Security issues seen to affect hotel stays

MANILA, Philippines - Hotel occupancy rates are expected to decline in the next 12 months, mainly due to the impact of the Marawi and Resorts World attacks, a property services firm said.

In its second quarter property report, Colliers International said overall hotel occupancy rates in Metro Manila reached 71 percent, slightly higher than last year’s 69 percent.

The growth was tapered by the decline in the second quarter of 2017 as occupancy levels fell to 68 percent, but was offset by the better-than-expected 73 percent occupancy rate in the first quarter.

Colliers added that occupancy levels are projected to further decline in the next quarters, given the historically slower foreign arrivals growth in the third quarter.

The real estate consultancy firm is projecting overall Metro Manila hotel occupancy rates to hover between 65 percent and 70 percent in the next 12 months.

“This may also be exacerbated both by the shooting in Resorts World Manila in June which resulted in a number of nearby casino-hotels recording booking cancellations from individual and junket players, and by the declaration of martial law in the Mindanao group of islands following the terror attacks in Marawi City,” Colliers said.

“To quash the negative impact of these incidents, Colliers believes that the government needs to project a business-as-usual image and ensure that tourism establishments such as hotels, restaurants and other entertainment facilities implement tighter security measures,” Colliers added.

The property services firm said the Department of Tourism should consider sending additional missions to neighboring traditional markets such as Korea, China, and Japan to quell concerns about safety and security in the country and to assure tourists that the terror attacks in Marawi City and as well as the Resorts World Manila are isolated cases.

“We believe that the government should properly communicate to tourism stakeholders that the extension of martial law in Mindanao is primarily meant to heighten security in the island region and ensure the safety of both residents and tourists,” Colliers said.

Despite the decline, Colliers research manager Joey Roi Bondoc said Metro Manila occupancy rates remain “stable” despite the projected decline.

He added that hotel developers continue to add more rooms to their portfolios, given the project rise in foreign arrivals this year.

Colliers sees foreign arrivals growing 10 percent this year. This is slightly lower than the tourism department’s 17 percent growth target for this year.

Bondoc said Colliers remains optimistic it will achieve the 10 percent foreign arrivals growth target this year, as January to May figures already show a 14 percent rise in arrivals at 2.88 million visitors.

“As a result developers are ramping up three and four star hotel developments,” Bondoc said.

For this year, the real estate consultancy firm projects at least 1,700 additional hotel rooms being completed over the remainder of the year, slightly higher than the 1,600 rooms completed in 2016.

Apart from the security issues in the country, Colliers said the high amount of upcoming hotel rooms could also further impact hotel occupancy rates.

“Occupancy rates will be between 60 to 65 percent from 2019 to 2020 due to new project completions,” Colliers said.

Colliers forecasts an additional 7,850 new hotel rooms to enter the Metro Manila hotel market from this year until 2020.

Moreover, the large amount of new supply is expected to impact hotel room rates in the Manila Bay area as Colliers projects a softening of rents by two to three percent in the next 12 months.

Average hotel rates across all segments in Metro Manila grew by two percent to $275 a night from $270 a night.