Market Update: Hotels and Leisure

As the economy continues to blossom and stay on target, the investment climate in the Philippines grows warmer, spurring interest not only among investors but also among travellers. Travel and tourism in the country is showing good momentum in the early parts of 2014. From January through May, a three percent increase in foreign tourist arrivals, to more than 2 million, has been marked by the Department of Tourism. If this goes on track, the target of 10 million tourists by 2016 might just be reached. Increase in tourist arrivals has opened more doors for investment and business opportunities, especially the hotel and leisure industry.

There's great potential for hotel development in Metro Manila, the main gateway for tourists and the key MICE destination. Hotels and other real estate projects in the pipeline will expand the current hotel room supply, which is relatively low compared to its Asia Pacific neighbors. The limited number of hotel rooms is a great opportunity for foreign brands to penetrate the market and establish their hospitality brand in the country to meet the growing marked demand. Leisure and tourism development, however, isn't only happening in Metro Manila but also in other island destinations and tourist spots in the Philippines such as Boracay, Cebu, and Palawan.

Hotel and leisure development in Metro Manila

The anticipated increase in tourist arrivals and the generally favorable investment climate have prompted a series of room expansions and hotel developments in the metro. This June, Tune Hotels has opened its 200-room property at Aseana City in Paranaque, which is the ninth hotel in the Red Planet Hotel portfolio in the Philippines. At the end of the year, with the opening of the tenth Tune Hotel in Ayala Avenue, about 1,720 rooms will be provided by one of the largest internationally owned and operated hotel brands in the country. As more investors test the waters in the local market, hotel development in the country continues to expand. One of the much-anticipated projects in the hotel and leisure sector is the City of Dreams Manila, which will be a new entertainment hub in Asia, complete with upscale shopping centers, hip night clubs, and world-class performances. This project will add to the growing portfolio of luxury hotels, with three international hotels and spa to open by 2014-Crown Towers Manila, Nobu Hotel Manila, and Hyatt City of Dreams Manila.

In Metro Manila alone, around 8,000 hotel rooms will be added to the growing portfolio of the hotel market by 2015. The rise of the Entertainment City, Las Vegas-like gaming and entertainment hub, has also led to the establishment of various gaming hotels and international luxury brands. Solaire Manila, for instance, has opened its doors with around 500 rooms for guests. Various plans have already been laid out for the coming years. Through Travelers International Hotel Group, Hilton and Sheraton brands will be part of the Resorts World Leisure Complex, bringing in about 700 rooms. Hilton Manila and Sheraton Manila are slated for a 2017 opening. By 2015, Shangri-La will open its doors at Bonifacio Global City with about 580 new rooms. Another major hotel brand, Conrad Hotel Manila, will rise at the SM Mall of Asia Complex and will be opened by mid-2015 with about 350 rooms.

Expansions and developments in other parts of the country

Expansions and developments outside of Metro Manila include investments from Aman Resorts for the island property of Amanpulo, which will be a US$14.5 million joint venture. This development includes the construction of around 40 villas in the resort. In Boracay, Crimson Resort & Spa will be established at the top island destination in the country, providing about 200 luxury hotel rooms. Cebu has also received a lot of interest and attention from tourists around the globe because of its port facilities, heritage sites, transport infrastructure, and its transformation into a modern tourist hub, which makes it an excellent alternative to Metro Manila. With 66% increase in tourist arrival in 2013, Albay is cited as among the top destinations for travelers around the globe, with its culinary culture, heritage sites, natural wonders, and various leisure spots as among its finest attractions. The newly opened Xiamen-Legazpi route continues to attract more Chinese tourists to this province.