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Philippine Tourism Industry Modernizing Government Regulations Program PHILIPPINE TOURISM INDUSTRY Regulatory Review 2018 TABLE OF CONTENTS INTRODUCTION ..................................................................................................... 1 Industry Background ...................................................................................................... 1 Tourism Demand Situation ............................................................................................ 1 Tourism Supply Situation ............................................................................................... 1 Employment in Tourism ................................................................................................. 2 Philippine Tourism Performance ................................................................................... 2 Ease of Doing Business ................................................................................................. 3 Accredited Establishments ............................................................................................ 4 OBJECTIVES ......................................................................................................... 5 Program Objectives ........................................................................................................ 5 Research Objectives ....................................................................................................... 5 SCOPE OF WORK AND LIMITATIONS ..................................................................... 5 RESEARCH DESIGN AND METHODOLOGY .............................................................. 6 TOURISM INDUSTRY REGULATORY ENVIRONMENT .............................................. 6 Starting a Tourism Business.......................................................................................... 7 Tourism Business Value Stream Map ........................................................................... 9 Accreditation ................................................................................................................. 10 Documentary Requirements ........................................................................................ 10 Accreditation and Enforcement................................................................................... 15 Sanctions on Non-compliant Establishments ............................................................ 16 ISSUES RAISED BY STAKEHOLDERS AND PRELIMINARY RECOMMENDATIONS ... 16 CRITIQUE OF THE ACCREDITATION SYSTEM ....................................................... 17 CONCLUSIONS .................................................................................................... 21 RECOMMENDATIONS .......................................................................................... 22 REFERENCES ....................................................................................................... 23 ANNEXES ............................................................................................................ 24 Profile of the Study Team ............................................................................................ 24 Results of the Perception Survey ................................................................................ 25 Documentation of the Industry Dialogue, Public Consultation, and Public Forum .. 33 Value Stream Maps ...................................................................................................... 69 Regulations Dashboard ................................................................................................ 71 Regulatory Impact Analysis/Statement Template ..................................................... 73 EXECUTIVE SUMMARY Philippine Tourism Industry Regulatory Review INTRODUCTION Industry Background The United Nations World Tourism Organization defines tourism as “[comprised of] the activities of persons traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes.” The tourism industry, according to Destination New South Wales (Australia), refers to “all businesses that directly provide goods or services to facilitate business, pleasure and leisure activities away from the home environment.” They include airlines, hotels and other accommodation, travel agencies, tour operators, car rental companies, transport operators, theme parks and other attractions, and many more. In the Philippines, these businesses are commonly known as sectors. Tourism Demand Situation Tourism was one of industries that was identified by the National Economic Development Authority as drivers of inclusive growth. Tourism has grown steadily from 2008 to 2018, from 3.14 million to 7.13 million, averaging 8% growth rate per year. The only time when it dipped slightly was in 2009, which was the year when Typhoon Ondoy, which submerged Metro Manila occurred. International receipts have also generally increased from 2008 to 2017, from USD 3.29 billion to USD 8.35 billion, averaging 6.41% per annum. TABLE 1. International Arrivals and Receipts Philippines Year International Percent International Tourist Percent Arrivals (a) Growth (b) Receipts (Million USD)(b) Growth (b) 2008 3,139,422 1.5% 3,293 (40.38%) 2009 3,017,099 (3.9%) 2,916 (11.45%) 2010 3,520,471 17% 3,441 18.00% 2011 3,917,454 11.3% 4,053 17.79% 2012 4,272,811 9.1% 4,963 22.45% 2013 4,681,307 9.6% 5,599 12.81% 2014 4,833,368 3.3% 6,059 8.22% 2015 5,360,682 10.9% 6,415 5.88% 2016 5,967,005 11.3% 6,289 (1.96%) 2017 6,620,908 11.0% 8,349 32.76% 2018 7,127,168 7.7% NA NA Average Growth 8.0% Average Growth 6.41% Sources: a. Department of Tourism; b. www.knoema.com Tourism Supply Situation In terms of supply, the available data from the Philippine Statistics Authority showed that from 2009 to 2014, the number of tourism-characteristic establishments has grown by 74%, from 8,717 in 2009 to 15,191 in 2014, excluding food and beverage establishments, where data was not available in 2009. The number of F&B establishments in 2014, is 1.6 times the number of all other types of tourism establishments combined. TABLE 2. Tourism-characteristic Establishments Establishments 2009 2014 Percent Growth Accommodation establishments (hotels, motels, pension houses) 1,475 3,279 122% Health and wellness establishments (sauna, slandering and body 3,797 7,234 91% building centers, hospitals) Other tourism activities (amusement parks, sporting activities, 2,015 3,146 56% foreign exchange dealers) Transport operators and tour & travel agencies 1,430 1,532 7% Food and beverage services No data 24,121 -- Total 8,717 15,191 74% Source: Philippine Statistics Authority Modernizing Government Regulations Program / Page 1 of 80 Philippine Tourism Industry Regulatory Review According to the World Travel & Tourism Council (2018), travel and tourism contributed a total of USD 66.3 billion (from direct and indirect impacts) to the Philippine Gross Domestic Product in 2017, representing 21.1% of the country’s GDP. This is expected to rise annually by 5.8% from 2018 to 2028, reaching USD 123.6 billion or 22.4% of GDP in 2028. The total number of jobs (direct and indirect jobs) in the travel and tourism industry in 2017 was 7,796,500 or 19.2% of total employment. This is expected to grow by 2.4% per annum from 2018 to 2028, or 10,540,000 jobs in 2028 or 19.9% of total employment. Employment in Tourism The following table shows the total number of people directly employed in the industry in 2014. A total of 766,777 people was holding full employment. Of this number 54.8% were working in the food and beverage service sector. Health and wellness, and accommodation establishments accounted for 33% of total full employment. Seasonal employment happens during the peak season from March to May. Seasonal workers numbered 32,827. Of this number more than 45% were hired by food and service establishments. The second biggest seasonal employer was the accommodation sector which took in almost 38% of all seasonal workers. TABLE 3. Employment in Tourism Characteristic Establishments, 2014 Sector Full % Share Seasonal % Share Employment Employment Food and beverage service 420,471 54.8 14,826 45.2 Health and wellness 161,306 21.0 1,848 5.6 Accommodation 92,075 12.0 12,372 37.7 Other activities 56,500 7.4 3,488 10.6 Transport operators, tour 36,465 4.8 292 0.9 and travel agencies All establishments 766,777 100 32,827 100 Source: Philippine Statistics Authority Philippine Tourism Performance While the Philippines continues to break its own record in terms of tourist arrivals and receipts, compared with fellow members in the Association of Southeast Asian Nations (ASEAN), the country’s tourism performance was quite lackluster. Data from the World Economic Forum’s 2017 Travel and Tourism Competitiveness Report showed that the Philippines was ahead only of Cambodia and Laos in terms of such indicators as tourist arrivals and tourism receipts (WEF, 2017). TABLE 4. Tourism-Performance Indicators in the ASEAN, 2017 Rank Country Tourist arrivals T. Receipts (million USD) 1 Thailand 29,923,185 44,552.7 2 Malaysia 25,721,251 17,597.1 3 Singapore 12,051,929 16,743.4 4 Indonesia 10,406,759 10,761 5 Vietnam 7,943,600 7,350 6 Philippines 5,360,682 5,276.3 7 Cambodia 4,775,231 3,130.3 8 Lao PDR 3,543,327 679.4 Total 8,717 15,191 74% Source: World Economic Forum, 2017; No data for Brunei and Myanmar The country’s tourist arrivals and receipts generally reflect its overall travel and tourism competitiveness (TTC)
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