The importance of hospitality industry

The hotel sector recorded total revenues in 2005 to be at P36.94 billion, over ten billion higher than the 2003 level (P26.64 billion). Over the years the competition in the hotel sector has kept industry players on their feet for constant service and management innovations as well as service price changes.

In fact, lower-end hotels have started to build rapport in competing with high-end ones. One of the business strategies for lower-end establishments is banking on making their service "closer to home".

This strategy attempts to capture both tourist and business markets by establishing a homier feel with guest access to living rooms, dining rooms, and kitchens. Some even include home amenities not normally found in high-end hotels such as flat irons, microwave ovens, silverware, and cooking utensils, among others.

Other low-end hotels cut costs by employing mostly non-professional helpers. Some are family operated guest houses or lodging places that typically cater to local tourists, often families, who are looking for lower rates, according to IDEA’s Industry Trends.

Furthermore, the same report revealed that “the Hotel and Restaurant Association of the Philippines (HRAP) divides the hotel market into Makati and bay areas. In 2005, HRAP estimates the Makati clientele to comprise around 95% of foreign travelers who aim to conduct business in the country. The bay area clientele is largely comprised of international tourists. Travelers will always be in need of a place to stay.

For this reason, the hotel sector heavily relies on tourists, whether foreign or local. The hotel sector thus sees itself vulnerable to the same problems that the tourism industry suffers with: troublesome peace and order situation, environmental and infrastructure degradation, and poor marketing.

At the same time, the hotel sector benefits from the peaks of tourism activity: festivals (although seasonal and location-sensitive), spectacles (such as beauty pageants, concerts, and the Papal visit in 1995) and vacation periods (such as during summer and the holidays). With the holidays ahead, tourism prospects may brighten the path for the hospitality industry. Still, even the tourism industry has not been immune to the current global downturn.

As tourism activity declines in the wake of the crisis, so will activity in the lower end of the hotel sector, particularly those heavily reliant on local tourism. In the longer run, the industry’s sustained growth depends on how players maintain and improve the quality of service offered to customers. For tourism-sensitive establishments, cooperation with the government and local community is crucial in order to maintain the viability of certain locales as tourist spots.

For the industry as a whole, it is worth the investment to improve infrastructure and service facilities. Furthermore, the industry will surely benefit much from a professionalized workforce. Rigorous staff training is necessary if the domestic industry wants to be truly competitive with other countries.

Overall, the trends show that the hospitality industry has greatly improved from its state ten years ago. Hotels are constantly investing for refurbishment and facility improvements, especially in the area of information technology and management.

Restaurants, particularly chains, likewise improve their production and distribution systems for greater efficiency. In the short run, the industry anticipates a slump in the coming months as an effect of the expected decline in tourism and consumer spending. In the meantime, better quality of services will help sustain the growth of the industry in the long run according to IDEA.  

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