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

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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

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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?
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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.

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Number of Tourists In Burma
2006-2007
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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
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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
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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,

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most international tourists have already made other plans.
2008 will likely be a devastating year for Burma's tourism
industry.

VILLAROSA