Smoke is seen on Myanmar's side of border as Rohingya refugees walk on the shore after crossing the Bangladesh-Myanmar border by boat through the Bay of Bengal, in Shah Porir Dwip, Bangladesh September 11, 2017. Photo: Reuters/Danish Siddiqui

On September 1, the 658-unit Korean-owned Lotte Hotels & Resorts Yangon opened for business without much fanfare.

The launch of Yangon’s newest, largest five-star establishment could have been better timed, coming just days after a fresh outbreak of violence in western Rakhine state that has claimed hundreds of dead and forced over 400,000 Rohingya Muslims to flee for their lives.

The military crackdown, which has drawn international condemnation and charges against the government of “ethnic cleansing,” “pogroms” and “genocide,” is bad news for the Lotte Hotel and more broadly Myanmar’s nascent tourism industry, although hoteliers and travel agencies are putting on a brave face.

“Myanmar is the last jewel of Asia,” the hotel’s general manager David Shim told the Myanmar Times newspaper, days after the launch. “If the market grows, our hotel will grow with it.”

That has been the mantra of Myanmar’s tourism industry for the past two decades. Despite its allure as one of Asia’s last pristine tourist destinations, boasting unsullied beaches, unexplored jungles, authentic cultural experiences, Southeast Asia’s only snow-covered mountain and a plethora of ancient Buddhist temples and holy sites, Myanmar remains a stark under-performer on the global tourism scene.

In 2012, the year after Myanmar’s previous military-backed regime started to implement economic and political reforms, an estimated 1.1 million tourists arrived in Myanmar. That figure shot up to 4.7 million in 2015, the industry’s peak year, according to government figures.

Foreign tourists taken for a ride on Myanmar’s Inle Lake in a file photo. Photo: AFP

But those figures mask the true picture. Of the 4.7 million arrivals in 2015, some 3.4 million were day-trippers coming across Myanmar’s borders from Thailand and China, according to Hotel and Tourism Ministry data.

In 2016, the total number of tourist arrivals dropped to 2.9 million, triggered by a 51% drop in day-trippers over Myanmar’s northern borders due primarily to fresh outbreaks of serious fighting between Myanmar’s military and a handful of ethnic insurgencies in the north and northeastern regions.

Tourism industry veterans tend to stick to Yangon International Airport arrivals of international passengers as the most trustworthy indicator of real tourism figures. In 2016, the number of international arrivals at Yangon airport were 1,080,144, down slightly from 1,080,682 the previous year. But even these figures exaggerate tourist numbers.

“The 1.08 million foreigners arriving at Yangon International Airport includes business people, foreign resident expats every time they arrive, overseas Myanmar people visiting and leisure tourists,” said Edwin Briels, managing director of Khiri Travel Myanmar. “My rough estimate is that about 50-60% of arrivals at Yangon airport are visiting purely for leisure.”

Another good indicator of actual tourist figures is international visitors to Bagan, a United Nation’s desiginated World Heritage site and Myanmar’s main tourist destination outside of Yangon.

Last year there were 280,000 international ticket-paying visitors to Bagan, compared with 2.2 million international visitors to Angkor Wat, the main cultural attraction in Cambodia, another frontier market with security issues.

A traveler walks along the road to the Htilominlo Temple in Bagan, Myanmar. Photo: iStock/Getty Images

In the first half of 2017, international arrivals at Yangon International Airport jumped 10%, giving rise to some optimism that it was going to be a bumper year.

That optimism has been significantly defused by the Rakhine crisis, although the full impact cannot yet be accurately assessed. Travel agents and hotels are reporting some cancelations in bookings since the Rohingya refugee crisis has come to dominate global headlines.

“We had some clients wondering whether it was ‘ethical’ to visit Myanmar now and we explained that especially now tourists should not give up on Myanmar,” Briels said. “Tourists should continue to visit the country in a sustainable way to support all people from all races and religions.”

Tourism could be one of the quickest means to create jobs and income in Myanmar, where 25% of the 53 million population live below the national poverty line, according to UN figures.

The sector employed 735,000 Myanmar people (2.8% of total employment) in 2012 and earned the country US$534 million. By 2016 some 1.5 million jobs had been created and tourist receipts had jumped to US$2.2 billion (about 3.3% of gross domestic product (GDP) – US$67.4 billion, according to World Bank estimates.)

For decades, Myanmar’s tourism industry suffered from economic sanctions on the country imposed by Western countries and campaigns in the West to boycott travel to Myanmar to avoid supporting the military regimes that ruled between 1988 to 2010. Those sanctions were largely dropped in 2012, after opposition leader Aung San Suu Kyi was allowed to contest and win a by-election.

Although Myanmar has been led by Suu Kyi and her National League for Democracy party since 2016, following their November 2015 victory at the polls, the country’s pariah shadow lingers.

Indonesian rally at the Myanmar embassy in Jakarta during a protest against the government’s treatment of Rohingya Muslims on September 8, 2017. Photo: Reuters/Darren Whiteside

It’s largely a matter of perception. Neighboring Thailand, which has been under military rule since the latest coup of May, 2014, drew 32.6 million tourists last year, earning the kingdom US$46 billion in tourist spending.

“Thailand automatically bounces back very quickly no matter what happens in a negative way because that’s the image of the destination,” said Laurent Kuenzle, chief executive officer of Asian Trails, a travel agency that specializes in European tours to Cambodia, Laos, Myanmar, Thailand and Vietnam.

Despite its periodical coups and violent street protests, Thailand has been a darling of mass tourism since 1986 when authorities launched the first Visit Thailand Year. “[Myanmar] does not have that image,” he said.

The country’s poor image is to a large extent the result of a poor reality. For decades, the country was under brutal military rule that suppressed former democracy champions such as Suu Kyi and her NLD followers and committed atrocities against ethnic rebels as they continue to do today, keeping large swathes of the country off-limits to tourists.

The situation in Rakhine is not the only flashpoint for ethnic violence in Myanmar. Besides the Arakan Rohingya Salvation Army (ARSA) – as the latest Rakhine insurgent group have styled themselves – there are a half-dozen insurgencies in north and northeastern Myanmar that have been at war with the Tatmadaw since 2011, when a cluster of former ceasefires fell apart.

Because there is still fighting in these areas they are restricted to tourists. There are about 80 restricted areas in Myanmar still, keeping a lot of exotic destinations off the tourist map.

United Kingdom government travel warning map for areas of Myanmar in 2016

“Palaung is the Switzerland of Myanmar,” claims Tun Maung, a businessman with tea plantations in Namh San, Palaung, northern Shan State. “We have forests and mountains. You can watch the clouds floating below you on our mountains.”

The Palaung district has been a restricted area for foreign tourists since 2015 due to fighting. With places like Namh San off limits to tourists, much of the expenditure in new hotels over the past five years has been in Yangon, Mandalay and Bagan – the three main cities that tourists can safely visit.

Tourism could be one of the quickest means to create jobs and income in Myanmar, where 25% of the 53 million population live below the national poverty line, according to UN figures

One bright spot for Myanmar’s tourism sector is that it is no longer suffering the room shortages and high prices it did back in 2012, when tourist arrivals first topped the one million mark. Back then Myanmar had about 800 hotels, motels and guesthouses with 28,000 rooms nationwide.

By 2016, the numbers had doubled to 1,432 hotels, motels and guesthouses with 56,429 rooms, with 59% of them in Bagan, Mandalay, Naypyitaw (the capital) and Yangon.

In Yangon, there is now a looming hotel glut, especially in the five-star segment. Besides the Lotte Hotels & Resort, Singapore’s Pan Pacific Group opened a five-star establishment in Yangon this year. Kempinski, Pullman and Excelsior brand hotels will also be opening in the former capital in coming months.

“It’s scary for the five-star hotels,” said Tony Picon, managing director at Colliers International/Myanmar, an international property consultant. “But it’s good for the market. Prices will come down. That’s great.” But that may be all Myanmar’s tourism sector has going for it these days.

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