BURMA: SHARP DECLINE IN TOURISM

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000677 SIPDIS STATE FOR EAP/MLS, INR/EAP PACOM FOR FPA TREASURY FOR OASIA E.O. 12958: DECL: 08/22/2018 TAGS: ECON PGOV PREL BM SUBJECT: BURMA: SHARP DECLINE IN TOURISM REF: A. 07 RANGOON 1108 ¶B. RANGOON 664 RANGOON 00000677 001.2 OF 002 Classified By: CDA Tom Vajda for Reasons 1.4 (b and d) ¶1. (C) Summary. Burma's tourism industry continues to suffer from the twin effects of the regime's violent crackdown in September 2007 and Cyclone Nargis in May. Tourism dropped by 10 percent in 2007, despite a record-breaking number of visitors in the first eight months of the year. Tourism statistics for the first seven months of 2008 paint an even bleaker picture, with a 37 percent decrease over the same period last year. The Tourism Promotion Board estimated that since September 2007, companies have laid off more than 50,000 people and cut hours or salaries for several thousand more. No rebound is expected this year, and some industry insiders predict massive job losses among the 500,000 Burmese directly employed in the sector. End Summary. Where have All the Tourists Gone? -------------- ¶2. (SBU) In 2007, revenues generated from tourism totaled approximately $200 million, accounting for 1.4 percent of Burma's officially announced GDP. Burma had seen a steady rise in tourism since 2003, up 27 percent from 192,648 visitors in 2003 to 245,540 visitors in 2006. Until September, it appeared that 2007 tourism levels would reach an all-time high of 300,000 tourists. However, after the brutal GOB crackdown on peaceful protestors last September, tourism dropped off precipitously, as potential visitors deferred travel to Burma for safety and security reasons (Ref A). In the last three months of 2007, the peak of Burma's tourist season, the number fell by 65 percent. -------------- -------------- Number of Tourists In Burma 2006-2008 -------------- -------------- Month 2006 2007 % Change 2008 % Change -------------- -------------- January 24,675 30,584 23,95 19,024 -37.80 February 22,529 29,489 30.89 18,951 -35.74 March 20,210 27,621 36.67 21,100 -23.61 April 17,028 19,368 13.74 14,075 -27.33 May 12,741 15,818 24.15 9,258 -41.47 June 13,817 16,621 20.29 10,968 -20.62 July 17,744 21,248 19.75 7,471 -64.84 August 19,109 19,414 1.60 -- -- September 14,585 13,774 - 5.56 -- -- October 23,695 7,221 -69.53 -- -- November 29,004 10,165 -64.95 -- -- December 30,403 11,285 -62.88 -- -- -------------- -------------- Total 245,540 222,608 - 9.34 100,847 -37.20* -------------- -------------- Source: Myanmar Hotels International *Through July 2008 compared to same period in 2007 ¶3. (C) While industry officials expected tourists to return to Burma in 2008, statistics released by the Myanmar Tourism Board show the country has yet to recover. Through July, the number of tourists totaled roughly 101,000 people, a 37 percent decline from 2007 levels. Visitors were primarily from other Asian countries, mainly China and Thailand. Dr. Aung Myat Kyaw, Chairman of the Myanmar Tourism Promotion Board, noted two reasons for the decline in tourism: the continued "misperception" among the international community RANGOON 00000677 002.2 OF 002 that Burma was unsafe and the notion that Cyclone Nargis had destroyed the entire country. Despite efforts to promote Burma as a tourist destination, he claimed that the European tourists who normally travel to Burma in July and August had all cancelled their tours because they were afraid of catching diseases in the aftermath of Nargis. However, several Embassy contacts surmised that it was not the effects of the storm that deterred tourism, but rather the GOB's lack of response to the cyclone victims. Myanmar Airways International Managing Director Aung Gyi told us he believed that tourists did not want to support financially a regime that killed monks and allowed people to starve. Loss of Business Affects Thousands -------------- ¶4. (C) According to Sigi Bierbaumer, General Manager of Traders Hotel, one of Rangoon's flagship properties, small and medium-sized hotels in Rangoon saw an average 50 percent drop in room bookings in 2008. Several of the smaller hotels registered fewer than 75 customers each month for the past six months, while others were forced to close down "temporarily" due to lack of customers. However, larger international hotels appeared to be immune to the overall decline, registering an average occupancy rate of 80 percent in 2008. Bierbaumer attributed the higher occupancy rate to business travelers, conventions, and the influx of UN and NGO staff after Cyclone Nargis. ¶5. (C) Hotels, restaurants, and other tourism-related companies in Burma's main tourist locations - Bagan, Mandalay, Ngapali Beach, and Inle Lake - had registered substantial financial losses during the 2007-2008 tourism season, Aung Myat Kyaw told us. Fewer than 30,000 visitors had traveled to Bagan in the past six months, a 50 percent drop. Many local businesses, which depend on revenues earned in the high season to carry them through the rest of the year, were forced to close their doors, unable to cover operating costs including salaries. ¶6. (C) Until recently, the tourism sector has employed an estimated 500,000 people. Myanmar Tourism Promotion Board Chairman Aung Myat Kyaw estimated that more than 50,000 people have already lost their jobs since September 2007, though no official figures are available. In the aviation sector alone, more than 100 people lost their jobs in the past month, and officials predict future downsizing if the tourism industry does not rebound soon (Ref B). U Thein Aung, a Ministry of Tourism employee, told us that some companies had opted to cut hours and salaries instead of firing their staff, effectively forcing them to seek other employment. Aung Myat Kyaw noted that if tourism did not pick up by November, hundreds of thousands of Burmese, many of whom were the sole income providers for their families, could lose their jobs, potentially affecting up to two million people. VAJDA