Hotel prices in Metro Manila will likely continue to soften and less than half of the available room supply may be filled in the coming year as foreign tourist arrivals remain sluggish amid the prolonged coronavirus (COVID-19) pandemic, property consulting firm Colliers International Philippines said.
Colliers projects hotel occupancy rates in the metropolis to recover but still remain below 50 percent in 2021 as foreign arrivals remain subdued as a substantial new supply comes online across Metro Manila, the firm said in its Dec. 23 research.
Over the next 12 months, Colliers sees foreign arrivals remaining muted as tourists and leisure stakeholders are likely to remain wary of traveling until a vaccine is rolled out. This is seen impacting further on the hospitality sector as well as hotel occupancy and average daily rates (ADR) of hotels across Metro Manila.
As such, Colliers sees ADRs declining by about 10 percent in 2021 from the projected 30-percent drop in 2020.
In the first half of 2020, Colliers saw hotel occupancy in Metro Manila falling to 25 percent from 71 percent in the second half of 2019. This was attributed to the substantial decline in foreign arrivals due to the pandemic and global travel restrictions.
The recovery this year should be supported by the Department of Tourism’s (DOT) aggressive domestic tourism campaign and the implementation of travel corridors between COVID19-free countries in Asia.
Colliers said it believed that hotel operators should be more agile given the anemic demand brought about by the pandemic and the global economic crunch.
“These schemes, however, should comply with the government-mandated physical distancing measures. These offerings should be promoted aggressively on social media and target the millennial and mobile workforce,” the research note said.
“Hotel operators should also continue utilizing technology to enhance customer experience. These technology-enabled services include keyless check-ins, smart room controls and 24/7 mobile connectivity. In our opinion, the pandemic and physical-distancing protocols likely to be implemented once COVID-19 wanes only highlight the need to roll out innovative hotel services using modern technology,” it added.
From 2020 to 2022, Colliers sees the completion of about 6,100 rooms or about 2,020 rooms annually. New supply is seen to pick up in 2021 and 2022 following the delayed delivery of several hotels in Metro Manila.
Like other property markets, Colliers said the hotel segment was likely to suffer from delayed completion of new projects as developers factor in a sluggish recovery.
In its second half 2019 hotel report, Colliers had highlighted the potential drop in Chinese arrivals due to the China-centric nature of the outbreak.
“Now that it has evolved into a global pandemic, this has also affected arrivals from other source markets such as South Korea, the United States and Japan,” it noted.
DOT data showed that tourist arrivals reached 1.32 million in the first 10 months of 2020, down by 81 percent from a year ago. Tourist receipts also plunged by 79.7 percent in the 10 months to October to P81.05 billion. The decline in foreign arrivals was largely due to the travel bans implemented by the government from April to October 2020 due to the pandemic.
Most of the hotel guests during the lockdown, which started mid-March, were returning overseas Filipinos, health workers serving as front-liners as well as professionals working in Metro Manila whose daily commute was limited by the suspension of mass transportation in the capital region.