A Time to Build, a Time to Rehabilitate
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INSIDER THE PHILIPPINE GUIDE ISSUE NO.5 | 2018 FOR HOTEL, PROPERTY, AND TOURISM DEVELOPMENT CAt’s A WAtcH LIST EYE A Time To Build, ON TOURISM AND PROPERTY A Time To Rehabilitate MARKET omposed of 7,641 islands (the official count was updated from 7,107*), the Philippines has More, more, more hotels rooms. Over 18,000 Cmuch to offer in terms of natural attractions and destinations. Yet, the country is still lagging hotel rooms (50% in Metro Manila alone) are behind neighboring countries such as Thailand, Malaysia and Indonesia when it comes to tourist expected to open in the Philippines over the next arrivals. The biggest obstacles in attracting foreign tourists to the country are poor infrastructure four years. Currently, more than 70 hotel projects and inadequate access—making it expensive and difficult to travel to and within the country— are in the pipeline in anticipation of the estimated which President Duterte is addressing aggressively through his proposed Build! Build! Build! arrival of 10 million foreign tourists by 2020, as program. well as an increase in domestic tourists. This ambitious agenda will see $160B to $180B go into implementing 75 flagship projects, More international hotel groups are opening including six airports, nine railways, three bus rapid transits, 32 roads and bridges, and four in the Philippines. Grand Hyatt, Mandarin seaports. If successful, Build!Build!Build! will generate more jobs, encourage countryside Oriental, Sheraton, Westin and Hilton are just investments, and make the movement of goods and people more efficient, possibly ushering some of the global brands opening in the next two in a “golden era” of economic development. to three years. Property developer Megaworld is With this effort, the Department of Tourism is confident that it can double the number also poised to bring in Marriott’s Ritz-Carlton into of foreign tourist arrivals and increase tourism revenue by 90 percent by 2022. This program the country. is also a worthy complement to the hospitality boom the Philippines is presently enjoying. Sudden growth of homegrown brands. Ayala’s Hotel pipelines over the next five years show a rapid construction of hotels and mixed- Seda Hotels is opening seven properties over the next use developments throughout the country by both local and foreign investors. With so three years. Filinvest’s Grafik Hotels are now ready much going on at the same time, one has to wonder if we have enough trained laborers to for roll-out. Maverick hotel brands like Discovery complete all these hospitality and infrastructure projects and the skilled service providers Group, Bellevue, Astoria, and Hennan Resorts are once it all opens. building a series of lone hotels in key cities and resort Another pressing concern is the possible impact this rapid development will have on the destinations. environment. A strong economy is sustainable only if it integrates economic, social and Branded Residences: the marriage that environmental well-being. As of printing, the government is a few days away from making works. With rising prices of real estate, we’re seeing a decision on whether to temporarily or completely shut down popular beach destination more hotels integrated into branded residences, Boracay to allow for the island’s rehabilitation due to environment problems, and if so, some with leaseback options. It’s no longer just for how long. But Boracay is far too reliant on tourism to take such extreme measures— a luxury play—we have seen a roll-out of upper the negative impact a closure will have on the labor force and the economy does not bear and mid-scale projects as developers seek higher repeating. Plus, we risk turning foreign travelers to other island destinations like Bali and premiums on residential sales and less property Phuket instead of other places in the Philippines. What also happens to hotel and business management while addressing the needs of its owners who have abided by environmental and zoning laws? Should we all consider them buyers for quality construction, design and service, collateral damage? along with potential investment returns in case of Whether or not a Boracay closure takes place, the government still needs to find a balance resale or from a rental pool. between rapid infrastructure development and protecting the island’s natural resources—and Hostel hybrids emerge in Southeast Asia. that of the country’s remaining 7640 islands. Not just for backpackers, the new hostels or Regardless of the outcome, Boracay’s present situation can be a reference point as well “poshtels” are a hybrid between hotels and hostels as a cautionary tale of what not to do, but it can also be a case study for the creation that offer private and dorm rooms with chic design of innovative solutions that promise the ultimate reconciliation of environmental and and social experiences for today’s millennial travelers. economic progress. Generator Hostels and Meininger led the reinvention Cyndy Tan Jarabata of hostels in Europe. The trend is now spilling over into Asia with Lubd in Thailand, 5 Footway Inn in Singapore *According to the National Mapping and Resource Information Authority or NAMRIA in 2016 and Junction Hostels in the Philippines. TOURISM INDICATORS IN FOCUS: BORACAY TOP 5 Boracay, along with Cebu, and Palawan, were VISITORARRIVALS named the best islands in the world by the Conde January-December 2017 Nast Traveler’s Readers’ Choice Awards 2017. Boracay ranked first in the survey, while Cebu and TOP 3 BUSIEST AIRPORTS Palawan placed second and third, respectively. More than N THE PHILIPPINES 300,000 travelers took part in the survey. Despite this recognition, Boracay, famous for 2017 its long, wide beach and powder-like sand was recently targeted by President Duterte, who called 01 KOREA 02 CHINA 03 USA 01 NiNOY AQUINO it a cesspool, due to the island’s inefficient sewerage 1,607,821 968,447 957,813 INTERNATIONAL AIRPORT system. Several beachfront establishments have (Manila) - 42,022,484 also been accused of violating easement rules. The interior, environment and tourism departments have 02 MACTAN-CEBU recommended the closure of Boracay for one year to INTERNATIONAL AIRPORT facilitate its rehabilitation. (Cebu) - 10,050,940 Despite these environmental issues, two casino operators—Macau’s Galaxy Entertainment Group and 03 FRANCISCO BANGOY Resorts World Manila—are coming in, while another INTERNATIONAL AIRPORT 04 JAPAN 05 AUSTRALIA major hotel group—Double Dragon’s Hotel 101—is 584,180 259,433 (Davao) - 1,933,832 opening in the island. PALAWAN TOTAL TOURIST ARRIVALS TOTAL TOURIST ARRIVALS Apart from ranking third in the list of Conde Nast January–December 2016 January – December 2017 Traveler’s best islands in the world, Palawan was also cited by a New York-based magazine as one of the 13 places in the world where you can see the “bluest waters.” The tropical paradise got the nod from Travel 6.6 + Leisure for its “jungle-filled islands surrounded by Million stunning teal waters teeming with fish and coral reefs.” Palawan has over 1780 islands and islets, making it ripe for investment and opportunities, especially in El Nido, Coron, Busunga and Nakpan. Property giant Ayala Land Inc. has allotted P11 billion to invest in El Nido, transforming the 325-hectare former copra farm Lio into a resort community. After opening the boutique hotel Casa Kalaw in late 2017, Ten Knots is set to open three more hotels: Balai Adlao, Hotel Covo, and Seda Lio. Also under development at Lio is Kalye Artisano, an artist’s village that will serve as a platform for various forms of visual 9.8 % and performing arts. from 2016 MACTAN, CEBU The long-established Mactan Economic Zone, along with the emergence of new business districts, has made Mactan Island in Cebu a thriving investment hub and renowned center for manufacturing. About INCREASING CHINESE MARKET P30 billion worth of investment will be poured into South Koreans may have remained the Philippines’ developing a 28.8 hectare township called the Mactan top tourism market in 2017 with arrivals at 1.6 million Newtown Center by MegaWorld, which will have (Boracay and Cebu being the most popular destina- luxury condominiums, cyberpark, hotels, retail and tions), but Chinese tourists are fast catching up—ar- entertainment centers. rivals showed a 43% growth from 2016. DOT attributes Major hotel development projects are expected to this to improved relations between the Philippines be completed in the next few years, including The and China, added air routes and the Visa Upon Arrival Sheraton Cebu Mactan Resort and Residences (2019), (VUA) option for Chinese nationals. Dusit Thani (2019), Filinvest’s Grafik Resort Mactan Cebu DOT projects 7.4 million foreign tourist (2020), and Aruga Hotel by Rockwell (2021). Holding company Udenna is also building Emerald Casino Resort, arrivals for 2018. the first integrated resort and casino outside Metro Manila, which is planned for completion by 2020. Mactan is also experiencing an infrastructure boom. Terminal 2 of the Mactan Cebu International Airport (MCIA) is set to open mid 2018, while the construction of the P30 billion Cebu-Cordova Link Expressway (CCLEX), the third bridge to connect mainland Cebu and Mactan, is set to start this year. Target completion by 2021. HOTELS IN THE PIPELINE HOTEL NAMES LOCATION KEYS TARGET OPENING DATE Metro Manila Grand Hyatt Manila BGC, Taguig 461 Feb 2018 Seda Hotel BGC Tower 2 BGC, Taguig 342 2018 dusitD2 The Fort BGC, Taguig 245 2018 Seda Arca South FTI Complex, Taguig 265 2018 Hotel 101-Fort