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Chinese tourists troop to PH

/ 12:19 AM April 11, 2016

DESPITE the diplomatic chill with China over disputed territories, the Philippines is again becoming attractive to Chinese holiday-makers, who may outnumber tourists from traditional markets like Japan and the United States in the next year or two, regional investment house CLSA said.

In a regional research note titled “Great Wall of Chinese” dated April 7, CLSA said the Chinese thirst for outbound travel continued to grow, with 2015 finishing strongly and momentum continuing into 2016.

While it can be argued that the Philippines is merely catching up after a significant correction in 2014—when geopolitical tensions escalated between the two nations—the analysts pointed out three consecutive months where the trailing 12-month trend had broken new highs.  This is in turn seen to benefit publicly listed gaming firms like Bloomberry Resorts Corp. and Melco Crown (Philippines) Resorts Corp..


“As the dispute continues to simmer, there does remain a risk that a worsening of tensions can cause another correction, but we’d argue, and the data seems to suggest, that we might be through the worst in terms of impact on tourism,” CLSA said.

“What does hold the Philippines back, however, is the perception of safety, which unfortunately is something that will probably take a longer time to improve,” it said.

But if the Philippines could improve such perception on safety, CLSA said strong growth could be expected ahead, noting precedents which had shown that “when the Chinese come, they can come in large numbers, very quickly.” In the case of Thailand, the research noted that Chinese tourists grew from 800,000 in 2009 to 8 million in 2015 while Chinese tourists in Japan more than doubled from 2.4 million to 5 million last year.

“It would be naive to assume a similar growth trajectory for the Philippines but the potential to grow here is higher than most other countries,” it said.

Chinese tourists in the Philippines account for 9 percent of tourist arrivals, the fourth biggest foreign visitor segment next to Korea, the US and Japan. But this share lags regional peers, where the share of Chinese visitors is well into the teens level or higher and usually rank first or second of foreign arrivals.

“We’d assume that China will overtake Japan very soon and the US in the next year or two,” CLSA said.

In January, CLSA noted that the number of Chinese visitors to the Philippines had risen by 130 percent. While much of this was driven by a low base in January 2015, CLSA said it’s encouraged by the recent trend, which has been strong for many months now. Since its recent bottom in March 2015, the trailing 12-month number of tourists from China into the Philippines has risen from 351,000 to 518,000, a gain of 48 percent in 10 months.

“The gaming plays in Manila should stand to benefit, should tourism continue to rise, particularly from the gambling mad Chinese,” CLSA said. It added that all three major integrated gaming resorts in the country were but a few kilometers from the airport and with a new expressway – due to open in the third quarter, cutting travel times down to 10 minutes.


CLSA prefers Bloomberry’s Solaire and Melco’s City of Dreams Manila, which the investment house said should benefit more given their higher quality offering.

The investment house expects the gross gaming revenues of integrated resorts in the Philippines to grow by a 10 percent compounded annual growth rate to 2017 but noted that “margin expansion should mean that earnings growth is bigger, given fuller property ramp-ups.”

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