Manila, 14 February 2019 - Latest data from the Department of Tourism show that foreign tourist arrivals in 2018 reached a record-high 7.1 million, exceeding arrivals in 2017, but behind the government’s goal of 7.4 million. Manila continues to lag behind its Asian neighbours in terms of tourist arrivals and average daily rates (ADR), but the push to attract more leisure investments by improving infrastructure and implementing sustainability programmes should support arrival growth and sustain healthy hotel occupancy and ADR growth from 2019 to 2021. Colliers encourages developers to establish more homegrown brands; landbank near airports that are due for modernization; explore air service agreement opportunities; and monitor tourism projects implemented by relevant government agencies.

Colliers recorded the opening of about 1,000 new hotel rooms in H2 2018. Among the new hotels completed during the period were the 357-room Hilton Manila and the 390-room Sheraton Manila in the Newport Area; and Vista Land’s 130-room Mella Hotel in Las Pinas.

HOMEGROWN BRANDS IN THE PIPELINE

From 2019 to 2021, Colliers sees an aggressive completion of local hotel brands established by national developers. Among the national players that have aggressively developed their own hotel brands are Ayala Land, Filinvest, Rockwell, 8990 Holdings, Eton, and Vista Land. The bulk are planned to be spread across integrated townships across Metro Manila. Foreign brands we expect to complete new projects over the next 12 to 24 months are Okura, Mövenpick, Mandarin Oriental, and additional rooms from Okada Manila.

About 40% of the 5,500 new hotel rooms due to be completed from 2019 to 2021 are classified as three-star. Colliers expects the annual completion of about 1,800 new units per year from 2019 to 2021.

MANILA ADRs LAG BEHIND

Rates of foreign branded hotels in Manila continue to lag behind their counterparts in other Asian economies. Colliers attributes this to the relatively lower number of foreign arrivals in the Philippines compared to other Asian economies. This results in the Philippines receiving the least amount of tourism receipts versus other comparable Asian Countries.

The continued improvement of the country’s infrastructure network, sustained arrivals from major tourism markets, and implementation of tourism department-initiated programmes should ensure a more competitive leisure market over the next two to three years. To take advantage of the opportunities, we encourage developers and operators to consider implementing the following measures:

More two-and three-star hotels in the fringes of business hubs

In our opinion, developers should consider the peripheries of major business hubs as possible locations for budget hotels. The fringes of Makati, Ortigas, as well as northern Quezon City are feasible sites for these hotels. The Makati fringe area has also become a viable location for hostels such as Lub D, which mainly caters to millennial travelers and ‘staycationers’.

Development of homegrown brands

Colliers believes that the success of Seda and Aruga have shown that homegrown hotel brands can compete with international brands, especially those that cater to the three- and four-star market. 8990 Holdings has also launched its own hotel brands and plans to open facilities in key cities and tourism sites across the country. Colliers believes that national developers should aggressively explore the possibility of launching their own hotel brands in destinations around the country to capture the thriving foreign and domestic travel markets.

Position near airports up for modernization

In our opinion, developers should start acquiring parcels of land near the regional airports that are up for modernization. SM and the Filinvest have been active in expanding their hotel portfolio in Clark in anticipation of the full modernization of the international airport in 2020 as well as the staging of the Southeast Asian (SEA) games in December 2019.

For example, the 260-room Marriott hotel in Clark opened in September 2018. We also recommend that developers expand their meetings, incentives, conferences, and exhibitions (MICE) facilities in Clark as it is becoming a preferred destination for international events and conferences.

Monitor air service agreements between governments and airlines

We encourage hotel operators to closely monitor air service agreements inked by the Philippine government with other countries as well as partnerships firmed up by local air carriers. Philippine Airlines, for instance, is reviving its flights to India in Q1 2019 while AirAsia Philippines is opening more flights to Macau, Kunming and Chengdu in China.



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Colliers International | Manila 11F Frabelle Business Center, 111 Rada Street Legaspi Village, Makati City 1229 Philippines | Tel: +632 888 9988