Hotels and Tourism U Htay Aung attended the industry meeting at Inya Lake Hotel on April 28 and urged the two sides to find a solution “as soon as possible”.

Over the past year Yangon’s handful of international-standard hotels have increased room rates significantly – in some cases 300 percent – to cater for higher demand from tourists and particularly business travellers. However, agents are upset that the hotels have recently started refusing to set rates in advance for group tourists, a move that has made it difficult to set prices for packages.

U Htay Aung said the ministry would give as much support to help the two sides reach an equitable agreement.

“We know exchange rate is not stable. These times are very difficult for every sector but Myanmar tourism is just a starting to prosper. If we all cooperate we can work for good … tour operators and hotels are just like husband and wife,” he said.

At the meeting, tour operators requested Yangon’s major hotels to agree one-year contracts on room rates.

“I want to say openly to Traders, Sedona, Park Royal and Chatrium Hotels: please give us a contract. We can work together on the terms and conditions but please honour a one-year contract. You can raise the price when we make the contract but don’t change the contract price later on. In future, Myanmar will become a great tourist destination in the world so we should cooperate and negotiate with each other,” said U Khin Zaw, chairman of Tour Mandalay.

He cited a number of examples of hotel practices that had made operations difficult for agents: Sedona and Parkroyal were refusing to take bookings from agents for the rest of the year; Chatrium Hotel cancelled a contract on April 5 that was signed on March 2; and contract room rates at Traders Hotel had risen from US$78 last year to $242.

U Phyoe Wai Yarzar, managing director of All Asia Exclusive Travel, said it was important for the industry that room rates stabilised.

“Clients are already giving us feedback that rooms are too expensive,” he said.

“Our big tour operators in Europe have commented that some hotels have increase rates dramatically and it is very difficult for them to convince customers to pay a [room rate] supplement.”

Sukhdeep Singh, managing director of Myanmar Hotels International, which manages Inya Lake Hotel, said hotel owners were driving the room rate increases.

“The increases are very high,” Mr Singh acknowledged. “We do want to give contract [to operators] … I promise that I will keep your suggestions but of course I am not a right person to solve this. We are not the owner of this hotel.”

Representatives from hotels said “foreigners exploring for investments” were driving the increase in demand and they were already receiving bookings for 2013.

Mr Rum Nurani, general manager of Parkroyal, said his hotel was simply responding to demand from a “new market” that wanted “comfortable accommodation”.

He said another factor in the rate increases was the value of the US dollar, which had declined 19pc over the past year against the kyat.

Representatives from the hotels said they would consider the suggestions of tour operators arrange another meeting for further discussions.