The number of hotel rooms in Metro Manila continues to grow with the completion of over 2,000 rooms in the first half of the year and more in the pipeline including those from foreign brands.
In its latest hotel property market report, Colliers Philippines said it recorded the delivery of 2,700 rooms in the first six months of the year, more than triple compared to 797 rooms a year ago.
“Quezon City accounted for nearly half of the new supply with the delivery of Hop Inn North EDSA (187 rooms), Ibis Styles Manila Araneta City (286 rooms), Citadines Roces (200 rooms), and Solaire North (526 rooms), Quezon City’s first 5-star hotel. The Grand Westside Hotel also opened in the Bay Area and is now the largest hotel in the country with 1,530 rooms,” Colliers said.
For this year, Colliers said it projects the completion of 4,560 new hotel rooms, lower than its initial forecast of 5,100 rooms due to construction delays.
Among the hotels due to be completed in the second half of the year are Ridgewood Premier Hotel in C5 road, Somerset Valero Makati, Seda Hotel One Ayala and Seda Hotel Arca South, Ascott DD Meridian Park, and Westside City Resorts World. Colliers noted that the Bay Area will likely cover nearly half of the new supply.
Despite the addition of new hotel rooms, Colliers noted that Metro Manila’s hotel room stock still pales in comparison to other major Southeast Asian cities.
“While foreign brands continue to expand across the country, brand penetration is still a laggard in the region,” Colliers said.
The professional services firm believes that it is now an opportune time for foreign brands to expand their presence in the Philippines given the planned modernization of the country’s international airports and the projected rise in international arrivals.
It emphasized the Department of Tourism (DOT)’s target of attracting 7.7 million foreign visitors this year, higher than the 5.45 million last year as well as the government’s goal of attracting 12 million international tourists in 2028.
“This optimism has been enticing foreign hotel operators to expand presence across the Philippines,” Colliers said.
The professional services and investment management firm highlighted that several foreign brands have hotels in the pipeline such as Accor Hotels’ 175-room Ibis Styles and 250-room Mercure Hotel in Subic, Zambales. Additionally, Radisson Hotels also announced that they will be launching Radisson Blu in Cagayan de Oro, as well as other Radisson brands in Cebu.
Other foreign branded hotels in the pipeline will come from Sheraton, Dusit Thani, Citadines and Tryp by Wyndham, Colliers noted.
“Colliers recommends that developers be on the lookout for upcoming convention centers and soon-to-be modernized airports outside the capital region for their hotel expansion plans,” the professional services firm said.
Positive medium and long term outlook
A separate report by Leechiu Property Consultants (LPC), in partnership with the Philippine Hotel Owners Association (PHOA), noted that investors have mixed feelings about the short-term prospects of the country’s hospitality industry due to inflation driving up the costs of transportation, goods, and services, impacting both tourists and hotels.
“With hotels only beginning to resume full operations in 2023, investors are still working to recover from pandemic-related losses. This period also presents an opportunity for operators to address shifts in guests’ demands and preferences,” the report said.
Citing results of the Philippine Hotel Investment Outlook Survey (PHIOS), the LPC-PHOA report noted, however, that 89 percent of respondents expressed a positive outlook for the hospitality industry over the medium term, while 95 percent of respondents expressed optimism for the long term, believing the industry will thrive beyond the next three years.
“Long-term prospects appear highly positive, with investors optimistic about the future of tourism in the Philippines, suggesting that the sector will continue to advance post-recovery and well into the latter half of this decade,” it added.
The LPC-PHOA report also emphasized that investors are keen on the upper midscale hotel segment driven by the surge in occupancy rates experienced by upper midscale hotels in Metro Manila, from 48 percent in 2019 to 67 percent in 2023.
“LPC observes a growing interest in mid-market products, likely fueled by increased developer activity in provincial cities and to support new township developments,” the report said.
“Secondary and tertiary cities with high growth potential, currently served by local accommodation, will soon see the transformation into branded properties or face competition from new greenfield developments,” it added.
MICE market demand
Aside from demand from local and foreign tourists, Colliers pointed out that Metro Manila hotels continue to see rising occupancies and rates due to brisk take-up from businessmen as well as exponential rise in demand for meetings, incentives, conferences, and exhibitions (MICE) facilities.
“The return of in-person events has been fueling the demand for MICE facilities across the Philippines. There’s no doubt that developers are cashing in on this gargantuan need for massive convention halls. The strong take-up for this sub-segment should also be buoyed by the rise in foreign tourists, including business travelers,” said Colliers Director for Research Joey Roi Bondoc.
Colliers stressed that the establishment of more MICE and co-working facilities should complement the accommodation and dining packages that hotels will offer to business travelers.
“The integration of these facilities is of utmost importance especially in business hotels located in major business districts in Metro Manila, Pampanga, Cebu, and Davao,” Colliers said.
With the tourism department priming the Philippines as a major MICE destination, Colliers said this should enable the country to corner major global MICE events and further boost tourist arrivals and spending across the archipelago.
“Colliers believes that previous hosting of MICECON events in Clark, Cebu, and Davao should help promote the Philippines’ viability as a MICE hub in the ASEAN region,” Colliers said.
