PHL hotel investors drawn to Bohol, El Nido, Siargao

PHL hotel investors drawn to Bohol, El Nido, Siargao

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PROPERTY developers feel so optimistic about the prospects in the tourism industry and the economy as a whole, that they are increasing allocations toward hotel real estate in the coming years.

This was among the findings of the Philippine Hotel Investment Outlook Survey for March-April 2024 by Leechiu Property Consultants (LPC) and the Philippine Hotel Owners Association (PHOA), which was distributed during the recent Philippine Tourism and Hotel Investment Summit 2024. “In contrast to more established hotel markets, developers in the Philippines lean towards greenfield hotel developments over acquiring existing properties…LPC has experienced a notable increase in land acquisition interest over the past year, reflecting a broader trend among developers nationwide as they pivot towards tourism-related developments,” according to the survey.

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It also found a shifting interest by investors to “emerging markets” such as Panglao Island, El Nido, and Siargao, although they were still keen on Metro Manila and Cebu City. “These [three] are increasingly identified as key growth hotspots offering compelling investment opportunities due to their untapped potential and rising popularity among tourists. Investors are particularly drawn to these regions by the prospects of high returns and the ability to shape the development landscape from the ground up.”

The Philippine Statistics Authority (PSA) recently reported investments in the tourism industry by government and the private sector reached P509 billion in 2023, up  34 percent from the P379 billion in 2022. Last year’s investments fell short, however, of the P596.22 billion recorded in prepandemic 2019. The accommodations sector accounted for the largest amount of investments at P261.4 billion, or 51 percent of total. This was 29-percent less than the P370 billion invested in the sector in 2019.


More gov’t support needed

PHOA Executive Director Benito C. Bengzon Jr. said, “The investments are being made by Filipinos, which is a good indication of the confidence of hotel players. We do want the foreign investors to come in as well, but to entice them, there has to be strong market demand. They have to see more tourists and visitors.” Government’s target arrivals this year is 7.7 million, from the 8.3 million reached in 2019.

The same survey showed 66 percent of respondents “[have] not received any benefit from government programs in their businesses,” while 34 percent said they have benefited from fiscal and non-fiscal incentives from the government, initiatives by local government units, as well as “promotional efforts to enhance their hotel operations.”

The respondents recommended a slew of possible government assistance in the form of extended tax incentives, increased promotion and support, more incentives for sustainability, enhanced accessibility, and streamlined collection of environmental fees. While studies have shown the willingness of travelers to pay environmental fees, they usually complain of the chaotic collection of these fees, such as in the jetty port gateway to Boracay Island.


Profit to exceed 30%

Meanwhile, the survey said 89 percent of the respondents expressed confidence in the growth of the hospitality industry in the medium term (1-3 years) while 95 percent were bullish “the industry will thrive beyond the next three years.” They were less confident about the next 12 months due to inflation, geopolitical risks, and “incomplete resumption of some international flights.”

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Investors also felt “remarkably strong” about their hotels with 64 percent of respondents projecting “their gross operating profit (GOP) to surpass 30 percent this year, despite inflationary pressures. Only13 percent of respondents expect a GOP of 20 percent and lower.”

Respondents saw growth opportunities in the upper midscale hotel segment, “capturing 39 percent” of their interest, especially in second-tier cities and emerging townships. Upper midscale hotels are those charging between P4,700 and P5,700 per night like Park Inn by Radisson North Edsa, Tryp at the Mall of Asia Arena, and Savoy Hotel Manila. Occupancy rates in this hotel category has soared to 67 percent in 2023 from 48 percent in 2019.

Survey respondents represented over 10,000 hotel keys, covering properties across every major city and market segment in the country.

Image credits: Dmitrii Pichugin via Dreamstime.com



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