Hotel room backlog hounds PH tourism sector

The country’s tourism sector has been in dire need for new tourist accommodation facilities with backlog in hotel rooms already reaching 73,483 in 2016.

Dr. Peter Yu, Vice Dean of the School of Economics who spoke on behalf of the Philippine Hotel Owners Association, Inc., said during a presentation at the Trade and Industry Development Updates of the Department of Trade and Industry that while there have been newly completed hotels, there is still a huge shortage in tourist facilities in the country.

The country has even lagged behind Vietnam in the number of hotel rooms, he said. Investments in hotel business can also be very capital intensive that can even match up with investments with that of industrial firms, he said. He noted that Conrad Hotel alone costs R6 billion, higher than the investment by Nestlé for a R5 billion manufacturing plant.

Members of the local hotel association have combined investments of R500 billion, excluding real estate, he noted.

Based on government data, the hotel sector has huge contribution to the Philippine economy, contributing 1.9 percent to the country’s GDP and 1.76 million in employment.

As much as 30 percent of foreign visitor’s spending is on accommodation services, the largest share, while 20 percent is the spending of a domestic tourist. This means the hotel sector brough in about $1.6 billion in 2016, Uy said.

The hotel sector also accounted for 23.3 percent of R255-billion tourism direct gross value added in 2015.

“The hotel sector can indeed be a substantial contributor to the economy,” he said.

There are also problems that continue to hound investments in the hotel sector. These are infrastructure constraints like lack of airports and airport congestion; uncompetitive investment climate because of high cost of doing business; peace and order situation that gives bad impression overseas; and uncertainty in labor policies.

To counter these issues, hotels are already improving their standards on health and safety and human resource management, among others.

The government has also continued to grant fiscal incentives to tourist accommodation facilities and has lifted locational restrictions.

Meantime, Milagros Y. Say, director of the Department of Tourism, reported that there are over 128,000 room requirements by 2022, most of these are located in central Philippines where most of the good beaches are. Say said that 70 percent of foreign tourists in the country are beach bound.

The DOT expects to surpass the 6.5 million tourist arrivals target this year. As of August this year, the agency already reported of 4.4 million tourist arrivals.