Stock Commentary

Cebu Landmasters opens 200-room hotel in Bacolod

Merkado Barkada
Cebu Landmasters opens 200-room hotel in Bacolod

Cebu Landmasters [CLI 2.62, up 1.9%; 67% avgVol] [link] announced the opening of Citadines Bacolod City, which is a 200-room international hotel in Bacolod. This is CLI’s fourth hotel and the start of its commercial operation grows CLI’s total hotel rooms under management to over 1700. This particular hotel was developed under a joint venture with Capitaine Inc, called CCLI Premier Hotels. CLI noted a 37% y/y increase in hotel-based revenue in Q1/24, and is looking to lean into that growth sector by opening this hotel and six more over the next two years. 

MB bottom-line: The Philippine hotel industry is in the midst of a robust recovery and expansion phase. International arrivals and domestic tourism are both showing strong growth, and we’ve seen property developers turn their profit-seeking eyes to this sector in recent years. As a result, we have a massive (and growing) collection of regional hotel chains that have sprouted to both soak up the overflow from existing hotspots and expand the footprint of tourism to new and under-served locations. In a tourism market like this, there are no truly tough choices. What’s better than opening a new hotel? Opening six new hotels! International chains (like Best Western) are here and more are looking to partner with local developers to get a foothold. But the same industry dynamics that make the market so attractive to new entrants and existing players now will eventually turn as both new and existing players build out frantically in reliance on this trend. When the unlimited horizons of this growth market begin to look more finite and the competition of all the players heats up, that’s when I expect to see a round of consolidation where smaller fish get gobbled up by the bigger fish. We’re not there yet. This press release tells me that we’re still in the “all offense no defense” stage. On a company-specific level, I’ve been waiting for CLI to do something in the REIT space for years now. I wonder if there are any plans for the company to consider a REIT for its hotel interests as a way to raise more capital and keep the growth party going.



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