Flawed rating system

Did I hear it right, our country has received a $7-million technical assistance grant from the Canadian International Development Agency (CIDA) for a hotel rating system, only to find out later that what has been produced by our tourism officials is a flawed system?

And now, tourism experts are asking the Department of Tourism (DOT) to account for these funds, which are administered by the Asian Development Bank (ADB), because some say the money went into the pockets of corrupt tourism officials.

Earlier, Robert Joseph Lim, president of the Network of Independent Travel and Allied Services Philippines Inc. (NITAS) and a member of the Hotel and Restaurant Association of the Philippines, brought to the attention of the DOT the complaints from hoteliers and resort owners against the star rating system for hotels, resorts, and apartelles nationwide. They said the system is flawed and outdated and is not being used by other countries, except for Ireland.

According to Joseph, other countries do not rate their hotels as it is difficult to standardize criteria, and they leave the rating to private organizations and publications. Even the US and UK, the top two tourism destinations, leave it to travellers to do the rating, he said.

The DOT project would rate these establishments using a one to five-star system supposedly to conform to global standards. Hotels are evaluated by answering 286 questions regarding the facilities and services they provide to their guests.

One newspaper reported Plantation Bay Holdings Corp., owner of the five-star Plantation Bay Resort and Spa in Mactan Island, Cebu, filed a case before the Ombudsman against Tourism Secretary Ramon Jimenez Jr., Tourism Undersecretary Maria Victoria Jasmin, DOT accreditation division head Jose Tolentino, and DOT’s foreign consultants for alleged arbitrary and capricious implementation of an unnecessary star grading system for Philippine tourism enterprises.
Besides pointing to its “conceptual defects and practical flaws,” Plantation Bay also questioned the hiring by the DOT of “foreign consultants of questionable competence in the creation of its star grading system.” (www.tribune.net.ph)

Meanwhile, the House Committee on Tourism approved a motion filed by Cebu Rep. Raul del Mar asking the DOT to hold in abeyance the implementation of the hotel and resort star rating project pending its submission of revised accreditation standards to the body chaired by Rep. Rene Relampagos.

During a committee hearing, Joseph as one of the resource persons revealed the flawed system in his opening statement. The details were explained by Emmanuel Gonzalez, managing director of Plantation Bay Resort and Spa, another resource person in the hearing.

Joseph informed the committee about the existence of the CIDA grant for the program and his attempt to get from the DOT, particularly Jasmin who is in charge of the project, details of the funding assistance and the breakdown of expenses.

He revealed how Jasmin gave vague answers to his letter-queries and how she hid the information, which finally came out during the hearing, that she was aware of how the grant money was being disbursed being a member of the project steering committee which was formed after the CIDA approved the funding.

Meanwhile, Cebu Rep. Gwen Garcia agreed with Del Mar’s motion that unless the standards are changed to a measurable and objective manner, there is no way the hotel rating system could be defended in a court of law.

Garcia said a number of metrics being used by hotel rating auditors are subjective, impossible to measure, and open to the assessors’ wide discretion.

The congresswoman showed to the committee the accreditation standards being used by assessors of the European Union, which she said could be checked and measured, as against those used by the DOT, which are immeasurable, open to subjective judgment, and impractical.

For instance, she noted it is difficult to differentiate between excellent and outstanding designs, adding even architects would not be able to decide among themselves which is an excellent design and which is an outstanding design. And to think that the hotel rating auditors train for only four days.

For his part, committee chair Relampagos emphasized the need to improve the rating system in order not to leave it to the auditor’s subjective judgment and whims.

Relampagos and Garcia directed Jasmin and other DOT executives present to get the inputs of industry stakeholders led by Joseph and Gonzalez in drafting the new rating standards which the DOT should submit to the committee next month.

BOC turning universal

We have just learned that Bank of Commerce, one of the country’s leading commercial banks, is turning universal.

A universal bank has the same powers as a commercial bank, except that in addition, a unibank has the powers of an investment house and the power to invest in non-allied enterprises. As a universal bank, Bank of Commerce will be able to do underwriting, which is the process by which investment bankers raise capital from investors on behalf of corporations and governments that are issuing securities, both debt and equity.

According to the Bangko Sentral ng Pilipinas (BSP) website, our country currently has 21 universal banks. These are RCBC, Security Bank, Union Bank, UCPB, Al-Amanah, DBP, Landbank, ANZ, Deutsche Bank, ING Bank, Mizuho Bank, Standard Chartered, HSBC, Asia United Bank, BPI, BDO Unibank, China Bank, EastWest, Metrobank, PNB, and Philippine Trust Company.

Meanwhile, we have 19 commercial banks and these are Cathay United Bank, Shinhan Bank, Industrial Bank of Korea, Bank of Commerce, BDO Private Bank, Philippine Bank of Communications, Philippine Veterans Bank, Robinsons Bank, CTBC Bank, Maybank, Bangkok Bank, Bank of America, Citibank, JP Morgan Chase Bank, Korea Exchange Bank, Mega International Commercial Bank, Bank of Tokyo, and Sumitomo Mitsui Banking Corp.

Universal banks are required to have a higher capitalization than commercial banks. Under the revised rules issued by the BSP last year, the minimum capital levels of both unibanks and commercial banks are tiered depending on the number of branches they have, unlike before when there was only one level of minimum capitalization required (P4.95 billion for universal banks and P2.4 billion for commercial banks).

Now, if a universal bank has more than 100 branches, the minimum capital is P20 billion, followed by P15 billion if it has 11-100 branches, P6 billion for up to 10 branches, and P3 billion for head office only. In the case of commercial banks, the requirement is P15 billion for more than 100 branches, P10 billion for 11-100 branches, P4 billion for up to 10 branches, and P2 billion for head office only.

We have just learned that BOC’s board of directors has approved an increase in the bank’s capitalization to conform to the BSP requirements.

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