The Philippines needs to build more three- and four-star hotels, particularly on the fringes of Metro Manila, to serve the rising demand from local and regional tourists, according to property consulting firm Colliers International.
Colliers’ latest hotel property report written by research manager Joey Roi Bondoc showed that hotel occupancy in the second half of 2016 had risen due to record-high foreign tourist arrivals and sustained growth in tourist expenditures.
In the fourth quarter of 2016, hotel occupancy in Metro Manila increased to 71 percent from 69 percent two quarters ago. This was supported by the completion of more than 1,700 new hotel rooms in 2016.
Of the new hotel rooms made available last year, about 40 percent were delivered in the second half in time for the arrival of overseas Filipino workers (OFWs) for the holiday season.
Average rates for five-star rooms in Metro Manila grew by 3 percent to $370 a night in the second half of 2016 from the first half of the same year, Colliers said. Rates for three-star accommodations rose by 9 percent to $186 per night while rates for four-star rooms rose by 5 percent to $247 per night in the same period.
“Rates among the three- and four-star hotel rooms recorded the fastest growth due to higher demand from Chinese and Korean tourists and OFWs who spent Christmas holidays in Metro Manila,” Colliers said.
“Colliers believes there is a massive room for growth in this sub-segment (three and four-star hotels) because this is driven by both the local and foreign tourists, particularly those from Asian countries. Thus, Colliers encourages developers to build more three- and four-star hotels both in Metro Manila fringes and key provinces,” the research said.
The property consulting firm sees hotel rates in the metropolis marginally increasing by 2-5 percent in the next 12 months.
About 5.39 million foreign tourists visited the Philippines from January to November last year, 12 percent higher than the level a year ago, mostly from Korea (1.33 million), USA (771,849), China (630,327) and Japan (491,261). This 11-month figure also exceeded the full-year 2015 figure of 5.36 million.
This year, the Department of Tourism expects tourist arrivals to break the seven-million milestone. Colliers said a 10-percent growth to 6.6 million would be “more realistic.”
Given the encouraging foreign tourist arrival data, Colliers expects hotel occupancy rate in Metro Manila to hover between 65 and 70 percent in the next 12 months.
Colliers sees the Philippines attracting more Chinese visitors as a result of President Duterte’s recent visit to China in October last year, during which the Chinese government lifted negative travel advisories. Based on data from the Philippine embassy in China, the number of Chinese nationals applying for tourist visas to the Philippines rose to 1,400 daily in the fourth quarter of 2016 from an average of 400 per day in the previous quarter.
The country’s successful recent hosting of the Association of Southeast Asian Nations (Asean) Tourism Forum, Routes Asia, Asia Pacific Economic Cooperation Summit and Miss Universe Pageant helped increase arrivals and raise the country’s attractiveness as a meetings, incentives, conferences and exhibitions destination in the region, Colliers said. This year, the country will host the Madrid Fusion, Asean Summit and Hotel Show Philippines.