Philippines hotel sector to attract investors

MANILA, Philippines — The Philippine hospitality sector is among markets in the Asia Pacific region seen to attract investors this year, driven by the robust growth of the tourism industry, a property services firm said.

“The overwhelming support for tourism that the Philippine government has demonstrated is expected to bring forth a tremendous positive effect on the growth of the real estate industry’s hospitality sector,” Jones Lang Lasalle (JLL) Philippines said last week in a statement.

“This, as JLL predicts that the region’s positive tourism numbers will continue to thrive in 2019, anchored on the strong fundamentals of the Asia Pacific market,” it added.

JLL cited data from its report which showed that the Asia Pacific region is the only region expecting growth in hotel transaction volumes, anticipating a total of $9.5 billion this year, a 15 percent rise from 2018.   

Last year, developers and private equity firms were the biggest buyers, acquiring more than half of all the properties traded. 

“Building on 2018, investment momentum is expected to accelerate as investors look to sell assets and ride the anticipated tourist boom,” JLL said.

JLL said it expects the most notable buyers in 2019 will be Pan-Asian private equity funds that raised capital last year but have yet to deploy it. 

“These investors are considering putting their money in countries like Japan whose hotel market has become enticing and will remain buoyed by the Rugby World Cup and the Tokyo Olympics; Japan has already seen an 8.7 percent growth in tourism year-on-year,” JLL said, adding that Singapore’s growing hotel market and China’s influx of tourists are other attractive markets in the region.

“The growth of the tourism industry in these countries has also incited international and domestic investors to take notice of other Asian neighbors, including the Philippines,” JLL said.

In 2018, international tourist arrivals in the Philippines grew 7.7 percent to 7.1 million.

For this year, the Department of Tourism (DOT) is targeting foreign arrivals to reach 8.2 million.

“Capitalizing on the positive global tourism projections for 2019, the Philippine government has high hopes in increasing tourist influx as they recently inaugurated the Bohol-Panglao International Airport and the Terminal 2 of Mactan-Cebu International Airport; sought ways to expand the Clark International Airport and had the National Economic and Development Authority approve the proposed New Manila International Airport in Bulacan,” JLL said.

Apart from infrastructure, JLL said another major tourism endeavor is the continuous rehabilitation of Boracay and Manila Bay led by various national agencies working together to make sure that environmental compliance in tourism destinations all over the Philippines is maintained and monitored. 

“These initiatives are aligned with the plans of the DOT to relaunch the ‘It’s more fun in the Philippines’ campaign and position the Philippines as one of the pioneering countries for sustainable tourism,” the property services firm said.

Moreover, figures from last year show that the local hospitality industry continued to grow as 3,000 hotel rooms were added to the existing stock of hotel rooms in Metro Manila. 

JLL cited homegrown hotel developments such as Seda Hotels by Ayala Hotels and Resorts and Hotel 101 by Hotel of Asia, Inc. as among the key drivers of the hotel industry in 2018.  

“From 2019 to 2021, JLL’s research cited future hotel and serviced apartment completions within Metro Manila that will further boost the country’s hotel outlook,” JLL said.

Parañaque City is expected to have the most number of new rooms as a total of 3,000 rooms are set to be completed by 2021.

This was followed by Makati City with 2,100 rooms, Taguig City with 1,600 rooms, Pasay City with 1,200 rooms, and Quezon City with 1,000 rooms.

“Hotel rates in Bay City are expected to remain highest, owing to the presence of resort-casino complexes, combined with the strong tourist arrivals anticipated from South Korea and Mainland China,” JLL said.

It added that high room rates are also expected in Central Business District areas.