Tourism to feed hotel growth

The Philippine government will need to immediately address security issues and air transport infrastructure, among other concerns, to further improve the competitiveness of the country’s travel and tourism industry.

This was deemed necessary as the industry is seen to “play a crucial role in sustaining hotel occupancy rates and enticing local and foreign businessmen to hike their leisure-related investments in the country,” according to Colliers International Philippines.

Despite pressing issues, Colliers noted healthy occupancy rates across Metro Manila, on the back of rising foreign arrivals, thriving domestic tourism, and growing demand for quality business accommodation and meetings, incentives, conferences, and exhibits (MICE) facilities.

Rising arrivals

“Foreign arrivals continue to grow despite safety and security issues as well as the imposition of martial law in the Mindanao group of islands. We still expect 10 percent growth in international arrivals in 2017 as we see the likely slowdown in the historically slack third quarter being offset by the traditionally strong fourth quarter driven by foreigners and overseas Filipino workers (OFWs) who spend holidays in the Philippines,” Joey Roi Bondoc, research manager at Colliers, explained in a second quarter report issued by the global commercial real estate services firm.

Colliers’ forecast of a 10 percent growth this year to 6.6 million tourists was however slower than the Department of Tourism’s target of 17 percent or 7 million tourists.

According to Colliers, the expected dip in the third quarter “may also be exacerbated both by the shooting incident in Resorts World Manila in June which resulted in a number of nearby casino-hotels recording booking cancellations from individual and junket players, and by the declaration of martial law in the Mindanao group of islands following the terror attacks in Marawi City.”

To quash the negative impact of these incidents, Colliers said the government needs to project a business-as-usual image and ensure that tourism establishments such as hotels, restaurants, and other entertainment facilities implement tighter security measures.

“The Tourism Department should consider sending additional special missions to neighboring traditional markets such as Korea, China, and Japan to quell concerns about safety and security in the country and to assure tourists that the terror attacks in Marawi City as well as the shooting incident in Resorts World Manila are isolated cases,” the report stated.

“Moreover, we believe that the government should properly communicate to tourism stakeholders that the extension of martial law in Mindanao is primarily meant to heighten security in the island region and ensure the safety of both residents and tourists,” it added.

Popularity of staycations

Meanwhile, demand among three- and four-star hotels should be sustained by the rising popularity of “staycations” and growing domestic travel market. Budget hotels will still be popular among millennials who account for more than half of local travelers, according to Colliers.

“The thriving domestic tourism, fueled by millennial spending and the growing popularity of staycations helps sustain hotel occupancy in Metro Manila. This compels developers to build more three- and four-star hotels in Metro Manila and other urban areas outside the capital,” Bondoc said.

Colliers said the growth in domestic tourism is being fueled by millennials with Filipinos aged 15 to 34 accounting for more than half of the 42.1 million domestic travelers recorded from April to September 2016. Citing figures from the DOT, Colliers said local travelers made a total of 91.2 million trips during the period under review.

In Metro Manila, hotel developers are already responding to this demand by building hotels in strategic locations across the capital. Ayala, for instance, has been aggressive in opening Seda hotels within its integrated townships; Rockwell Land is ramping up its accommodation facilities through its Aruga brand; Filinvest is working on a new brand that will specifically cater to millennials; and Double Dragon is planning to build more Jinjiang hotels in the country’s capital and other urban areas as it intends to more than double its room count to about 2,000 by 2020.

Innovative programs

Given the sustained demand, Colliers has thus urged developers to construct more three- and four-star hotels and MICE facilities in Metro Manila and provincial locations where road networks and air transport projects are being developed. It likewise encouraged operators to be more proactive in offering innovative loyalty programs to their regular clients.

Colliers thus recommended that hotel developers take advantage of the rising number of foreign and domestic tourists by implementing the following:

Development of more affordable hotels in the provinces given the continued rise in domestic tourists. Among the most viable provincial locations for hotel development are Negros Occidental, Cavite, Bohol, Cebu, Camarines Sur, Cagayan de Oro, Davao, Iloilo, and Clark in Pampanga;

More aggressive construction of three and four-star hotels in Metro Manila, especially within masterplanned communities or townships given the expansion of business activity in the country’s capital that is driven by both outsourcing and non-outsourcing companies; and

Improvement of loyalty programs for regular clients. Among the perks that operators can provide to loyal customers are free Wi-Fi access, and discounts in in-house restaurants and room upgrades.