Clogged road to Mandalay

The relaxation of political rule has meant tourist beds and flights are at a premium, writes Sally Robinson.

Two years of rapid political reform has turned Myanmar into south-east Asia's hottest tourist destination, but the country's underdeveloped infrastructure is struggling to cope.

Although hotel rooms and internal flights are in short supply, credit cards are not widely accepted and there is no global mobile phone network, the tourists keep coming.

According to figures released by the Ministry of Hotels and Tourism in January, Myanmar attracted a record-breaking 1 million visitors in 2012, up 30 per cent from 2011 and predicted to rise by another 30 per cent this year.

"You almost want to put a sold-out sign on the whole of Myanmar," says Richard Ludwig, product and adventure manager for luxury travel specialist Exotissimo.

One of the most acute problems is hotel accommodation, not only in Yangon but in the popular tourist centres of Mandalay, Inle Lake and Bagan. It is near impossible to find a room in high season and demand has pushed prices up to record levels. Visitors who want to stay at Yangon's top international hotels such as The Strand or the Orient Express Governor's Residence need to book at least six months ahead.

According to a recent report by Andrew Langdon, senior vice-president of Thailand and Indochina at Jones Lang LaSalle Hotels and Hospitality Group, there are about 8000 hotel rooms in Yangon but only between 1500 and 2000 are of international standard. Existing hotel owners are scrambling to build extra rooms or convert office space into accommodation, but there's no quick fix.

"The undersupply of hotels will get worse before it gets better," Langdon admits, "but according to our research there will be an extra 3100 rooms by the end of 2016, all geared to the international market."

Last week Accor also announced three new-build hotels in Myanmar, with properties in Yangon and Naypyidaw due to open by the end of 2013, and a further 280-room property in Mandalay by 2015.

Yangon's vast stock of crumbling colonial buildings, many empty, is also being eyed hungrily by international hotel groups but as yet no deals have been signed, partly because the framework for direct foreign investment is still lacking.

"Legal and regulatory structures need to be put in place, particularly if you want to attract the international franchise resort companies," says Cyn-Young Park, principal economist at the Asian Development Bank Office of Regional Economic Development and author of a recent report on Myanmar in transition.

"International operators such as Hilton and Accor, which have recently signed management agreements [for new-build or existing hotels], would generally insist contracts are subject to Hong Kong or Singapore laws and not local laws."

Travel to and around the country also presents a challenge. There are limited direct long-haul flights and visitors need to go via Singapore or Bangkok, although this is changing. In the past six months, All Nippon Airways has started direct flights from Japan, as has Korean Air from Seoul and Dragonair from Hong Kong.

The lack of trained hospitality staff is looming as an additional problem, and tour guides are also in short supply. All guides need to be licensed and take a three-month course.