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Hotels unlikely to attract new investors
This file photo shows a hotel room.
Pixabay/David Lee

Hotels unlikely to attract new investors

Catherine Talavera (The Philippine Star) - January 19, 2021 - 12:00am

MANILA, Philippines — The Philippine hotel market is unlikely to attract new investors in the mid-term given the industry’s projected slow recovery, a property consultancy said.

“In terms of investment, the sector is not an attractive investment right now. If you’ll ask us, at least in the mid- term,”Lobien Realty Group (LRG) chief executive officer Sheila Lobien said.

Lobien said that a number of hotels are just surviving right now, adding that many hotel facilities are repurposing use as a quarantine space or for temporary offices.

“I think the recovery will be slow until, of course, the vaccine is already out there and the confidence of the market is back and travel around the world is already open,” Lobien said.

At present, international tourists are still not allowed to enter the country due to travel restrictions brought about by the pandemic.

In 2020, international visitor arrivals dropped by 83.97 percent to 1.3 million from 8.2 million arrivals in 2019.

This translated to an 83.12 percent drop in inbound tourism receipts for the year to P81.40 billion.

Lobien said that due to the movement in the tourism industry in the last decade, as well as the growth of the outsourcing and the Philippine Offshore Gaming Operators (POGO) sector, all the big five star hotel brands have already entered the country.

“But today, we don’t see that it’s not going to move back to pre-pandemic levels right away, it will take time,” Lobien added.

In contrast to the hotel market, Lobien said that international investors continue to look at the Philippines for joint venture projects in other real estate asset classes such as office and residential.

“As we speak, there are many international players who are looking at the Philippines. There are several players from Europe, the US and Asia. So there are many opportunities,” Lobien said.

She also said that some of them are looking to partner with big developers for office projects and mixed-used housing or condominium projects in the country.

“They still find that investing here in the Philippines is so much better compared to putting their money elsewhere in a mature market such as Europe and   the US. The margins that they will make here now in the Philippines is so much better compared to a mature market,” Lobien said.

LRG said 2021 would be a better year for the real estate industry as the worst of the COVID-19 pandemic is seen to be over in light of the planned aggressive rollout of various vaccines.

“The speed and magnitude of the real estate recovery will also depend on the national government’s ability to roll-out the vaccines and rebuild the economy through the government’s monetary and fiscal policies as embodied in the Bayanihan to Heal as One Law,” LRG said.

Despite the optimism, LRG forecasts that vacancy rate in Metro Manila is seen to reach as much as 14 percent this year as demand softens due to the pandemic and the exodus of POGO.

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