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Hotel and Restaurant Industry in the Philippines

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Hotel and Restaurant Industry in the Philippines An In-depth Study on the Hotel and Restaurant Industry In the Philippines Submitted by: Dr. Divina M. Edralin Project Head and Ms. Paulynne Castillo Senior Researcher August 17, 2001 Table of Contents page List of Tables ii List of Appendices iii Executive Summary v Introduction 1 1. The industry 3 1.1 Definition 4 1.2 Contribution to the Economy 5 1.3 Structure 5 1.4 Seasonality of Demand 25 1.5 External Support Systems 26 2. Forward Linkage/Market 28 3. Backward Linkage/Suppliers 35 4. Laws Hindering/Facilitating 40 5. Market Potential/Foreign Market Demand and Competition 47 5.1 Entering Foreign Markets 47 5.2 Extent of Services Rendered Abroad 47 5.3 Foreign Market Demand and Competition 49 6. Supply Capability 59 6.1 Services Offered 59 6.2 Areas of Specialization 60 6.3 Expertise/Technical Competence of Manpower 61 7. Industry Training Needs 63 7.1 Quality and Quantity of Training 63 8. Opportunities and Threats 65 8.1 Opportunities 65 8.2 Threats 69 9. Action Plan Enhancing Competitiveness 9.1 Recommendations 72 9.2 Performance Monitoring Scheme 78 10. Directory 79 Bibliography 294 Appendices 106 List of Tables Page Table 1 Hotel and Restaurant Industry Definition Based on the 4 PSIC Table 2 The Hotel and Restaurant Industry’s Contribution to the 5 Philippine Economy Table 3 Hotel and Restaurant Industry Structure 6 Table 4 Hotel and Restaurant Industry Breakdown 6 Table 5 Regional Distribution of Hotel and Restaurant 7 Establishments Table 6 DOT Accredited Hotels Average Number of Rooms, 9 1995-1999 Table 7 DOT Accredited Hotels Average Occupancy Rates, 1995- 9 1999 Table 8 Description of Selected Philippine Hotels 12 Table 9 Top 38 Hotels & Other Lodging Facilities Profile (in 17 million PhP) Table 10 Top 38 Hotels & Other Lodging Facilities Profile 17 Table 11 Top Hotels & Other Lodging Facilities 18 Table 12 Top DOT Accredited De Luxe Hotels Based on 18 Occupancy Rates (in %) Table 13 Top DOT Accredited First Class Hotels Based on 19 Occupancy Rates (in %) Table 14 Top DOT Accredited Standard Hotels Based on 19 Occupancy Rates (in %) Table 15 Top DOT Accredited Economy Hotels Based on 20 Occupancy Rates (in %) Table 16 Top 181 Restaurants Profile (in million PhP) 23 Table 17 Top 181 Restaurants Profile 23 Table 18 Top Ten Fastfood Restaurants 24 Table 19 Top Ten Fine Dining and Specialty Restaurants 25 Table 20 Weekly Seasonality 26 Table 21 No. of Visitor Arrivals & Amount of Visitor Receipts, 29 1994-1999 Table 22 Visitor Arrivals & Amount of Receipts, January to June 29 1999-2000 Table 23 Visitor Arrivals by Country of Origin, 1st Semester 1999- 30 2000 Table 24 Average Foreign Visitor Daily Expenditure on Major 31 Items (US$) Table 25 Hotel and Other Lodging Facilities Sub-sector Forward 32 Linkage Table 26 Philippine Income Segments, 1991-1997 33 Table 27 Food Share to Total Family Expenditure, 1985-1997 33 Table 28 Restaurant Sub-sector Forward Linkage 34 Table 29 Hotel and Other Lodging Facilities Sub-sector Backward 35 Linkage Table 30 Hotel and Restaurant Equipment Market Size (in million 36 US$) Table 31 Restaurant Sub-sector Backward Linkage 39 Table 32 Domestic Capacity Before and After E.O. 219 40 Table 33 Roundtrip Ticket Prices Before and After E.O 219 41 Table 34 Deployment of Filipino Hotel & Restaurant Industry 48 Professionals, 1996-2000 Table 35 1998 Tourism Destinations in the World (in ‘000) 49 Table 36 1999 Visitor Arrivals to Asia from Within Asia-Pacific 51 Table 37 1999 Visitor Arrivals to Asia from Europe 51 Table 38 Foreign Visitors’ Ratings of Facilities/Services 52 Table 39 Expected Hotel Investments in China, 1998-2000 52 Table 40 Expected Hotel Investments in Indonesia, 1998-2000 53 Table 41 Expected Hotel Investment in India, 1998-2000 53 Table 42 Expected Hotel Investment in Malaysia, 1998-2000 53 Table 43 Expected Hotel Investment in Australia, 1998-2000 53 Table 44 Expected Hotel Investments in Philippines, 1998-2000 54 Table 45 Restaurant Industry Sales Performance in Major World 54 Markets Table 46 Restaurant Industry Performance in Major World Markets 55 (in %) Table 47 Number of Restaurant Outlets in Major World Markets, 55 1993-1997 Table 48 No. of Restaurant Outlets in Major World Markets 56 Growth Rate (%) Table 49 Restaurant Sales in Major World Markets 57 List of Appendices Page Appendix A SWOT Analysis 166 Appendix B Amending Part IX of The Integrated 170 Reorganization Plan By Renaming the Department of Trade and Tourism as The Department of Tourism, and Creating the Department of Tourism With a Philippine Tourist Authority Attached to It In Lieu of Philippine Tourist Commission Appendix C Department of Tourism Programs and Projects 179 Appendix D Industry Associations 193 Appendix E Trade Unions 208 Appendix F Investment Priorities Plan and Implementing 210 Guidelines Appendix G College of St. Benilde 281 Hotel and Science in Hotel, Restaurant, and Institution Management Curriculum and The Hotel and Tourism Institute of the Philippines (HTIP) Appendix H The Asian Institute of Tourism 289 Appendix I Hotel and Restaurant Administration/Travel and 292 Tourism OJT Program Profile Appendix J Tourism Industry GDP, Visitors’ Exports and 294 Employment in Selected Countries, 2000 Appendix K International Tourism Receipts by Region (US$ 295 billion) Appendix L Network Economy and Tourism Industry 296 Appendix M Technology utilized as a Competitive Method 298 Appendix N Changing Roles and Relationship in the Electronic 299 Market Space Appendix O Cost and Benefit Analysis for Developing Internet 300 Presence for Small and Medium-sized Tourism Enterprises Appendix P Obstacles to the Introduction of electronic Data 301 Interchange (EDI) Executive Summary In the Philippines, tourism is one of the major industries that the WTTC noted as positioned at the epicenter of global travel and tourism growth and development. In 1997, tourism contributed 8.7% of the country’s GDP, generating 2.3 million jobs (or one in every nine nationwide), and accounting for some 10.5% of Philippine investments. According to the Department of Tourism, international arrivals in 1999 stood at 2.17 million, a slight increase from the previous year’s total of 2.15 million visitors. Despite the economic crisis suffered by its Asian markets, the Philippines’ foreign exchange receipts from tourism went up by 5.83% from $2.41 billion in 1998 to $2.55 billion in 1999. Moreover, the Philippines enjoyed the highest repeat visitors in Asia at 54.22 percent, indicating that the tourism sector can survive external threats and competition in the region. As tourism serves as the main market for hotel and restaurant services, increase in visitor traffic over the past ten years resulted in a corresponding boom in the hotel and restaurant industry. During the last decade, the hotel and restaurant industry has flourished even as it struggled to cope with difficult challenges. New hotels mushroomed in the capital while older hotels have done their best to spruce-up both their interiors and upgrade services. Likewise, the growth of the restaurant sub-sector, the number of players and the variety of services offered, has been notable during the period. Invariably linked, increasing world tourism is expected to offer both opportunities and trials for the world’s hotel and restaurant industry. It is in this context that this paper presents information meant to: 1. define the coverage and structure of hotel and restaurant industry 2. identify the industry’s forward linkages (market) 3. identify the hotel and restaurant industry’s backward linkages (suppliers) 4. identify the laws affecting the trade in hotel and restaurant services 5. determine the industry’s market potential/foreign market demand 6. determine the industry’s supply capability 7. identify the sector’s training needs 8. identify the industry’s strengths, weaknesses, opportunities and threats 9. recommend policies that will enhance the industry’s competitiveness The Industry The study adopts the definition of the Philippine Standard Industrial Classification in identifying establishments as belonging to the sector. According to the PSIC, the industry is disaggregated into two sub-sectors: hotel and restaurant. The hotel sub-sector includes the various lodging units of different sizes and standards located both in urban and rural communities. The restaurant sub-sector, on the other hand, includes places that serve food and drinks, be it self-service or full-service. This covers a range of services including fine dining specialty restaurants, fast food outlets, canteens, and food courts. In terms of its contribution to the national economy, the hotel and restaurant industry accounted for 1.35% of Philippines’ 1998 gross domestic product (PHP12 billion in GVA compared to the Philippine’s PHP889 billion GDP during the period) and 1.28% of its national product (PHP12 billion in GVA compared to the PHP931 billion GNP). Moreover, the hotel and restaurant industry employed about 1% (282,142) of the country’s 31,278,000 labor force during the same period. Meanwhile, the National Statistics Office (NSO) in 1994, classified 46,930 firms as belonging to the hotel and restaurant industry, employing a total of 221,954 people. At the time, each peso investment in labor contributed PHP4.40 to the industry’s total output while each peso investment yielded a PHP1.27 contribution to the same. Hotel In general, hotels offer two major types of services: (a) accommodation and (b) dining services. Based on the quality and extent of services provided, location, bedroom, front office/reception, food and beverage, general facilities (service and staff), and special facilities (i.e., business center, limousine services and airport transfers), hotels are further classified as Deluxe, First Class, Standard, and Economy. Hotel guests can expect a room with private bath, telephone, radio, and television, in addition to such customer services such as laundry, valet, cleaning and pressing.
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