With opposition leader and Nobel Peace Prize laureate Aung San Suu Kyi now free after years of house arrest, world leaders are queuing up to come here. Newly re-elected US president Barack Obama announced he would visit Myanmar, perhaps as early as today - and sanctions are being lifted. The country's once-feared generals appear to be changing their spots.

Visiting Myanmar no longer involves the moral dilemma that led Lonely Planet to include a "Should You Go?" section in its guidebooks. Hillary's been, British Prime Minister David Cameron has been and even Jackie Chan has dropped by.

Today the question isn't whether you should go but whether Yangon is ready for you. Can this dusty, potholed backwater cope with the demands of international travellers, among them notoriously picky Hongkongers?

We'll soon find out. In January, Dragonair is launching direct flights to a city the airline is touting as "fascinating … with its hybrid of local, British, Chinese and Indian influences, and the largest number of original colonial buildings in the region".

However enticing that sounds, there are two things you shouldn't leave home without when heading for the city formerly known as Rangoon: a pile of US dollars and a confirmed hotel booking. I arrive with neither and my first day is an expensive headache.

Yangon remains a city without ATM machines and where credit cards are not accepted. One travel agent in the city gives cash advances on credit cards and it does so with a 10 per cent surcharge and at unfavourable exchange rates based on the Thai baht. That means a US$200 cash advance will cost you almost US$230.

It could have been worse. "You were lucky to find the travel agent," a fellow hotel guest tells me the next morning. "Most people who find themselves in that situation have to fly to Bangkok to stock up on cash then fly back out again."

Then there is the issue of hotel rooms. With businessmen pouring in to exploit new opportunities, top hotels are booked out, in some cases months in advance. The business-oriented Traders Hotel, where rooms cost US$152 a night and up, is heavily booked and it's even harder to get a room in Yangon's most famous hotel, The Strand.

Rooms at this magnificent hotel, promising "grand colonial decadence", start at US$390 a night - but they were, at least, graced once by Somerset Maugham, George Orwell, Noel Coward and Rudyard Kipling. Rooms are heavily booked well into next year, according to the hotel website.

The Alfa is an adequate but nondescript hotel dating back to the 1990s that was renovated and reopened this year by a savvy Hong Kong family who identified the anticipated tourism boom.

A room booked on arrival here costs me US$120, although my neighbour at breakfast tells me he paid US$85 for an identical room booked a few weeks in advance. Closer to the city centre, there are better budget options, particularly the comfortable Central Hotel, next door to Traders.

Yangon retains something of the aura travel writer Norman Lewis experienced on a visit six decades ago, when he was overwhelmed by the sight of crumbling colonial edifices staring grimly out across "scavenging dogs and sprawling, ragged bodies".

"Half-starved Indians lie in the sunshine," Lewis wrote in his classic book . "There are small annual epidemics of cholera and smallpox and the incidence of bubonic plague is unlikely to decrease because the sewers of Rangoon swarm with rats."

The starving Indians and the plague may have gone but Yangon maintains a decrepit charm. Black crows flap around pagodas at dawn, pavements are cracked and stained with betel, and giant black rats still stalk the city's streets after dusk. There is no nightlife, there are few shops and most restaurants close before 9pm.

However, the squalor, the choked streets and the hunt for a reasonably priced hotel room are worth it for two experiences alone.

First, a visit to the imperious, 2,600-year-old Shwedagon Pagoda - a "beautiful winking wonder" that dazzles and blazes in the sunshine, as it did in Kipling's 1889 description. This is one of Asia's most breathtaking sights.

Second, even if you can't afford one of its rooms, begin your evening with a cocktail in The Strand Hotel. In its panelled, time-warped bar, you can sink back into a leather armchair, rifle through the pages of a 1913 bound copy of the and imagine that the sun never did set on the British empire.

Outside in the real world, of course, Yangon is changing at a bewildering pace. Foreign visitors are no longer followed by government spooks, as they routinely were only a few years ago, and images of Suu Kyi are no longer as scarce as images of the Dalai Lama in Tiananmen Square.

The face of The Lady stares out from souvenirs on every street corner and every aisle of the bustling Bogyoke market. For some, this must be one of Asia's most extraordinary sights.

"It's not a smokescreen," assures a veteran Yangon journalist who has first-hand experience of the military regime at its most repressive. "Things really are changing. You only have to look around to see how much the atmosphere has changed."

It has been five years, he says, since his work as a journalist last saw him carried away to a place euphemistically known as the government guest house. "They held me for a week," he says, with a grin. "I haven't been invited back since."