• 10 December 2018
Have A Spare Million or Two to Invest?

Have A Spare Million or Two to Invest?

trincomilli-sri-lanka

Tourist numbers are rising across the Asia-Pacific region – perhaps inevitably given population growth, a widening middle-class and the availability of cheap air travel. Many governments have accordingly chosen to emphasize tourism in their long term economic development plans resulting in opportunities for those willing to invest in the hotel sector.
Selecting the perfect location for new hotel developments requires in-depth research and due diligence, but the starting point may be to consider which locations will be the stars of the future. Looking at some of today’s leading destinations, such as Bali, Siem Reap and the Maldives, a number of patterns emerge.

World Heritage

Sixteen years ago on my first visit to Siem Reap, I found little more than a small selection of guesthouses. I had Angkor Wat almost to myself, with only a handful of determined travelers choosing to visit a Cambodia which was just beginning to emerge from its post-Khmer Rouge chaos. The land border with Thailand wasn’t an option, and Angkor was safely accessible only by air or river boat – yet look at it now.

World heritage sites like Angkor Wat virtually guarantee tourist arrivals, once the host country can provide the stability and infrastructure to support tourism. A similar opportunity presents itself in Myanmar today. As a military dictatorship which did little to encourage visitors, Myanmar, like Cambodia, has spent years off the tourist map until recently. However, current projections suggest 3 million tourists next year and studies indicate that demand for hotel accommodation easily outstrips supply – reflected in higher room rates than those on offer in the rest of South East Asia.

The outstanding cultural attraction in Myanmar is Bagan – the ancient city which is home to over 2000 Buddhist temples and pagodas scattered over the plains surrounding the town. At present, the accommodation options in Bagan can be described as limited, expensive and offering relatively poor value for money, and although foreign hotel investment in Myanmar reached $1.9 billion in 2013, with domestic investors following suit, the focus remains on Yangon and Mandalay. The Ministry of Hotels and Tourism recognizes the needs for foreign investors, allowing foreign-owned projects subject to the rules of the Directorate of Investment and Companies Administration, or joint ventures. The minimum investment is set at $300,000, and additional incentives such as 5 year tax holidays and 50 year land leases are among the incentives to encourage investors.

Off the Beaten Track

Bali and the Maldives also present a lesson for today’s investor. Forty years ago, the Maldives was perceived rather differently to the image of paradise it projects today. Difficult to access and with electricity a luxury, the islands showed little potential for tourism. Only with the development of basic infrastructure did the country begin to attract mainstream tourists in place of the backpackers who first chose to explore. Bali, too, was once off the beaten track, but initially grew to support the backpackers who so often lead the way in discovering the tourist destinations of the future. With this in mind, it’s worth checking out where today’s backpackers are heading.

One destination is Trincomalee, a beautiful natural harbor surrounded by pristine beaches on Sri Lanka’s hitherto untouched east coast. The region was off-limits during Sri Lanka’s long internal conflict with the Tamil Tigers, but with peace returning, Trincomalee may offer travelers even greater delights than the stunning south and west coasts. Only around 3% of Sri Lanka’s available hotel rooms are on the east coast and getting there is still a challenge, with eight-hour road journeys from Colombo the norm. However, the country has prioritized transport links; a new highway to Galle brought the southern beaches within an hour of the airport, and the Colombo-Kandy link will follow. With the infrastructure in place, Sri Lanka’s east coast might well follow the lead of the Maldives.

With a spare million to invest, both Sri Lanka and Myanmar are attractive emerging destinations worthy of further investigation. The tourist industries in both countries have the full backing of the government and offer the advantages of entering the market at an early stage. While all developing countries present challenges, the potential rewards on offer in Trincomalee and Bagan look sure to attract attention soon..

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