Improved performance in Manila’s hotel market and strong growth in fundamental sectors has stimulated a flurry of investment in the Philippines hospitality industry.
At the end of 2011, the Philippine capital recorded a total hotel inventory of 15,567 rooms, having displayed moderate growth 2006 to 2011 when it was hit hard by the global financial crisis. Since then occupancies in the city have recovered to 72% in 2010 and 2011, with average room rates and RevPAR at US$138 and US$98 respectively.
This upsurge is being driven by a variety of factors, including strong economic growth which posted 7.1% in Q32012, major infrastructure development projects, such as Pagcor Entertainment City and Resorts World, and strong growth within the tourism sector.
The total number of tourists in Manila recorded a historical high of 5.7 million visitors in 2011 with the domestic segment dominating the market with an 86% share. Meanwhile international arrivals to Ninoy Aquino International Airport (NAIA) increased 5% in 2011, with Korea, USA, Japan, China and Australia topping the list of source markets.
Business travellers to Manila dominate the tourism industry contributing to 57% of all hotel occupancy in the metro area, followed by leisure travellers and the MICE segment at 21% and 14% respectively.
With necessary ingredients for prolonged growth, the Manila Hotel Market Update by C9Hotelworks has identified an aggressive pipeline of growth and investment in the luxury sector, with a total of 5,797 rooms opening in the upper tier of the market over the next five years. This represents a significant acceleration in growth, with luxury hotel supply set to increase by 11% by 2015, compared to a CAGR of 3.2% between 2004 and 2011.
While much of the investment stems from domestic conglomerates, the coming years will see the introduction of internationally renowned brands such as Raffles, Fairmont, Grand Hyatt, Shangri-La, Sheraton, and Westin.
Bill Barnett, Founder and Managing Director of C9Hotelworks, said; “After falling behind the Asian region over a sustained period of time with relatively muted development, a strong performing economy has spurred greater investment in the hospitality industry in the Philippines resulting in new tourism attractions being launched in Metro Manila. The city’s current pace of growth has induced signiﬁcant demand driven by mega projects with a promising outlook in its tourism sector over the next decade.”