International tourism in Bagan, Myanmar, is experiencing strong growth, but the ancient destination is still under-served by major hotel groups, a new report has found.

In its latest emerging market update, Thailand-based C9 Hotelworks revealed that the historic temple-studded landscape welcomed a total of 282,387 overseas visitors in 2016, with a five-year average growth rate of 12%. It also revealed that Europe and US represent approximately 24% of total international arrivals, and that high-end travellers are creating demand.

Despite this however, Bagan’s hotel industry remains dominated by smaller domestic hotel groups. There are currently 88 international standard accommodation options operating in the Bagan area, comprising just under 3,000 keys. And this provides opportunities for international hoteliers seeking to establish a foothold in the fast-growing Myanmar market.

“In the next 24 months will see 804 new rooms coming into supply, but this is mainly from domestic investors,” said C9’s managing director, Bill Barnett. “Clearly there is ample space for overseas investors in the hospitality space, given high room rates and stronger seasonal trading.”

All of the new hotels currently in the pipeline for Bagan are smaller, locally operated properties. The 804 keys are split between 21 hotels and guesthouses, with an average room count of just 38. But hotel development is accelerating; annual supply growth jumped from 3% in 2015 to 15% last year, and according to C9, the protectors of the historic Bagan complex now have a decision to make regarding the future of the heritage site

“Looking at the path forward, the question is whether Bagan will succumb to the temptation to go into the mass market as has Siem Reap, Hoi An and Luang Prabang or is the true measure of success to remain small and targeted in its approach. Only the future can tell,” the report concluded.