MAJOR players in the Philippine hospitality industry remain optimistic despite challenges in recovering to pre-pandemic levels. This was revealed in the first Philippine Hotel Investment Outlook Survey, an initiative of Leechiu Property Consultants (LPC) and the Philippine Hotel Owners Association Inc. (PHOA).
Alfred Lay, LPC director for Hotels, Tourism and Leisure, and Benito Bengzon Jr., PHOA Inc. executive director, in their joint message in the report, said survey results showed “a notably bullish sentiment among investors.”
The objective of the new survey was to examine the investment appetite around the country and gain perspective on their preferred strategies and markets for 2024 and beyond, Lay and Bengzon said.
The respondents in the survey were comprised of hotel owners, investors and senior management, with a cumulative total inventory of over 10,000 hotel rooms in properties located in all major Philippine cities and from hotel market segments that covered luxury, upper upscale, upscale, upper midscale, midscale and economy.
The Philippine Hotel Investment Outlook Survey showed that a high 89 percent of respondents expressed confidence in the medium-term growth of the hospitality industry. An overwhelming 95 percent believed that the industry would flourish in the long term after a period of three years and beyond.
However, the outlook on the hospitality industry’s short-term prospects was more subdued and cautious. Respondents expressed mixed feelings, citing inflation driving up the costs of transportation, goods and services, impacting tourists and hotels, and geopolitical risks. In 2023, hotels were just beginning to restore full operations while investors sought to recover from pandemic-related losses.
Some 39 percent of respondents indicated the upper midscale hotel segment as the most attractive opportunity. The figure was not surprising, according to the report, in light of the surge in developer activity in the provinces and new township developments.
A resort in Panglao Island. PHOTO FROM LEECHIU PROPERTY CONSULTANTS LINKEDIN PAGE
In terms of cities and provinces, Bohol was the top bet of investors, with 41 percent of respondents ranking the island province highest.
Factors that gave Bohol the advantage over other hotspots included its Unesco Global Geopark status, the proximity to Panglao airport, high tourist volume and “stunning beaches, ” the report stated. This key finding supports the LPC forecast in late 2023, predicting Bohol as a major player in the Asian market for the next four to five years.
Top destination spots
Following Bohol in the top five were Metro Manila, Cebu City, Siargao and El Nido.
Both Bengzon and Lay made special mention of Boracay in their statement in the survey report. Beyond Metro Manila and Cebu City, which continue to draw significant investment attention, Boracay, they said, with its “enduring appeal,” has kept its position as the leading destination for arrivals and hotel density.
The survey results showed vigorous investor confidence. More than 64 percent of respondents were confident about the profitability of their investments, foreseeing their gross operating profit (GOP) to go over 30 percent. Meanwhile, 13 percent were more conservative, predicting only 20 percent or less GOP.
Sustainability was identified among the respondents’ top three priorities. The report said this finding indicates an increasing focus on environmentally responsible practices in the industry. It is driven by the rising number of eco-conscious guests and the potential cost savings associated with adopting sustainable practices in hotel operations.
On government incentives, 66 percent of respondents said they did not get benefits from government programs, while the remainder said they were leveraging government support to enhance their hotel operations. The respondents recommended extended tax incentives, increased government promotion and support, more sustainability incentives, enhanced accessibility, and streamlined collection of environmental fees.
The LPC-PHOA Survey. PHOTO FROM LEECHIU PROPERTY CONSULTANTS LINKEDIN PAGE
The survey report concluded with a positive prediction of the industry’s full recovery in 2025 as “consumers maintain their willingness to spend on travel.” Domestic tourism has proven to be a substantial growth driver, augmented by significant increases in Korean visitor arrivals and despite the loss of Chinese tourists. It was also observed that travelers patronized brands that reflect their values, prioritizing sustainability and ethical practices.
“The positive long-term outlook of investors and stakeholders serves as an encouragement for the industry’s future landscape,” Lay said at the media briefing LPC held for the report. “This confidence is evident in major developers’ continued tourism investments across the Philippines, potentially solidifying the industry as the third leg of the economy.”
LPC and PHOA will continue conducting the Philippine Hotel Investment Outlook Survey, launched in March 2024.
“Through continued monitoring and analysis, we aim to provide valuable insights and support strategic decision-making for stakeholders within the hospitality sector,” Lay and Bengzon said in their joint statement in the report.
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