Manila, April 25, 2017 - The completion of the Mactan-Cebu International Airport (MCIA) expansion project should further boost Cebu’s attractiveness as a tourist destination.  From January to November of 2016, Cebu attracted some 3.46 million domestic and foreign tourists, making it the most visited destination in the Philippines. The 2016 figure is 12% higher YoY. The continued surge of tourists in the city should provide impetus for developers to ramp up construction of hotels and resort-oriented condominium projects.

The PHP17.5-billion public-private partnership (PPP) project involves the construction of a new world-class passenger terminal building.  The new terminal will have a capacity of 12.5 million tourists per annum, almost triple the old facility’s original capacity of 4.5 million. Cebu serves as the jump-off point to other Visayas and Mindanao destinations, hence the need to expand its airport’s capacity.

According to the Public-Private Partnership (PPP) Center, the MCIA project is 51% completed as of end-March 2017. GMR-Megawide Cebu Airport Corp. (GMCAC), the firm behind the PPP project, said MCIA’s second terminal is on track for completion by June 2018.  The MCIA expansion is touted as a model for the implementation of PPP projects in the country. The timely completion of PPP projects will be crucial in fulfilling the government’s commitment of making the next five years the “golden age of infrastructure” in the Philippines.

The upgraded terminal should entice more foreign airlines to mount direct flights to Cebu which has consistently ranked as among the most visited destinations in the country. In 2016, it attracted the largest number of domestic and foreign tourists, outranking other key destinations like Camarines Sur, Davao, Iloilo, Negros Occidental, and Palawan.

Aside from the expansion of MCIA, Cebu should entice more tourists over the medium term given the completion of other key infrastructure projects that will considerably ease travel within the city and its environs. These projects include the Cebu-Cordova bridge and the proposed Bus Rapid Transit (BRT) system that is among the priorities of the Duterte administration. These major road transport projects should complement the rehabilitation and upgrading of national and local roads being undertaken by the Department of Public Works and Highways (DPWH).

Other key developments that should boost Cebu’s tourism industry include the lowering of airfares as airlines compete for bigger market share; approval of the ASEAN Multilateral Agreement in Air Services that allows Philippine air carriers to fly an unlimited number of times to the capital cities of other Southeast Asian countries; and Cebu’s emergence as a key meetings, incentives, conventions and exhibitions (MICE) destination. Over the past three years, Cebu successfully hosted a number of major international events such as APEC ministerial meetings, International Eucharistic Congress, and preliminary events of the recently-concluded Miss Universe pageant. Cebu is also among the cities that hosted a number of ASEAN 2017 meetings. “With growing interest in Cebu as a MICE destination in the region, we encourage developers to apportion a bigger space for conference rooms and other similar facilities,” said Gerard Padriga, general manager of Colliers International’s Cebu office.  Last year, Cebu-based Gaisano Capital Group launched the 1,500-seat Mactan Island Convention Center (MICC).

Cebu tourism will also benefit from the Philippine and Chinese governments’ signing of an agreement on tourism cooperation that includes exploring a possible increase in capacity entitlements in air services and encouraging airlines to open new flights between Philippine cities in the Visayas and Mindanao regions and Chinese cities. This will complement GMCAC’s plan to open new routes to Australia and Europe as well expand existing routes to Japan and South Korea.

Benefitting from robust tourist arrivals are the city’s hotels and residential condominiums being offered to the short-lease market.  Cebu houses a wide range of accommodation facilities that cater to both young urban professionals on a weekend getaway and investors on a short business trip.

With the increase in tourist arrivals, overall occupancy rate for 2016 improved to 68% from 65% in 2015. Robust occupancy rates of Deluxe and First Class hotels indicate the continued influx of high-spending tourists. “Cebu’s rising attractiveness as a tourist spot and growing competitiveness as an investment destination should support a 15% to 20% growth in tourist arrivals over the next 12 months,” Padriga added.  This should sustain hotel occupancy of between 65% and 70% across Metro Cebu in 2017.

Meanwhile, the impact of travel advisories issued by a number of countries will likely have a short-term effect in the influx of tourists. The long-term growth of tourism in the area will be hinged on the swift resolution of safety issues by the government.

In terms of the development of tourist facilities and infrastructure, several local and national developers have lined up their projects due to be completed over the next two to five years. The Ascott Limited is planning to open Citadines Cebu City in 2019 and Somerset Gorordo by 2021. Ayala is building a 214-room Seda hotel due to be completed in 2019 while Double Dragon has disclosed plans of building Jinjiang hotels in the city. Other notable projects include Rockwell’s Aruga resort; Duros Land’s 23 Minore Park Hotel; Grand Land and Dusit International’s Dusit Princess Hotel; and Megaworld’s hotels under the Belmont brand. 

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