Does FDI affect the hotel room rates in Yangon?

Using the hedonic pricing theory, this study investigates the relationship between Foreign Direct Investment (FDI) and hotel room rates in Yangon, Myanmar. Using a dataset of 168 hotels from Yangon, we examined how FDI influences hotel room rates for weekdays and weekends. Our analysis employs the Log-Linear OLS regression model, by using affiliation to a chain, size of hotels, hotel stars rating, service provided by the hotels, location of the hotels, presence of the online, and online customer review ratings on Agoda, Booking.com, Trip.com, and Expedia. We find that FDI has a positive correlation with hotel room rates in Yangon. However, the increase was not statistically significant, suggesting that other factors might be playing a more prominent role in influencing hotel room prices. The analysis also revealed hotel star ratings have a stronger influence on hotel room prices. Higher-rated stars hotels have higher room rates, this effect is mediated by hotel attributes, such as amenities and service quality. The results also highlight the importance of online customer reviews, particularly on Booking.com, in influencing hotel pricing decisions. Despite the lack of a definitive link, this research contributes to the ongoing discussion on the economic impacts of FDI in developing countries. The findings highlight the need for further studies to explore the influence of other factors alongside FDI. Additionally, future research with a larger data set, a focus on specific types of FDI, or a longer time frame could potentially provide a clearer picture of the relationship between FDI and hotel room rates in Yangon. These insights can inform policies that promote sustainable tourism growth in Yangon while considering both tourism development and affordability in the hotel sector.