Philippine hotels seek tax relief

MANILA, Philippines — The tourism industry is in need of government support in the form of tax relief measures as well as subsidies to help the sector recover from the coronavirus disease 2019 or COVID-19 pandemic, according to a survey conducted by Tajara Hospitality and Horwarth HTL.

Based on the survey, 79 percent of the respondents from the Philippine hotel sector said they expect some form of support from the government.

“Many have noted that under such dire circumstances, the lack of support will crush the industry, particularly those with low liquidity,” the report said, adding that there is still significant fixed costs in maintaining a large asset such as a hotel.

Respondents also said they prefer direct subsidies and payouts as support measures within the immediate term.
In addition, respondents also feel that it would be beneficial to receive support in cost control areas such as the reduction in income and property taxes.

The survey also found out that 50 percent of respondents feel that the COVID-19 impact would be felt for more than four to six months, while 71 percent felt it will be ‘much worse’ compared to previous health scares.

Tajara Leisure chief executive officer Cyndy Tan Jarabata said there is a need for the government to prioritize the tourism sector and extend support such as tax breaks, emphasizing the sector’s huge contribution to the economy.

“Tourism is such a big contributor to the economy-- it may not be a priority now, but everyone will feel the crunch,” Tajara told The Star, adding that the sector accounted for nearly 13 percent of the country’s gross domestic product in 2018.

Jarabata said that the tourism sector is also a huge job-generator, employing millions of direct and indirect workers, a lot of which are under small and medium enterprises (SMEs).

“If the SMEs are so affected, they will also contribute to unemployment,” she pointed out.

Meanwhile, results of the survey also showed that hotel stakeholders are optimistic about the faster recovery of demand from the domestic market compared to foreign markets.

“Respondents are more optimistic about domestic corporate demand as opposed to foreign corporate demand. A majority or 76 percent feel domestic corporate demand will recover to at least pre-COVID-19 levels, while only 54 percent feel foreign corporate demand will recover to at least pre-COVID-19 levels,” the report said.

In addition,demand from domestic leisure tourist is expected to recover. In contrast, the same number of respondents think foreign leisure group demand will never recover fully.

Data from the Philippine Statistics Authority (PSA) showed that domestic tourists reached 110 million in 2018. This already surpasses the 96 million domestic tourists target for 2022 under the National Tourism Development Plan (NTDP).  

“Among the market segments, domestic business travellers are expected to bounce back positively followed by domestic leisure,”Jarabata said.

Moreover, for the Meetings, Incentives, Conventions and Exhibitions (MICE) sector, 63 percent feel foreign MICE demand will never recover, while 67 percent feel domestic MICE demand recover to at least pre-COVID-19 levels.

“What is needed is a collective recovery effort driven by the private sector, working closely with the Department of Tourism on marketing campaigns to drive market demand and ignite interest among consumers,” the report said.

The Hotel Sentiment Survey was conducted in late March 2020 and had a total of 72 respondents across seven classifications to account for 11,032 rooms in Metro Manila, Cebu and other locations.