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East Asia tourism boosts Philippines market
January 10 2013

Visitors from countries including China, Japan and South Korea are boosting performance of hotels in Manila as well as sparking development initiatives.

Highlights
  • According to the most recent World Bank report, international arrivals to the Philippines increased 16.6% in 2010.
  • “The Philippines has seen a continuous upswing in international arrivals and has tremendous potential for growth as a tourist destination,” Accor’s Patrick Basset said.
  • The rate and occupancy outlook for the Philippines is strong, Starwood’s Matthew Fry said.

REPORT FROM THE PHILIPPINES—A surge in global tourism arrivals from other nations in the Asia/Pacific region is lifting the prospects of the hotel sector in the Philippines.

Patrick Basset, senior VP of Accor for Thailand, Vietnam, Cambodia, Laos and the Philippines, said the majority of arrivals are coming from East Asian countries such as China, Japan and South Korea. According to the most recent update from the World Bank, the number of international arrivals to the Philippines increased by 16.6% to 3.52 million during 2010.

“The Philippines has seen a continuous upswing in international arrivals and has tremendous potential for growth as a tourist destination,” Basset wrote in an email.

Guy Phillips, VP of development for Asia/Pacific at Hilton Worldwide, touted the region’s draw of meetings, incentives, conferences and exhibitions business as helping boost its global profile. “The archipelago offers a wide range of travel experiences due to its rich diversity of culture and people, thus making the Philippines an ideal MICE destination,” he said via email.

The leisure outlook, particularly in Manila, is strong as well, Matthew Fry, senior VP of acquisitions and development of Asia/Pacific for Starwood Hotels & Resorts Worldwide, said in an email.

Matthew Fry
Starwood Hotels & Resorts Worldwide

“The market is growing as the economy in the Philippines improves and also with the increase in gaming, which will increase tourism into Manila,” Fry said.

At least one gaming company is looking to take advantage of the market. Melco Crown Entertainment is expected to open the first two phases of its $600-million casino-hotel development in Manila by the first half of 2014.

“Leisure outlook is strong as we believe that there will be synergies created by all of the hotels in the Manila Bay area and will really help put Manila on the map as a leisure destination,” Fry said. “In turn this will help the other parts of the country. (It is) kind of a snowball effect.”

Development efforts
Other hotel companies also are looking to get in on the development action in the Philippines. The hotel development pipeline has grown by nearly 80% during the past couple of years, Jonas Ogren, area director-Asia for STR Global, sister company of HotelNewsNow.com, said in an email.

“From a development standpoint … we’ve seen a lot of action,” he said.

Accor has one property in Manila, the Sofitel Philippine Plaza Manila, Basset said. The company also has two properties—the Novotel Manila Araneta and Mercure Manila Ortigas—in its development pipeline.

 

Guy Phillips
Hilton Worldwide

“Although we see potential in the numerous cities and islands, metro Manila is the leading destination and gateway for the Philippines, welcoming almost 40% of the total international arrivals entering the country,” he said.

Meantime, Starwood has two signed deals, and the company is working “on a handful of others” in the country’s other city and resort markets, Fry said.

Philippines outlook
Still, occupancy year-to-date through November was down slightly 1.3% to 67.6%, according to data from STR Global, sister company of HotelNewsNow.com. Average daily rate, however, was up 4.1% during the same time period to 5,130.88 Philippine pesos ($121.08), while revenue per available room also increased by 2.7% to 3,466.62 Philippine pesos ($81.81).

Nonetheless, the outlook for the hotel market in the Philippines is strong, according to sources contacted for this report.

“Rate and occupancy should continue to climb,” Fry said. “There has been some new supply to the Manila market and will be some in 2013, but we believe demand growth will outpace the change in supply.

“As for the resort markets, we think the prospects are very good as key feeder markets like Korea and China increase their outbound visitor numbers.”

 

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