The Hospitality Sector has always been a sunshine industry and one of the underserved segments in the country. The lack of quality accommodation facilities has been one of the reasons why the tourism industry continues to underperform compared to some of our Southeast Asian neighbors.
Massive tourism campaigns by the Department of Tourism (DOT) over the past two decades from “Wow Philippines”, “It’s More Fun in the Philippines” and the latest “Love the Philippines” have continuously spurred the growth of Tourism and has made the Philippines one of the top international tourist destinations. These campaigns have reaped benefits as places like Palawan, Bohol, Siargao, Pagudpud and Boracay have been recognized as having some of the best beaches and dive spots in the world. These campaigns have likewise promoted some of the UNESCO Heritage Sites in the country which showcases the natural beauty of the Philippines as well as the richness of its culture.
The visitor arrivals to the Philippines have been steadily increasing since 2015 and peaked in 2019 with 8.26 million visitors. The start of 2020 still saw a substantial number of visitor arrivals but took a significant downturn by the second quarter of 2020 running into 2021 as the country closed its borders because of the COVID-19 pandemic. Arrivals during that time were mostly returning Filipinos.
Source: Department of Tourism
As the number of visitor arrivals was increasing so was the visitor receipts over the same period of 2015 to 2019. Visitor receipts likewise peaked in 2019 as it reached USD9.3 Billion then likewise dropped drastically and stagnated in 2020 and 2021.
Source: Department of Tourism
By February 2022 the international borders were opened and so with the Philippines. The year registered 2.65 million visitor arrivals with visitor receipts USD3.82 billion. In 2023, visitor arrivals more than doubled to 5.45 million visitor arrivals with visitor receipts of USD8.69 billion, “Revenge Travelling” gaining momentum.
In the first half of 2024, visitor arrivals hit 3.03 million, while visitor receipts registered USD4.8 billion for the first half of 2024 which is more than half of the previous year’s total. Tourist arrivals and activities usually pick up in the second half of the year. More so in the months leading to the holiday season. Surpassing last year’s visitor arrivals and visitor receipts are to be expected. Hitting the year-end target of DOT for visitor arrivals at 7.7 million may still be within reach given the momentum from last year.
During the period of lockdown from 2020 to 2021 a number of hotels and accommodation establishments have shut down. Most of the operating hotels were functioning as holding areas or “quarantine facilities” for returning Filipinos and selected travelers in compliance with the health and safety protocols in effect.
Aside from the pandemic, recent typhoons that struck the country have resulted in the loss and damage of hotel and resort facilities. Such was the case of super typhoon “Odette” which struck in December 2021, just a couple of months before the opening of international borders. Damages to tourism facilities cut across a wide area. Most notable were in the prime tourism and resort areas of Siargao, Panglao, Cebu and Palawan.
The foreseen continuing growth in visitor arrivals and visitor receipts is expected to drive the hospitality sector even further. Likewise, the reduction of operating accommodation facilities has strengthened the resolve of some developers and investors to expand their presence in this sector.
Meetings, Incentives, Conventions & Exhibitions (MICE) Tourism are also seen to drive the hospitality sector. With major travel restrictions lifted, conventions, exhibitions and other large group gatherings are once again being organized. Being able to physically reconnect, network and to promote new products and services in a small or large audience setting has been a welcome development after being absent during the pandemic. Function halls/rooms which are able to accommodate headcounts from less than a hundred to a couple of thousands will be part of the facilities being offered by some of these upcoming hotels.
SM Hotels and Conventions Corp. (SMHCC),a subsidiary of SM Investments Corp. (SMIC),is slated to open 1,700 new hotel rooms in the next four years. The Phinma Group, which holds the Microtel and TRYP by Wyndham hotel brands, is targeting to grow its portfolio to 2,000 room keys by 2030.
Cebu-based developers Cebu Landmasters, Inc. (CLI) and AppleOne, Inc. are expanding their hotel portfolio outside of Cebu. Projects in the pipeline will be areas within the Visayas and Mindanao Region such as Bacolod, Iloilo, Cagayan De Oro and Davao.
The gaming sector is also seen to boost both domestic and international tourism with the opening of Integrated Resort Casinos (IRC).The recent opening of Nustar Resort and Casino in Cebu City and Solaire North in Quezon City is a testament to the strong performance in this segment. Grand Westside Hotel, the recently opened hotel with the largest number of rooms at 1,530, will likewise feature a gaming complex once completed. Up in the Clark Freeport Zone, Hann Resort Casino will be adding another hotel to its existing gaming complex.
The Philippine Hotel Owners Association (PHOA), during the 1st Philippine Tourism and Hotel Investment Forum Summit at the New World Makati Hotel, mentioned that by 2028,at least 50 more hotels are expected to rise in the country which will translate to about 15,000 more rooms in the country's inventory. This is a strong indication of the commitment of developers and investors to grow the hospitality industry.
Further growth in tourism will be fueled by improvements in infrastructure, such as roads, airports and transportation facilities that will enhance connectivity and accessibility to the various tourist destinations. These initiatives are being addressed by the government and the private sector through Public-Private Partnership (PPP) projects. Some of which are ongoing, and several are being lined up.
The Philippine Tourism Industry is seen to continue growing. The World Travel and Tourism Council (WTTC) forecasts Philippine travel industry will have a value of PhP5.4 trillion for 2024, up from the PhP4.34 trillion of 2023. WTTC further estimates that the value of travel and tourism will account for 22% of the Philippine economy by 2034 as it is forecast to hit PhP9.5 trillion.
The pandemic has brought about a cultural shift and a change in mindset. Increased attention to mental health and wellness was given so people may better handle the stress and hassles during the pandemic. Achieving a “work-life balance” wherein one effectively manages his/her professional life and responsibilities to be productive and successful at work while having plenty of time to live a fulfilling personal life became the objective.
This resulted in having flexible working arrangements which included working outside the office and more personal time off (PTO). Others have gone to the extent of giving up working in the office completely either working at home, in a coffee shop, in a co-working space or even while travelling (digital nomads).
The importance given to health and wellness may have even contributed to the “revenge travelling” phenomenon. The pandemic gave people a better appreciation of life by showing how easily it can be taken away. Traveling became one of the outlets for a number of people to show this greater appreciation be it foreigners or locals. To show the value of travelling, some travelers have extended their original travel plans by several weeks as shared through their social media posts.
The importance of mental health and wellness has been deeply entrenched and has become one of the prime objectives for most people, especially after the pandemic. Having said this traveling and tourism industry is poised for continuous growth. Sustaining this growth will take a concerted effort between the government, the private sector and other stakeholders in the hospitality industry including the developers and investors of hotels and accommodations.
