May 18, 2006

RP tourism industry experiencing growth

BORACAY ISLAND, Philippines — Orlando Sacay, a long-time resort owner in Boracay Island, reputed to have the best white beach in the world, has seen the popular resort island come a long way. From only a few huts and cottages in the late 1970s, Boracay now boasts four-story concrete buildings and by next year, will be home to the popular Shangri-La Hotel and Resorts chain.
Sacay’s resort, Waling Waling Beach Hotel, is one of the more famous on the island with guests coming from as far as Europe and the U.S. It is also playground to Manila’s most elite families. The hotel, with its 29 beachfront rooms, is almost fully booked the whole year round, with guests willing to pay $120 to $260 per night.
But with the steadily growing numbers of tourists on the island, led primarily by locals and Korean travelers, he sees a shortage of rooms very soon. Sacay, who is also president of the Boracay Foundation Inc., a group of hotel and resort owners on the island, has even built another villa-type resort, Sitio Waling Waling, just a few hundred meters at the back of his hotel, to answer to the growing demand for rooms.
According to a landmark study, released in March by the International Finance Corp., the investment arm of the World Bank, there was an estimated 2,847 rooms in Boracay in 2004 — 85% of which are in small hotels, 10% medium-sized (30-60 rooms), 2.5% large hotels (more than 60 rooms), and one with more than 100 rooms. The study, however, could not determine the hotel occupancy rates because of the lack of accurate data.
But the study does show an annual average increase in tourists by 12.79% from 1996 to 2004, “significantly higher than the overall growth rate of visitor arrivals for the whole country.” As of end-2004, about 430,000 people visited Boracay, from 340,000 the year before.
“I still need more rooms. But IFC thinks that Boracay can take more tourists with the same number of rooms, conclusion — quality rooms are in short supply,” Sacay said in an exclusive interview with the Journal.
The tourist numbers are primarily driven by locals, accounting for close to 70% of total Boracay visitors, said Sacay. Until five years ago, tourism was driven mostly by foreigners. However, increased availability of cheaper transportation such as the roll-on, roll-off barges or RO-RO project of the Macapagal government which connect the Batangas City port to Caticlan, the jump off point to the island, have encouraged even Filipinos in lower income levels to go the island, he said. Flights to Kalibo, the capital of Aklan, and Caticlan have also risen tremendously over the past years with six airlines now serving the route from Manila and from Cebu.
Still, foreign visitors have also accounted for the rise in arrivals to the island, up an average of 18.4% annually for the period, while the entire country only saw a 1.09% rise annually, according to the study. As such, there have been discussions among the government and private sector about upgrading either the Kalibo or Caticlan airport to service international carriers.
In the last three years, a number of new establishments have sprung up, mainly boutique hotels which cater to mid-priced travelers. The largest so far is Hotel Seraph (100 rooms), which cater to Koreans. Aside from Shangri-La Resort, which will add 200 rooms, there are also other resorts and hotels nearing completion. Among them are Discovery Shores of Discovery Suites (60 rooms); Balaihara of Fairways and Bluewater (150 rooms); expansion of Boracay Regency (80 rooms); Boracay Mandarin (48 rooms); and Real Mariz (48 rooms), totaling 618 new rooms for the island by the end of 2007.
Despite the constant bad rap the Philippines gets in the international market — for example, the U.S. has issued travel advisories regularly against traveling to certain parts of the Philippines — the tourists are still coming. Last year, tourist arrivals rose by 14.5% to 2.62 million, from 2.29 million in 2004, according to DOT data. Ironically, Americans, led the pack at 528,493 (20.1%); followed by Koreans, 489,465 (18.7%); Japanese, 415,456 (15.8%); Taiwanese, 122,946 (4.7%); Chinese (excluding Hong Kong residents), 107,456 (4.15). The rest come from Hong Kong, Australia, Canada, Singapore, the United Kingdom, Germany, and Malaysia.
Guamanians, who fall under the Australasia/Pacific category, saw an 8.5% rise in arrivals to the Philippines last year at 37,249 from 34,326 in 2004. The total numbers exclude Filipinos working or living overseas still holding Philippine passports but include Filipinos who already hold passports of their countries of residence.
In a press statement on April 16, Ace Durano, DOT secretary, predicted that tourist arrivals would hit three million by year end. He said he is basing his optimism on the latest tourism statistics showing that “almost half a million arrivals were recorded during the first two months of the year, posting a growth rate of 17% against the same period last year.”
In other parts of the Philippines, hotel operators are also scrambling to establish more facilities in response to an expected influx of both foreign and domestic tourists. Among these are Clark field in Pampanga, a former airbase of the U.S. Armed Forces, and Cebu City in Eastern Visayas. Suprisingly, despite the increase in tourist arrivals, Metro Manila is not anticipating any room shortages.
Quoting figures from the regional DOT, Marco Protacio, general manager of Waterfront Hotel Cebu, said there would be a shortage of rooms in Region 7 (Eastern Visayas), which includes Cebu, in anticipation of five million tourist arrivals by 2010.
From January to September 2005, 1.09 million traveled to Region 7, 69% of which were local tourists, while the rest were foreigners. Last year’s figures were 11% higher than the same period in 2004. Of the total, Cebu accounted for 840,000, up 10% from the previous year’s 764,000.
Cebu has always been the favorite venue for out-of-town conventions for Filipinos as it sits almost in the middle of the two major island regions of the Philippines — Luzon in the north and Mindanao in the south. It is also fairly accessible via sea or air, and its international airport is probably the busiest after Manila. In the last two years, for example, Cebu has played host to the annual Advertising Congress, the largest gathering of advertising companies in the country.
Protacio, who is also president of the Hotel Resort Restaurant Association of Cebu, told the Journal that there were a total of 105 hotel and resort establishments in Cebu as of January, contributing 6,194 rooms. This accounts for almost 75% of the total rooms available in Region 7, which also includes Bohol, a growing popular tourist destination especially among foreigners.
Fourteen standard hotels, he said, account for the largest number of rooms in Cebu at 1,420; followed by three deluxe hotels at 1,018; then 14 economy hotels with 959 rooms. Two first class hotels account for only 729 rooms.
Like Boracay Island, the hotel shortage appears to be among the first class and deluxe establishments, going by the recent openings of hotels and the expansion of existing resorts.
In October 2005, the Hilton Cebu Resort & Spa opened its doors with 246 rooms on Mactan Island, which its management called an historic event. Speaking at the grand opening on Oct. 26, 2005, Koos Klein, president for Hilton International Middle East & Asia Pacific, said, “Today marks a milestone for Hilton. It not only sees the return of the Hilton brand to the Philippines after 17 years, it also signifies the launch of the very first Hilton Worldwide Resort in one of Asia’s preferred tourism destinations.”
April saw the reopening of the Cebu Plaza Hotel, renamed Marco Polo Plaza Cebu, and now owned by Federal Land Inc. of the Metrobank group. The reopening of the establishment after three years of absence, added 335 rooms to the local scene. It was previously owned by Pathfinders Holdings Inc., the same owners of Philippine Plaza located at the Cultural Center of the Philippines complex in Manila. Metrobank foreclosed on the property when Pathfinders failed to pay its 900-million peso ($17.31 million) debt.
Another new hotel expected to be completed this month is the Park lane International Hotel with 250 rooms, while the others being constructed are additional rooms for existing first class and deluxe hotels, said Protacio. These are: Cebu White Sands Resort (75 rooms), Costabella Tropical Beach Hotel (66 rooms), and Maribago Bluewater Resort (51 rooms), for a total of 192 rooms expected by year end.
In Clark field, north of Manila, foreign tourists are boosting hotel occupancies. It is now running close to “80% on a regular basis,” according to Victor Jose I. Luciano, executive vice president and chief operating officer of the government-run Clark Development Corp.
He told the Journal, “Before, occupancy rates here ran on peaks and valleys. For instance, during the weekends, occupancy was higher…. In 2003, the average was 50%, 2004, the average was 65%, and 2005, this has gone up to 80-90%. Obviously, there is now a shortage of hotels in Clark.”
He attributes the increase tourist arrivals due to the influx of Koreans —which according to the DOT, has already dislodged Americans as the No. 1 tourist group to the Philippines this year — followed by Singapore and Malaysia, Taiwan, Hong Kong and Macau. Over the years, direct flights from the latter countries have boosted the tourist numbers in Clark. There are 46 passenger flights a week at the Diosdado Macapagal International Airport, “offering the most competitive rates,” flying directly to Korea, Singapore, Hong Kong, Kota Kinabalu, Taipei, China, Macau and Thailand.
“At the same time, Clark has positioned itself to be a venue for meetings and seminars of corporations based in Manila,” Luciano added.
With the jump in tourist arrivals to 120,000 last year from only 40,000 in 2004, a number of hotels is expected to be completed by year end to complement the projected rise in arrivals in the next following years. Among the hotels undergoing construction are Raffles Hotel (250 rooms), Fort Stotsenburg Hotel (250 rooms), and Fontana Leisure (60 rooms). “Smaller hotels are now being added outside Clark area,” said Luciano, to catch the overspill of arrivals inside the former U.S. airbase.
Metro Manila’s hotels, while recording decent occupancies, will not likely see any additional rooms built within the next few years, primarily because there is no need for them.
Helmut Gaisberger, general manager of Mandarin Oriental, Manila, a premier hotel in the business district of Makati City, said he doesn’t see any hotel shortage in the city. “That the hotels have been enjoying high occupancies does not mean that we need additional rooms in Metro Manila.”
He said Mandarin is recording an average occupancy rate “in the high 80s (%), similar to those in previous years.” Like most deluxe hotels in Makati, business travelers and conferences make up the bulk of the hotel’s business. MBJ

(Originally published in Marianas Business Journal, May 15 issue.)

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