The role of PPP in the growth of Philippine hospitality

Any country’s massive infrastructure push will have a positive impact on the national economy. A quality infrastructure network immensely benefits every government’s livelihood and job creation initiatives. This is particularly true for developing economies such as the Philippines. Infrastructure plays a pivotal role in attracting more foreign direct investments and in ensuring that the country is open for business. No investor will be willing to invest in a country with poor and dilapidated transportation networks as this will only raise any business’ cost of doing business. Hence, there’s a positive correlation between the quality of a country’s infrastructure network and its ability to attract much-needed foreign direct investments.

Economies that heavily rely on tourism and its allied sectors should ensure that infrastructure development is given the utmost priority. Paving and improving road networks is crucial in unlocking emerging tourist destinations’ potential. The improved roads should be complemented by modern and well-functioning airports and rail projects. Greater allocation to infrastructure should facilitate the creation of economic centers outside of established urban hubs such as Metro Manila, Cebu, and Davao.

  But while the public sector, especially in developing economies, has been aggressive in infusing much-needed funds to develop their respective economies’ infrastructure network, additional funding is still needed from the private sector to sustain and even ramp up infrastructure development efforts. While the more developed economies have willingly pitched in to bridge the public infrastructure financing gap, counterpart funding from private sector participants helps expedite much-needed infrastructure, which has humongous positive multiplier effects on an economy. Over the years, private developers have actively participated in developing the Philippines’ infrastructure network, eventually benefiting from the ancillary business opportunities generated from these public projects, including transit-oriented developments. This is where active public-private partnership (PPP) comes in.

The leisure sector stands to benefit from the new and upcoming infrastructure projects. From the modernization and expansion of airports to the upgrading of roads, particularly those that lead to new and exciting tourism spots, Colliers believes that these joint infrastructure implementation efforts between the government and private players should help the government accommodate more international tourists and entice long-haul and high-spending ones, especially now that the Philippines intends to attract 7.7 million foreign visitors this year and 12 million in 2028.

Thriving MICE opportunities for hotel developers

Four- and five-star hotels are likely to benefit from the return of in-person corporate events and the resurgence of business travel. Property exhibits, pharmaceutical product launches, and overseas employment summits are among the events that help drive occupancies of hotels and are primarily hosted in hotels’ meeting rooms and exhibition centers. Hotel operators should maximize the return of these in-person events and tap corporates by offering attractive packages. Hotel operators should also work closely with the Tourism department that is actively enticing international organizations to mount their events in the country. The department is also priming the Philippines as a key meetings, incentives, conferences, and exhibitions (MICE) destination in Asia, and this should result in the holding of international MICE events in the Philippines, especially in Metro Manila, Clark in Pampanga, Cebu, and Davao.

Record-high hotel room completion

 In H2 2023, Colliers recorded the delivery of 1,797 rooms following the completion of Hotel101 – Fort (606 rooms), Red Planet Hotel The Fort (245 rooms), Seda Manila Bay (350 rooms), Lanson Place Manila (389 rooms), and Citadines Benavidez (207 rooms) in Makati. In 2023, about 2,600 rooms were completed, lower than our forecast of 5,300 rooms, as some hotels’ completion was pushed back due to construction delays. In 2024, we expect the completion of about 5,120 new hotel rooms, an all-time high.

Resort-themed residential projects

 Developers have been taking advantage of the rising demand for resort or leisure-oriented properties outside Metro Manila. These projects were already popular pre-Covid, but the pandemic only highlighted the need for these leisure-themed residential enclaves. Among the developers that have leisure-centric properties outside Metro Manila include DMCI, Rockwell, Megaworld, Ayala Land, Robinsons Land, Cebu Landmasters, Torre Lorenzo, AboitizLand, Costa del Hamilo, Landco, Brittany Corp., and Damosa Land with projects located in Cebu, Davao, Bohol, Palawan, Cavite, and Batangas. These projects remain popular, and Colliers encourages developers to further assess launching similar projects.

PH hospitality a catalyst for sustainable and inclusive growth

 Colliers believes that public-private partnership (PPP) should not just focus on infrastructure development. Greater emphasis should also be provided on propping up the tourism sector and making sure that it benefits all stakeholders – from hotel owners and operators to retailers of souvenir items. Over the past few years, we have seen the expansion and modernization of airports in Clark and Cebu, and there will be more in the pipeline – New Manila International Airport in Bulacan and the rehabilitation and expansion of the existing Ninoy Aquino International Airport (NAIA). With tourism as one of the major job-generating sectors of the Philippine economy, there’s just so much on the line. That’s why greater public and private participation is needed in buoying the sector, ensuring that public projects are completed as scheduled, and promoting sustainable and inclusive economic growth across the Philippines. With Alfonso Martin Aguila Senior Analyst, Colliers Philippines

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