Manila Hotel Market Update November 2013 Manila’s gaming push aiming to induce tourism demand 4.2 million international Gaming Revenue Trend visitors recorded in 2012 Key Casino Operators Billion US$ % “Manila’s tourism market is taking a 1.8 80 decided turn away from a vanilla offering 1.6 1.4 60 to boost visitor numbers. Over the past 1.2 18 months, there was an influx of Korean 1.0 40 0.8 20 and Chinese visitors into the Philippines. 0.6 0.4 0 The country has a competitive advantage 0.2 over others in South East Asia in terms -20 of its location, approximately 1.5 - 3 2006 2007 2008 2009 2010 2011 2012 hours from major cities in China. Last Gaming Revenue Annual Growth year it recorded it’s highest growth ever. Source: PAGCOR and Resort World Manila Annual Reports, As Russian tourists arrived in the first and C9 Hotelworks Market Research Russian charter flight to Manila, which By 2017 the Manila hotel supply is launched in October. Viewing the trend anticipated to add over 6,000 keys of Russian visitors in other regional into the market, approximately leisure markets, the potential to tap into one-third of the existing keys. Given mass tourism remains strong. the fact that tourist arrivals to the country are still at a low compared The South East Asian casino dreamscape to its peers such as Thailand and is setting up a battle between established Malaysia, the current focus is on gaming giants and independent operators generating more demand. Looking in a high stakes contest of win or lose. forward there is upbeat momentum Meanwhile the growth by the gaming for future development in the industry in Metro Manila has fueled the tourism industry in Metro Manila.” building of hotel rooms. Bill Barnett, Managing Director, C9 Hotelworks Market Trend Forward Outlook • In the first eight months of 2013, the Philippines • A substantial rise of the gaming industry in welcomed over 3 million international visitors with Manila is anticipated over the next three years Korean, American and Japanese visitors being lead which will be a leading engine of economic contributors. growth for the Philippines. • There was a total of 37 million passengers through • Total revenue generated from casino businesses is Ninoy Aquino International Airport (NAIA) in forecasted to top US$3 billion in 2015, an 2012, a growth of 12% over 2011. average of 32% growth year on year. • 36% of total international travelers are first time • Hotel supply is expected to grow at 38% over the visitors to the country. existing supply in the next four years. TOURISM Airline Indicators • Passengers through Ninoy Aquino International Airport (NAIA) grew at a compound annual growth rate (CAGR) of 12% between 2006 and 2012. • In 2009, domestic passengers dramatically grew at 25% year on year and surpassed the international sector for the first time. In the last year, domestic and international visitors recorded at 20.5 and 16.7 million passengers, a 10% and 7% growth over 2011, respectively. International vs. Domestic Passengers at NAIA Number of Passengers % 25,000,000 30 25 20,000,000 20 In 2012, 15,000,000 domestic sector 15 10,000,000 comprised 55% 10 5,000,000 of total traffic 5 through NAIA 2006 2007 2008 2009 20102011 2012 vs. 45% in 2006 No. of International Passengers No. of Domestic Passengers Annual International Growth Annual Domestic Growth Source: Manila International Airport Authority and C9 Hotelworks Market Research Tourism Indicators • Total international visitors to the Philippines registered at 4.2 million in 2012, a 9% growth vs. 2011. An upward trend has continued in 2013. For the year to date figures up to August this year, the number of international travelers grew at 11% over the same period versus 2012. • Top five source markets consisted of Korea (26%), U.S.A (14%), Japan (9%), China (9%) and Australia (4%). Two key growth markets, China and Korea, recorded a year on year increase at 61% and 22%, respectively. • Manila ranked as the top tourism destination in the Philippines. In 2012, its arrivals accounted for 73% of total international visitors to the country. International Visitors to the Philippines Top 5 Sources Markets Number of Visitors % Number of Visitors % 4,500,000 20 900,000 30 4,000,000 800,000 25 3,500,000 15 700,000 3,000,000 600,000 20 10 2,500,000 500,000 15 2,000,000 5 400,000 1,500,000 300,000 10 1,000,000 0 200,000 5 500,000 100,000 -5 2009 2010 2011 2012 YTD YTD Korea USA Japan China Taiwan Aug 2012 Aug 2013 No. of Visitors Annual Growth YTD Aug 2012 YTD Aug 2013 Annual Growth Source: Ministry of Tourism and C9 Hotelworks Market Research Source: Ministry of Tourism and C9 Hotelworks Market Research 2 C9 2013 Hotel Market Update: November 2013 HOTEL MARKET Existing Supply 2012 vs. 2011 By Tier Number of Rooms % 5% 10,000 20 8,000 15 29% 56% 6,000 10 Luxury 4,000 5 Upscale 10% 2,000 0 Midscale -5 Budget and Economy Luxury Upscale Midscale Budget and Economy 2011 No. of Rooms 2012 No. of Rooms Annual Growth Source: Ministry of Tourism and C9 Hotelworks Market Research Source: Ministry of Tourism and C9 Hotelworks Market Research Luxury hotels comprise the Gaming industry spurred largest segment in Manila supply growth in upscale hotel tier Hotel Performance • For the first three quarters of 2013, market-wide occupancy registered at 67% vs. 72% in the same period last year. Average room rates increased by 4%, recorded at US$135. The resulting RevPAR slightly decreased by 2% to US$91. Overall Performance Trend Performance by Tier US$ % US$ % 250 100 250 100 200 80 200 80 150 60 150 60 100 40 100 40 50 20 50 20 2011 2012 YTD Sep 2012 YTD Sep 2013 Luxury & Upper Upscale Upscale & Midscale Average Room RateRevPAR Occupancy YTD Sep 2012 ADR YTD Sep 2013 ADR Source: STR Global and C9 Hotelworks Market Research YTD Sep 2012 Occupancy YTD Sep 2013 Occupancy Source: STR Global and C9 Hotelworks Market Research Luxury and Upscale Hotel Openings • A total of 6,030 keys are expected to enter into the market between 2014 and 2017. 60% of total pipeline will be added in the Manila Bay area, followed by Pasay City with 18%. Hotel Name Location Rooms Opening Period Solaire Resort & Casino Manila (extension) Manila Bay 300 Oct 2014 City of Dreams Manila Manila Bay 920 2014 Manila Bay Resort Manila Bay 1460 2015 Conrad Manila Manila Bay 352 Aug 2016 Westin Manila Bayshore Manila Bay 600 Q3 2016 Marco Polo Ortigas Manila Ortigas 313 Q1 2014 Grand Hyatt Manila Bonifacio 440 Jun 2015 Shangri-La at The Fort Bonifacio 577 Q4 2015 Maxims Tower (extension) Pasay City 170 2014 Manila Marriott Hotel (extension) Pasay City 228 Q4 2015 Hilton Manila Pasay City 320 Jan 2017 Sheraton Manila Hotel Pasay City 350 Q1 2017 Source: C9 Hotelworks Market Research C9 2013 Hotel Market Update: November 2013 3 About C9 Hotelworks C9 Hotelworks is an internationally recognized consulting firm with extensive experience in the Asia Pacific region. Its core business focus includes: Hotel and Resort Development Asset Management / Ownership Representation Project Feasibility and Analysis Key competencies include international hotel operator search, selection and contract negotiation, mixed use hotel and residential planning and operation reviews. A wide range of both institutional and private developers and a comprehensive portfolio of completed projects give C9 the skill set and background to focus on key issues, evaluate complex ones and assist clients in achieving solid results. Based in Phuket, Thailand and led by Managing Director Bill Barnett, who has Bill Barnett 28 years of experience in Asia Pacific, the firm is well positioned Managing Director to serve an increasingly demanding marketplace. The Source for all Hotel and Real Estate News www.thephuketinsider.com C9 Hotelworks Company Limited 9 Lagoon Road, Cherngtalay, Thalang, Phuket, 83110, Thailand (Office located at the entrance of Laguna Phuket) T: +66 (0)76 271 535 F: +66 (0)76 271 536 www.c9hotelworks.com [email protected].