BURMA: WHERE HAVE ALL THE TOURISTS GONE?

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 001108 SIPDIS SIPDIS STATE FOR EAP/MLS; INR/EAP PACOM FOR FPA TREASURY FOR OASIA:SCHUN E.O. 12958: DECL: 11/17/2017 TAGS: ECON PREL PGOV BM SUBJECT: BURMA: WHERE HAVE ALL THE TOURISTS GONE? REF: RANGOON 1102 RANGOON 00001108 001.2 OF 003 Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4 (b and d) ¶1. (C) Summary. Burma continues to feel the economic impact of the regime's violent crackdown in September. The tourism industry, which employs an estimated 500,000 people, continues to flounder as tourists cancel trips to Burma. In October, Burma only received 7,221 tourists, a 228 percent drop compared to the same period last year. Hotels in Rangoon have an average of 60 percent fewer hotel bookings in November; hotels in tourist areas, such as Bagan and Mandalay, report an estimated 90 percent decline. An estimated 20,000 people were laid off in October due to declining tourism levels. Hotel owners predict that tourism will not rebound in 2008. Industry insiders fear that the tourism industry will be unable to make enough money during the peak season (October-March) to cover the rest of the year's costs. End Summary. Where have All the Tourists Gone? -------------- ¶2. (SBU) In 2006, revenues generated from tourism accounted for 1.4 percent of Burma's GDP. Burma has seen a steady rise in the number of tourists since 2003, up 27.45 percent from 192,648 visitors in 2003 to 245,540 visitors in 2006. Before the brutal GOB crackdown on peaceful protests in September, tourism industry representatives had predicted that 2007 would be a record year, reaching almost 300,000 tourists. Their predictions were on target: by the end of August, the number of tourists in 2007 was 20 percent higher than the same period last year. -------------- -------------- Number of Tourists In Burma 2006-2007 -------------- -------------- Month 2005 2006 % Change 2007 % Change -------------- -------------- January 24,394 24,675 1.14 30,584 19.32 February 24,301 22,529 - 7.87 29,489 23.60 March 20,113 20,210 0.48 27,621 26.83 April 16,407 17,028 3.65 19,368 12.08 May 12,480 12,741 2.05 15,818 19.45 June 10,883 13,817 21.23 13.621 - 1.44 July 14,308 17,744 19.36 21,248 16.49 August 15,338 19,109 19.73 19,414 1.57 September 12,083 14,585 17.15 13,774 - 5.89 October 19,788 23,695 16.49 7,221 -228.14 November 23,735 29,004 18.17 -- -- December 25,874 30,403 14.90 -- -- -------------- -------------- Total 219,704 245,540 10.52 198,158 6.07 -------------- -------------- Source: Myanmar Hotels International ¶3. (SBU) However, the anti-government demonstrations and the subsequent GOB crackdown in September significantly deterred tourist travel to Burma. The number of tourists in September dropped 6 percent compared to last year, from 14,585 people to 13,774 people. October tourism, the start of the high season, was 228 percent lower than last year's figure, with only 7,221 people entering Burma. According to the Ministry of Tourism, of these 7,221 visitors, less than 3,000 were self-declared tourists; the rest traveled to Burma on business. Loss of Business Affects Thousands -------------- RANGOON 00001108 002.2 OF 003 ¶4. (C) The tourism industry, which directly employs an estimated 500,000 people, has suffered the loss of tourists. According to Sigi Bierbaumer, General Manager of Traders Hotel, hotels in Rangoon saw an average 70 percent drop in room bookings in October. Several of the smaller hotels registered less than 100 customers for the entire month, while others were forced to close down temporarily due to lack of business. Hotel room bookings in November have picked up somewhat, Bierbaumer noted. The larger hotels, including Traders, Sedona, and Hotel Nikko, now have an occupancy rate of 25-30 percent, significantly below the 85 percent occupancy in November 2006. Bierbaumer attributed the higher occupancy rate to business travelers and conventions, noting that many of the smaller hotels in Rangoon have not seen the same improvement in sales. He doubted that tourism levels would rebound in 2008, and predicted that while tourism would pick up by January, less than 20,000 tourists would visit Burma in January and February. ¶5. (C) Brett Melzer, owner of Balloons over Bagan, informed us that in October, fewer than 2,000 tourists visited Bagan and Mandalay, two cities with historically high tourism levels. Tourism is the main industry in Bagan, he noted, and local businesses, such as restaurants, tour companies, and smaller hotels, depend upon revenues earned in the high season to carry them through the rest of the year. Because of the lack of tourists, many restaurants and retail shops have closed their doors, unable to cover their operating costs and pay their staff. ¶6. (C) While no official figures are available, tourism industry insiders estimate that more than 20,000 people lost their jobs in October due to the decline in tourism. U Kyaw Tun, Chairman of Sun Far Tour Agency, opined that if the tourism industry does not rebound by February, many companies will go out of business. If tourism does not pick up, more than 300,000 people, many of whom are the sole income providers for their families, could lose their jobs. Including their families, more than 1.5 million people could be affected by the drop in tourism, he declared. Pleas Fall on Deaf Ears -------------- ¶8. (C) In late October, the Minister of Hotels and Tourism held a meeting in Rangoon with tourism industry representatives to discuss the current situation. The meeting was a waste of time, Bret Melzer observed. Instead of listening to the tourism industry's concerns, the Minister attempted to explain how the political crisis and subsequent drop in tourism was the fault of the U.S. Government. The Minister did not explain how the GOB plans to attract tourists, Melzer lamented, nor did he suggest ways the tourism industry could minimize their costs. When several hotels requested a tax holiday because of lack of revenue, the Minister did not refuse, but asked how that would benefit the government. Saman Sarathchandra, General Manager of the Sedona, told us that the Sedona, the most profitable hotel in Burma, would not pay taxes this year. Comment -------------- ¶9. (C) By blaming the United States for its problems, the junta ignores its own role in deterring tourism. Industry insiders are not fooled; they recognize the decline in tourism is due to the media's widespread coverage of the shooting of innocent protestors. Even though no new images of atrocities in Burma appear in the international media, RANGOON 00001108 003.2 OF 003 most international tourists have already made other plans. 2008 will likely be a devastating year for Burma's tourism industry. VILLAROSA