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Chapter 1

THE PROBLEM AND ITS BACKGROUND

Introduction

Tourism is now one of the world’s largest industries and one of its fastest

growing economic sectors. Tourism may have a positive economic impact on the

balance of payments, on employment, on gross income and production. It helps

people of far flung areas to promote their culture and norms; it also provides

opportunities to country to make a better image around the world. There are

many issues this sector is facing nowadays and the popularity of this sector is

sliding down day by day means that people is not ready to make tours because

of many problems and threats to security and life.

Consequently, tourism firstly brings about a redistribution of national

income, dividing the world into tourist-generating and tourist-receiving

countries, regions and destinations; and, secondly, it also leads to a

redistribution of income between sectors and companies within the economy,

with the latter reflecting the fact that tourism consumption differs from

personal consumption.

However, economic impacts assume more or less importance depending

upon the tourism context. For less developed countries, for example,

tourism is generally favored for its potential as a generator of foreign

currency whereas, within Europe and in the light of EU policy, it is tourism’s

role as a source of employment that has been growing in importance,

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together with its contribution to regional development. In the last decade,

tourism has often been seen as a vehicle for sustainable development and a

possible agent for more green economies.

Inflation is a major concern to global economists, and it affects people

from all walks of life. It refers to the measure or rate by which the cost of goods

and services rises and purchasing power declines. As prices increase, monetary

value decreases—prompting consumers to spend less on goods and services.

Inflation increases in prices of land, houses and food that can occur as a

result of tourism. Prices for commodities can increase when tourists place extra

demands on local services at a tourism destination. Opportunity cost engaging in

tourism rather than another form of economic activity.

The economic benefits generated have been the main driving force

encouraging the steady growth of tourism. Tourism has long been viewed as a

tool for economic development due to its ability to generate substantial economic

benefits to host regions and communities (Craggs & Schofield, 2009). Mihalic

(2002) emphasizes that it is tourist expenditure that represents the foundation of

the economic impacts of tourism. Legohérel and Wong (2006) point out that

expenditure is a key component to understanding consumption behavior of

tourists and that, levels of expenditure are more important than consumption

volume.

Conceptual Framework
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Tourists spend their money on so-called tourism characteristic and other

products. The first group is products created by tourism industries such as

accommodation, food and beverage services, passenger transport, travel

agencies and tour operators, cultural services and recreation and entertainment.

Yet tourists may also spend their money on other goods such as tourism-

connected products like fuel or tobacco, or on non tourism-related consumption

products such as cosmetics, shoes or other goods without tourism characteristics

(WTO, 1999). Regarding the above division, the structure of tourism

consumption may vary significantly from country to country and accordingly so

do the tourism-related economic benefits.

Like it or not, inflation is real and it could become a major problem in

hotels and resorts. Ignoring the effects that inflation can and will have on your

long-term savings is probably one of the biggest mistakes that many investors

make. Understanding the detrimental causes and effects of inflation is the first

step to making long-term decisions to mitigate the risks. But the next step is

taking action

Inflation could make or break a business depending on its level of

intensity. This graph could help in further understanding of Inflation itself, its

causes and effects and how it affects the economic growth of selected Hotels

and Restaurants in SBMA.

Inflation Increasing wages and corporate

profitability (if rate of inflation is
(The Money Supply,
considered to be approximately 2-3%)
Demand-Pull Effect,
Cost-Push Effect, Economic expansions have
Exchange Rates) historically, led to revenue growth at
hotels
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POSSIBLE
EFFECTS OF
INFLATION

Rise of labor costs

Cost of various other goods and

services skyrocket

Strategic Planning and seasonal

HOTELS AND STRATEGIES Promos.
RESORTS

Figure 1: Research Paradigm

Statement of the Problem

The study aims to determine the impact of inflation in selected hotels in

Subic Bay Freeport Zone during the Fiscal Year 2014-2019.

Specifically it sought to answer the following questions:

1. What is the profile of the hotels-respondents in terms of:

1.1. Name of the hotel;

1.2. Category of the hotel; and

1.3. Length of existence?

2. What is the impact of inflation among selected hotels in SBFZ in terms

of :

2.1 Job generation

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2.1.1 Contractual; and

2.1.2 Permanent

2.2 Income Generation;

2.3 Number of tourist arrival?

3. What are the strategies in coping with high inflation?

4. What is the implication of the study?

Assumptions

The following are the assumptions of the study.

1. There are many factors that affect the hotel industry.

2. The economy is a major factor that affects this industry.

3. Civil unrest or potential dangers in an area also affect the industry.

4. The responses from the different hotels-respondents are varying to

each other’s perceptions.

Scope and Delimitation

This research entitled “The Impacts of Inflation on the Economic Growth

of selected hotels or resorts in SBMA” focuses on determining the impacts of

inflation in hotel industries within the year 2014-2019. This study is also

interested in knowing the strategies the hotels will do in order to survive from

the ever-changing needs of tourists whenever there is a high inflation rate.

Significance of the Study

The researchers assume that after this study other researchers, students,

professors, aspiring researchers and us as students would gain more knowledge

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about the economic impact of inflation specifically under a large sector of

tourism; the accommodation sector which are Hotels contributing a large amount

of revenue in an economy.

The findings of this study will be of great significance to the following:

Hospitality Industry. The findings of this research are very beneficial

to the hotel management because they will be able to know the actions and

strategy to be implemented whenever there is a change in economic flow.

Student. This is significant to the students who especially to those who

are studying Hospitality or Tourism because this industry is the fastest growing

industry in the country and also, it are one of the major contributors of the

economy.

Tourist. This study can help the tourist find the best tourist destination

from time to time.

Economic Advocates. This is very important especially to those who are

studying inflation rate.

Future Researchers. This study will provide insights and information to

other researchers so that they may be able to inspire and realize the need to

conduct research and study relevant to this study.

Definition of Terms

For better understanding the following terms were define conceptually.

ADR (Average Daily Rate). It refers to a measure of the average rate

paid for rooms sold, calculated by dividing room revenue by rooms sold.
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Average published rate (APR). This refers to the average published

rate is measured by averaging the range of published room rates for various

room sizes (single, double, etc.) during different times of the year. 

Built-in inflation. It refers to the third cause that links to adaptive

expectations. As the price of goods and services rises, labor expects and

demands more costs/wages to maintain their cost of living. 

Capital expenditure .This refers to the money spent by a business to

acquire or maintain fixed assets such as land, buildings and equipment.

Class. It refers to the industry categorization which includes chain-

affiliated and independent hotels.

Competitive set. It refers to the competitive set consists of a group of

hotels by which a property can compare itself to the group’s aggregate

performance. 

Cost-push inflation. This is refers to the result of increase in the prices

of production process inputs.

CPI. This refers to the measure that examines the weighted average of

prices of a basket of goods and services which are of primary consumer needs.

Deflation. Refers to the opposite of inflation and it is a decrease in the

general price level of goods and services and represents an increase in the value

of money, where an amount of money can be exchanged for more goods and

services.
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Demand-pull inflation. This refers to the overall demand for goods and

services in an economy increases more rapidly than the economy's production

capacity.

Hotel types. It refers to the hotel classifications are driven primarily by

building structure and secondarily by service level.

Inflation. It refers to the quantitative measure of the rate at which the

average price level of a basket of selected goods and services in an economy

increases over a period of time.

Inflation rate. This refers to the percentage change in the price index

for a given period compared to that recorded in a previous period. It is usually

calculated on a year-on-year or annual basis.

Producer Price Index. This refers to a family of indexes that measures

the average change in selling prices received by domestic producers of goods

and services over time. 

WPI. This refers to another popular measure of inflation, which measures

and tracks the changes in the price of goods in the stages before the retail level. 

Chapter 2

RESEARCH METHODOLOGY
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This chapter is presentation of the research method used in the study, the

respondents, the instrument and technique used, and the treatment used in the

information gathered.

Research Design

To come up with necessary facts and figures regarding the Impacts of

Inflation in Selected Hotels is Subic Bay Freeport Zone, the descriptive method

was used by the researchers. This method is appropriate in a sense that it

involves a survey and description of existing facts and conditions along with the

analysis and integration of data gathered.

To characterize it briefly, it is something more and beyond just data-

gathering; the latter is not reflective thinking and not research. The true

meaning of data collected should be reported from the point of view of the

objective and the basic assumption of the project underway.

Locale of the Study

The Subic Bay Metropolitan Authority is governmental agency of the

Philippine government. Sometimes abbreviated as SBMA, the agency has played

a significant part in the development of the Subic Bay Freeport and the Special

Economic Zone into a self-sustainable area that promotes the industrial,

commercial, investment, and financial areas of trade in the zone as well as in the

country of the Philippines itself.

The area of jurisdiction of SBMA includes the erstwhile U.S. Naval Base

Subic Bay, parts of Redondo peninsula where the Subic Hanjin shipyard is
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located, and erstwhile US defense accommodations in the hills consisting of

Binictican and Kalayan housing areas.

The SBMA is currently headed by former Public Affairs and Contributions

manager of Philip Morris Fortune Tobacco Company Inc. (PMFTC) Atty. Wilma T.

Eisma as Chairman and Administrator

Figure 2 Location Map of SBMA

Subic Bay Freeport Zone (SBFZ), which is known simply as Subic Bay

or Subic is special economic zone covering portions of Olongapo City and the

town of Subic in Zambales and Morong and Hermosa in Bataan. It is the

Philippines’ first successful case of a Military base converted through

volunteerism into a tax and duty-free zone, operated and manages by the Subic

Bay Metropolitan Authority or SBMA. It covers the fenced area of the former US
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Naval Base Subic Bay located in the Southwest of Luzon Island in the Philippines.

The harbor faces the Zambales mountain range to the west and the Subic Bay

opening to the South China Sea. It is the Northwest of the Bataan Peninsula and

Southeast of the Zambales Province

Sun Plaza Subic Hotel

Sun Plaza Subic Hotel, located in Freeport Zone, is a great choice for

travelers looking for comfort and convenience. Sun Plaza Subic Hotel is a newly

built leisure condotel with a Japanese modernity specially designed for business

travelers, groups, and families who want to experience luxurious living at

reasonable cost. The property offers 37 quiet and relaxing guest rooms in

different styles. All rooms are tastefully furnished and many even provide bottled

water, a kitchenette, safety deposit boxes, and a wake-up call service to ensure

a comfortable stay. The property also features a sauna, a Jacuzzi, and a

swimming pool to give the guest a relaxed and comfortable stays every time.

Convenient location and excellent facilities make Sun Plaza Subic Hotel the

perfect choice for a visit to Subic.

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Figure 3 Sun Plaza Hotel

Vista Marina Hotel and Resort

A first class international hotel with impressive Mediterranean inspired

ambiance that will surely make every stay awe-inspiring. The hotel is situated

right in the heart of Waterfront Road with a magnificent view of Subic Bay.

Each room type is luxuriously designed so that guests will have a well

pampered stay for affordable prices. Each room is equipped with world class and

modern amenities, complimentary breakfast for 2 and a choice of Queen or King

sized beds for comfort. They also offer 24 hours Room Service Massage (Shiatsu,

Swedish, Combi, and Tandem), Laundry, Dry Cleaning, Ironing Service and Room

Service.

There's also the Cascade Bar located at the hotel where you can enjoy

until the sun rises. You may also enjoy a quite night along the seashore where

the moon reflects right across the bay supported by the fabulous night lights of

Subic Bay.

Vista Marina may also arrange transportation service for guests and may

choose from various types of vehicles from luxurious vehicles or air conditioned
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vans that can seat 2 to 6 persons. It may be rented by trip, half day or whole

day depending on how long a guest would need the transport service.

All guests can enjoy shopping at Duty Free stores that are a few minutes

away from the hotel and buy souvenirs from the Souvenir Shop or from our

locals who sell them for reasonable prices.

Figure 4 Vista Marina Hotel and Resort

The Lighthouse Marina Resort

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Located in a popular tourist destination of Subic Bay, The Lighthouse

Marina Resort is a charming boutique hotel with a fine blend of modern

architectural design and a touch of old world décor. The attractive property is

tucked away from the lively Waterfront Road, providing guests with a peaceful

sanctuary in a prime location. With a 20-meter lighthouse capping its building,

the property stands for its unique façade that reflects the endless list of exciting

water and outdoor activities the area has to offer. Delve into the fun under the

sun and relax in the comfort of the well-appointed guestrooms at The Lighthouse

Marina Resort.

Figure 5 The Lighthouse Marina Resort

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Subic Bay View Diamond Hotel

Offering air-conditioned rooms with free Wi-Fi, Diamond Hotel features a

24-hour reception at the property. A 10-minute walk to Harbor Point Ayala Mall,

the hotel also offers mini-convenience store, bar, restaurant, and provides free

private parking.

Each room is equipped with a flat-screen cable TV, safety deposit box,

desk and electric kettle. Private bathroom includes hot and cold shower. For your

comfort, you will find bathrobes, slippers, and free toiletries. Airport shuttle

services can be arranged at an extra cost.

Figure 6 Subic Bay View Diamond Hotel

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Subic Park Hotel

Cozy and charming, Subic Park Hotel is a boutique hotel with a unique

country home atmosphere that offers guest an excellent combination of charm,

peace and quiet, and a convenient position from which to explore Subic Bay.

Discover a new level of hassle free vacation with our homey, down-to-

earth interiors, and attention to top notch Filipino hospitality. Every corner, from

the reception area to the hallways, the decorations and ornaments are

personalized, while rooms are intricately styled to give a more homey

experience.

Horizon Restaurant, our on-site – beach front resto has a magnificent

view of Subic Bay’s famous waters. Authentic Filipino cuisines are made fresh

every day! Sumptuous breakfast, lunch, merienda and dinner, are crafted

passionately by skilled chefs for a very reasonable price.

Take a plunge in the hotel's beach side swimming pool where you can

relax and unwind while enjoying a picture perfect panoramic view of Subic Bay.

Comfortably located just along the Waterfront Road area, only a few minutes

away from the shopping centers, Duty Free shops, and famous Theme Parks so

guests can simply drop their beach bag while they’re in between activities, hang

around and enjoy all that Subic Bay has to offer.

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Figure 7 Subic Park Hotel

Respondents

The respondents for this study would be the selected hotels in SBFZ;

Diamond Hotel, Sun Plaza Hotel, Vista Marina, Light House, and Subic Park Hotel

with the Manager, Supervisors, employees under Food and Beverage

Department, employees under Housekeeping Department, and employees under

Accounting Department. The sample size is 50 respondents.

Research Instrument

Survey questionnaire was used as the main data gathering instrument for

the study. The questionnaire was composed of two main sections. The first

section is the profile that contains the profiles of the respondent. The second

part is the survey proper that explores the assessment of the respondents

(hotels) through Impact of Inflation.

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Data Gathering Procedure

The researchers identified the problems that need to be solved and the

respondents of the study. After the identification of the problem, a survey was

formulated and checked by the research adviser. Consent from the research

adviser was sought before the actual administration of the survey. The

researchers will coordinate with the Hotel in Subic Bay Freeport Zone before they

distributes the survey to the respondents. And during the actual administration,

the respondents answered the survey, and retrieved them afterward by the

researchers.

The Respondents were the selected hotels in Subic Bay Freeport Zone.

The selected hotels will answered the survey-questionnaires on The Impact the

Inflation to employee to the number of tourist arriving and the strategies they

implemented in coping up with inflation.

This questionnaire’s purpose is to know the impact of inflation to the

employment in a hotel. The response pattern was a five-point rating scale

ranging from rank point 1 to 5.

Statistical Treatment of Data

The Researcher will use weighted mean proven to be an effective tool

when determining the Impact of Inflation to the employment in a hotel. Data

was analyzed based on the respondent’s view on the research question.

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1. Frequency

This will be used to determine the number of times a scale in the

sample question occurs in a set of data and to summarize of how often different

scores occur with a sample scores.

2. Percentage

This was used to determine the proportion of the hotels in terms to

its inflation rate.

Formula:

% = f/n (100)

Where:

% - Percentage

F- Frequency

N- Total

100 – Constant Value

3. Weighted Mean

A Weighted mean is a kind of average. This Process is used to

determine the Impact of Inflation Rate of hotel to the Employees, Tourist Arrival,

and Strategies of Management.

Weighted mean = ∑wx/∑w

∑= the sum of (in other words..add them up!).

W= the weights

X= the value
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Data generated from 5-point Likert Scale were interpreted through the

following score rages: 1.00-1.79 is interpreted as insignificant impact, 1.80-2.60

is interpreted as minor impact, 2.61-3.20 is interpreted as moderate impact,

3.21-4.20 is interpreted as major impact, and 4.21-5.00 is interpreted as severe

impact. This measures How the Inflation Affects the Economic Growth of hotels

in Subic Bay Freeport Zone.

Rate Mean Range Verbal Interpretation

5 4.21-5.00 Severe Impact
4 3.21-4.20 Major Impact
3 2.61-3.20 Moderate Impact
2 1.80-2.60 Minor Impact
1 1.00-1.79 Insignificant Impact

Chapter 3

PRESENTATION, INTERPRETATION AND DATA ANALYSIS

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The data gathered were presented, analyzed, and interpreted in this

chapter. These are the Profile of the hotels, Category of the hotels, Impact of

Inflation of hotels in terms of Employees, Tourist Arrival, and Strategies of

Management.

Profile of the Hotel

Tables 1 to 5 present the Profile of the Hotels in Subic Bay Freeport Zone

as to their respondent’s designation, Category, Length of Existence, Number of

Employees, and Number of Contractual and Permanent Employees.

Table 1 present the respondents of the hotels which consist of the

managers, supervisors, Food and Beverage staffs, Housekeeping staffs, and

accounting staffs. Hotel A has 1 Manager, 2 Supervisors, 3 Employees from F&B

Department, 2 Employees from Housekeeping Department, 2 Employees from

Accounting Department. Hotel B has 1 Manager, 2 Supervisors, 2 F&B Staffs, 3

Housekeeping staffs, and 2 Accounting staffs. Hotel C has 1 Manager, 2

Supervisors, 2 F&B staffs, 3 Housekeeping staffs, 2 Accounting staffs. Hotel D

has 1 Manager, 2 Supervisors, 3 F&B staffs, 2 Housekeeping staffs and 2

Accounting staffs. Hotel E has 1 Manager, 2 Supervisors, 2 F&B Staffs, 2

Housekeeping staffs, and 3 Accounting staffs.

Table 1

Profile of the Respondents as to their Designation

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Hotel Manager Supervisor F&B Housekeeping Accounting

Department Department Department
A 1 2 3 2 2
B 1 2 2 3 2
C 1 2 2 3 2
D 1 2 3 2 2
E 1 2 2 2 3
Total 5 10 12 12 11

Table 2 Presents the Category of the Hotels in Subic Bay Freeport Zone.

Hotel A hasn’t been yet accredited by the Department of Tourism, Hotel B is a 3-

star hotel, Hotel C is a 1-star hotel, Hotel D is a 3-star Hotel, and Hotel E is a 2-

star Hotel.

Table 2

Category of the Hotel

Hotel Category

A 0
B 3 STAR
C 1 STAR
D 3 STAR
E 2 STAR

Table 3 shows the Length of Existence of the Hotels in Subic Bay Freeport

Zone.

The table shows that Hotel A and D was established 6 years ago and

operating since, Hotel C and Hotel E was established 5 years and 4 years ago

respectively, on the other hand, Hotel A was established last December 2017 (1

year and 3 months in operation).

Table 3
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Length of Existence of Hotels in Subic Bay Freeport Zone

Hotel Length of Existence (by Years)

A 1 year and 3 months

B 6
C 5
D 6
E 4

Table 4 presents the Number of Employees working in every hotel in Subic

Bay Freeport Zone.

Table 4 shows the number of employees working in a hotel in SBFZ.

Wherein; Hotel A has 13 employees, Hotel B has 100 employees, Hotel C has 40

employees, Hotel D has 90 employees and Hotel E has 78 employees.

Table 4

Number of Employees working in every Hotel in Subic

Bay Freeport Zone

Hotel 2018
A 13
B 100
C 40
D 90
E 78
Total 321

Table 5 shows the Number of Contractual and Permanent Employees in

every hotel in Subic Bay Freeport Zone

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As shown in the table below, Hotel A has employed 3 contractual

employees and 10 permanent employees, Hotel B has 75 contractual employees

and 25 permanent employees, as for Hotel c they have 25 contractual and 15

permanent employees, Hotel D has 70 contractual employees and 20 permanent

employees, Lastly, Hotel E has 28 contractual employees and 50 permanent

employees.

Table 5

Number of Contractual and Permanent Employees in every hotel in

Subic Bay Freeport Zone

Hotel Contractual Permanent

A 3 10
B 75 25
C 25 15
D 70 20
E 28 50
Overall Total 201 120

Table 6 to 9 shows the Impact Inflation of Hotels in terms of its

employees, Tourist Arrival, and Strategies of Management

Table 6 shows the Impact Inflation of Hotels to the employee.

As presented in the table, inflation has an moderate impact in the

employment generation of the hotels in SBFZ. Impact which hotels “reduced the

number of employees” has a weighted mean of 2.0 or Minor Impact, “Left Wages

Unchanged” has a weighted mean of 2.6 or minor impact, “increases in the

employees’ wages has a weighted mean of 3.0 or Moderate impact, “Difficulties

in recruiting staffs has a weighted mean of 1.60 or Insignificant Impact,

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“Inflation affects the number of workdays of the employees” has a weighted

mean of 4.40 or Severe Impact. The impact of inflation to the employee in hotels

in SBFZ has an overall mean of 2.72 or Moderate Impact.

According to Friedman (2007), if the economy is at its natural potential

output, then increasing inflation by increasing the money supply will rate

economic output and employment temporarily, by increasing aggregate demand,

but as prices adjust to the new level of money supply, economic output and

employment will return to its natural state.

He also states that expected inflation causes people to demand greater

wages so that their incomes will keep pace with inflation. By increasing the cause

of labor, the short term increase in employment is reversed back to the natural

rate of unemployment. This relationship is summarized in the natural rate

hypothesis, which states that unemployment eventually returns to its normal, or

natural, rate, regardless of the inflation rate.

Table 6

Impact of Inflation to the Employee

Weighted Verbal
Impact
Mean Interpretation
1. Reduced the number of employees 2.0 Minor Impact
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2. Left wages unchanged 2.6 Minor Impact

3.0 Moderate
3. Increases in employees’ wages
Impact
1.60 Insignificant
4. Difficulty in recruiting staffs
Impact
4.40
5. Inflation affects the number of workdays
Severe Impact
of the employees
Overall Mean 2.72 Moderate
Impact

Table 7 shows the Impact of Inflation to the tourist Arrival in Hotels in

Subic Bay Freeport Zone. Table 7 says that inflation is one of the factor why

travelers hinder from travelling, It affects the sales of the tourism attractions

here in SBMA because of few travelers visited the hotels. It’s agreeable that the

higher the inflation, the lower the number of tourist and it affects also the tourist

from spending and availing the services offered by the hotel. The Table shows

impact of “Decrease Sales” that has a weighted mean of 4.20 or Major impact,

“inflation is the main factor affecting the number of tourists visiting the

establishment” has a weighted mean of 4.20 or Major impact, “A high level of

inflation means low number of tourist” has a weighted mean of 4.40 or Severe

Impact, “Inflation affects tourist spending in establishment” has a weighted

mean of 3.60 or Major Impact, “Inflation hinders the travellers to travel because”

has a weighted mean of petroleum hike” has a weighted mean of 4.20 Major

Impact. The table for the Impact of Inflation to the Tourist Arrivals shows an

overall mean of 4.12 or Major Impact with the hotels in Subic Bay Freeport Zone.
 27

According to Bondoc (2004), the higher the inflation affects the

purchasing power of Filipinos. So there could be some belt-tightening for local

traveller. He also said that the hotels and restaurant sub segment has been

growing by about 8% per annum from 2009 to 2017, which shows that Filipinos’

leisure spending has been growing and indicates that Filipinos continue to allot

apart of their disposable income on travels.

Table 7
Impact of Inflation to the Tourist Arrivals
Weighted Verbal
Impact Mean Interpretation

4.20 Major Impact

1. Decrease sales
2. Inflation is the main factor affecting the 4.20 Major Impact
number of tourists visiting the establishment
3. A high level of inflation means low number of Severe Impact
tourist 4.40
4. Inflation affects tourist spending in Major Impact
establishment 3.60
5. Inflation hinders the travellers to travel 4.20 Major Impact
because of petroleum hike
Overall Mean 4.12 Major Impact

Table 8 shows the Impact of Inflation to the strategies management of

Hotels in Subic Bay Freeport Zone It is shown in the table below how inflation

affected the strategies and implications of the hotel whenever there is inflation.

The high level of inflation means low number of tourist had a total weighted

mean of 4.40 with verbal interpretation of “Severe Impact” . According to the

study of Icoz (1991) high inflation is a significant factor affecting tourism

demand and the tourism sector in developing countries. International tourism is

 28

highly susceptible to changes internal (e.g. prices) and external (e.g. global

economic trends) to the industry. The inflationary consequences of tourism can

arise in several different ways. Retailers in tourist areas often raise their prices in

the knowledge that they will continue to find a market among affluent tourists.

Inflation in tourist destination areas is also caused by land values, with tourism

generating additional demand for land. The extent to which inflationary price

increases are compensated for local residents by economic benefits such as

increased employment and income is uncertain.

Most of them promoted cost cutting, they tend to reconsider new

suppliers with low prices of goods, and they increase room rates. The Tables

shows an impact of “Promoted greater efficiency and cost-cutting’” that has a

weighted mean of 4.20 or Major Impact, “Reconsider new suppliers of raw

materials and procurement content” has a weighted mean of 4.0 or Major

Impact, “Increase utility costs” has a weighted mean of 3.20 or Moderate impact,

“Delays or changes in plans for capital investments” has a weighted mean of

3.20 or Moderate Impact, “Increases room rates” has a weighted mean of 2.80

or Moderate Impact, “Enhance after-sale service” has a weighted mean of 4.0 or

Major Impact, “Inflation causes shortage of supplies leading to lower count of

tourist arrivals” has a weighted mean of 3.80 or Major Impact, “There is a need

to change room and service rates for high inflation” has a weighted mean of

3.80 or Major Impact, “A high percentage of inflation causes shortage of supplies

for an establishment’ has a weighted mean of 3.0 or Moderate Impact. The table
 29

shows Impact of inflation to the strategies of Management of Hotels in SBFZ that

has an overall mean of 3.56 or has a Major Impact.

According Peterson (2016), Inflation is the bane of every businessman

and salary earner worldwide, the root cause of rising costs and other financial

woes. While Inflation is a subject that remains highly misunderstood among lay

people, it can have a very real effect on how you cope with your day-to-day

expenses. You may be able to stop Inflation, but that doesn’t make you

powerless against its effects. Understand how it affects your purchasing power

and you can start building effective strategies to protect your finances. Here are

just a few ways you can prepare yourself for the barrage of higher prices

brought about by Inflation.

Table 8
Impact of Inflation to the Strategies of Management
Weighted Verbal
IMPACT
Mean Interpretation
1. Promoted greater efficiency and cost- 4.20 Major Impact
cutting
2. Reconsider new suppliers of raw materials 4.0 Major Impact
and procurement content
3.20 Moderate
3. Increase utility costs
Impact
3.20 Moderate
4. Delays or changes in plans for capital
investments Impact

2.80 Moderate
5. Increases room rates
Impact

6. Enhance after-sale service 4.0 Major Impact

7. Inflation causes shortage of supplies 3.80 Major Impact

leading to lower count of tourist arrivals
8. There is a need to change room and 3.80 Major Impact
 30

service rates for high inflation

3.0 Moderate
9. A high percentage of inflation causes
shortage of supplies for an establishment Impact

Overall Mean 3.56 Moderate

Impact

Table 9 shows the overall presentation of tables. The Impact of Inflation

to the employees has an overall mean of 2.72 or Moderate Impact, the Impact of

inflation to the Tourist Arrivals has a weighted mean of 4.12 or Major Impact,

and the Impact of inflation to the strategies of management has a weighted

mean of 3.56 or Major Impact. The overall assessment of Tables states that the

Impact of inflation has different result for Employees, Tourist Arrivals, and

Strategies of Management.

Table 9

Overall Presentation of Tables

Impact of Inflation Overall Mean Verbal Interpretation

Employees 2.72 Moderate Impact

Tourist Arrival 4.12 Major Impact
Strategies of 3.56 Major Impact
Management
The Impact of Inflation on Tourism employs more and more people in the

less developed countries. However, they are mostly employed at the lower

performance level, in order to keep the salaries low. The managerial staff is on

the other hand brought with the multinational corporations. Thus the income

from tourism is not sufficiently let to grow in the destinations (Hemmi, 1999).

However, it is generally agreed that tourism does create employment and that
 31

this is a beneficial impact (Mathieson and Wall, 1992). There are three different

types of employment offered by tourism. Direct employment is employment at

tourism facilities, resulting from tourist consumption. Indirect employment is also

a result of employment in the tourism supply sector, however not directly

resulting from tourist expenditure. Induced employment occurs as additional

employment resulting from tourism multiplier effects (Ibid). To a certain extent,

the impacts of employment and income are related as direct, indirect and

induced effects can be distinguished in both cases. There is also a connection

between increased income and increased employment, although the pace of

growth is not necessarily of equal standard. The type of tourist activity influences

the effects on employment, as different types of tourism are labor-intensive at

different levels; for example the accommodation facilities employ a large number

of labor force at destinations and thus often require greater amounts of capital

as well. Effects of employment are also influenced by the local skills and the

employment struc cture as well as the seasonality of employment often thought

of as disadvantages (Mathieson and Wall, 1992).

Other than that, Tang (2010) said that, “this is not an immediate

phenomenon because it is time consuming for inflation to gradually “reduce” the

purchasing power” .Thus as an example for expected inflation is people are less

likely to hold cash, over time the money looses value due to inflation. Thus

dcrease the number of tourist arrival

Management Strategies
 32

According to the study of Chohan and Soni (2012) Inflation could hamper a

country’s economy as well as its economic growth mainly due to the following

reasons:-

1. Economies that are not fully adjusted to a given rate of inflation usually suffer

from relative price distortions caused by inflation. Nominal interest rates are

often controlled, and hence real interest rates become negative and volatile,

discouraging savings. Depreciation of exchange rates lag behind inflation,

resulting in variability in real appreciations and exchange rates

2. Real tax collections do not keep up with inflation, because collections are

based on nominal incomes of an earlier year (the Tanzi effect) and public utility

prices are not raised in line with inflation. For both reasons, the fiscal problem is

intensified by inflation, and public savings may be reduced. This may adversely

affect public investment.

3. High inflation is unstable. There is uncertainty about future rates of inflation,

which reduces the efficiency of investment and discourages potential investors

 33

Chapter 4

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

This chapter contains the summary of findings, conclusion and

recommendation of the study with regard to the measuring of Impact of Inflation

of hotels in Subic Bay Freeport Zone in terms of their Employees, Tourist

Arrivals, and Strategies of Management.

The study looked into the characteristics of the respondents; their

perceptions regarding the impact of inflation in the economic growth of selected

 34

hotels in SBFZ satisfaction in terms of selected Hotel in Subic Bay Freeport Zone;

the performance

Summary of the Findings

The Researchers found out that there’s a difference between categories

of hotels, some of them are accredited by the Department of Tourism and some

of them are not. The Length of Existence of the hotels are almost same (4 to 6

years) except to one of the hotels which is 1 year and 3 months of existence

which is considered to be the latest Hotel in SBFZ. The number of employees

working in Hotels at SBFZ increases every year whether they are Contractual or

Permanent Employees.

The Impact of Inflation to Employees which are “Reduced the number of

employees”, “Left wages unchanged” , “Increases in employees’ wages”, “Difficulty

in recruiting staffs”, “Inflation affects the number of workdays of the employees”

shows an a “Moderate Impact” to the Employees.

The Impact of Inflation to Tourist Arrival which are “Decrease sales”,

“Inflation is the main factor affecting the number of tourists visiting the

establishment”, “A high level of inflation means low number of tourist”, “Inflation

affects tourist spending in establishment”, “Inflation hinders the travellers to

travel because of petroleum hike” has a “Major Impact” to the Tourist Arrivals.

The Impact of Inflation to the Strategies of Management which are

“Promoted greater efficiency and cost-cutting”, “Reconsider new suppliers of raw

 35

materials and procurement content”, “Increase utility costs”, “Delays or changes

in plans for capital investments”, “Increases room rates”, “Enhance after-sale

service”, “Inflation causes shortage of supplies leading to lower count of tourist

arrivals”, “There is a need to change room and service rates for high inflation”,

“A high percentage of inflation causes shortage of supplies for an establishment”,

has a “Major Impact” to the Strategies of Managament.

Conclusions

This research aimed to identify the Impacts of Inflation in different Hotels

in Subic Bay Freeport zone to further understand its effects to the growing hotel

industry. Data’s are derived from our survey-questionnaire made to further

analyze the effects

In conclusion, Hotels in Subic Bay Freeport zone has their own way of

coping through changes that needed to be done due to a high percentage of

Inflation. It may affect them in terms of Its Employees that has Moderate

Impact, Tourist Arrivals that has Major Impact and Strategies of Management

Major Impact to inflation.

Recommendations

From the foregoing conclusions in order to improve negative result to the

impact of inflation to Employees “Difficulty in recruiting staffs”, The Researchers

offer the following recommendation:

 36

1. There should be a strategic planning to be able to cope up with the

rising and falling of inflation rates in the Philippines.

2. There should be a change in room rates, improves marketing and

enrich promotions to attract more clients.

3. The sales of the hotel must be enough to pay the employees. With

these, the management should always balance the arrival of the guests and the

number of employees.

BIBLIOGRAPHY

Brito, S., Y. Carriere-Swallow, and B. Gruss. (2018). “Disagreements about

Future Inflation: Understanding the Benefits of Inflation Targeting and
Transparency.” IMF Working Paper, January.

Dabara, D. I. et. al. (2016). Real estate Investments and the Inflation Hedging
Question: A Review. International Journal of Business and Management Studies
5(1): 187-196.

Dotsey, M, S. Fujita, and T. Stark. (2017) “Do Phillips Curves Conditionally Help
to Forecast Inflation?” Federal Reserve Bank of Philadelphia, working paper,
August. 
 37

Econbrowser. 2018. A Fisherian Decomposition of the Recent Interest Rate

Increase. February 9. 

Huang, H. and S. Hudson-Wilson. (2007). Private Real Estate Equity Returns and
Inflation. Journal of Portfolio Management (Special Issue): 63-73.
 Kirby, M. and P. Rothemund. 2018. “REITs on Sale” Heard on the Beach,
Green Street Advisors, February.

Lusht, K. M. (1978). Inflation and Investment Value. AREUEA Journal 6(1): 37-
49.

Miles, M and J. Mahoney. (1997). Is Commercial Real Estate and Inflation

Hedge? Real Estate Finance 13(4): 31-45.

Nalewaik, J. (2016) “Non-Linear Philips Curve with Inflation Regime-Switching,”

Federal Reserve Board, working paper, August. 

Mathieson, A., and Wall, G. (1992). Tourism. Economic, Physical and Social
Impacts. Essex: Addison Wesley Longman Limited.

Icoz , O (1991) Anatolia 1991 Vol.2 No.13/14 pp.19-21 ref.6

Tang, C. F. (2010). An exploration of dynamic relationship between tourist

arrivals, inflation,unemployment and crime rates in Malaysia. International
Journal of Social Economics, 50-69.
 38

ELECTRONIC SOURCES

Corgel, J. (2016, June 27). Hotel Profit Implications from Rising Wages and
Inflation in the U.S.
Retrieve from: https://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?
article=1015&context=chrreports

Gunio, B. (2019, March 11). SBMA touts P29.6-billion investments in 2018.

Retrieved from: http://www.manilastandard.net/lgu/luzon/289780/sbma-touts-
p29-6-billion-investments-in-2018.html

CompareHero (2018, January 25). 5 Ways to Cope with Inflation.

 39

Retrieved from: https://www.comparehero.my/money-tips/articles/5-ways-cope-

inflation
file:///C:/Users/CEAS/Downloads/SSRN-id2276771.pdf

Chohan V. and Soni , R (2012) A Study on Indian Economy. (n.d.).Retrieved

from
https://www.academia.edu/8255940/Impacts_and_Aspects_of_Inflation_A_Stud
y_on_Indian_Economy.
 40

APPENDICES

Appendix A

Output of the Study

PROPOSED INTERVENTION PLAN

Rationale

Based on the result in the survey, it was clearly stated that the Impact of

inflation to the hotels its Employees has a “Insignificant Impact” result in terms

of “Difficulty in recruiting staffs”.

 41

Objective

In order for them to improve negative result, the researchers of this study will

propose some intervention plans like seminars and programs such as:

1. Seminars and training about strategic planning on how to cope up with

high inflation rate.

2. Customer satisfaction and other related method.

3. Development of services and facilities of the hotel to attract more

customers.

Key Result Objectives Activities Person Resources Time Performan

Area Involved Needed Frame ce
Indicator
Seminars To help the Seminar Resource Funds, Monthly Enhanceme
about hotels cope and speakers, Activity, nt of
“Strategic up with Symposium Economies Seminar Strategies;
Planning on ever , and materials,
Awareness
how to cope changing Employees and venue.
up with economy. to inflation
inflation”
Seminars To help Training Resource Funds, Weekly Enhanceme
and employees speakers, Activity, nt of
Trainings be more Managers, Seminar Strategies
about productive and materials,
Customer and to offer Employees and venue.
satisfaction a better
 42

quality of
customer
service.
Meetings of To make Open Managers Venue Weekly Awareness
employees the Forum and and about the
regarding employees meetings Employees basic
Developmen aware of services and
t of services the basic facilities to
and facilities services and gain
improve customer
facilities satisfaction
with
regards to
customer
satisfaction
Develop By means Promote Marketing Venue, Quarterl Hotels will
seasonal of this, seasonal departmen products y be able to
promos to customers promos and t, and have an
attract more will be able freebies managers. services. income
customers to go to whether it is
and clients hotel summer or
because of rainy
discounts season.
and
freebies.

Conclusions

Upon implementing the proposed plan of seminar, the researchers

conclude:

1. Improved strategic plan and implications of the hotel and will cope up

to the rates of inflation.

2. The employees will be productive and will be aware of the better

quality of customer service.

3. The employees will be aware of the basic services and improve facilities

with regards to customer satisfaction.

 43

4. The hotel in SBFZ will be competent to the hotels in other places when

it comes to customer service satisfaction and will have good quality of facilities.

Appendix B
Letter of Permission

GORDON COLLEGE
COLLLEGE OF HOSPITALITY and TOURISM MANAGEMENT
OLONGAPO CITY

Dear Respondents,

Greetings!

We are presently conducting a study entitled “THE IMPACT OF INFLATION ON

ECONMIC GROWTH OF SELECTED HOTELS IN SBFZ.” as a requirement for the
completion of the subject; Tourism Research Methods and Techniques under the College
of Hospitality and Tourism in Gordon College.
Dean, College of Hospitality and Tourism Management
44

In this connection, we would like to request for you to be a respondent as part of the
study and we hope that you will take time answering the questions honestly. Rest
assured that all data gathered will be treated with utmost confidentiality and will be
used for academic purposes only.

Your approval and cooperation to conduct this study will be greatly appreciated.

Sincerely,

Angelica R. Arcilla
Carl Francis Cariaso
Mikee Anne Ulanday

Noted by:

Dr. Roel P. Anicas

Research Instructor, Gordon College
 

Approved by:

Mr. Mark Alvin V. Lazaro

45
46
47
48
 49

Appendix C
The Instrument
SURVEY-QUESTIONNAIRE

THE IMPACT OF INFLATION IN ECONOMIC GROWTH OF SELECTED

HOTELS IN SUBIC BAY FREEPORT ZONE

I. Profile of the Hotel

Name of the Hotel:

Category of the Hotel:
Length of Existence:

DIRECTION: Kindly provide the necessary answers for the researchers

to gather needed information.

1. How many employees do this hotel has for the year….

2014 2015 2016 2017 2018

         
 50

2. How many of them are contractual/permanent employees…

Contractual Permanent

   

3. What is the total income of this hotel for the year…

2014 2015 2016 2017 2018

         

4. How many tourists arrived in this hotel for the year…

2014 2015 2016 2017 2018

         

II. Impact of Inflation

Direction: To be filled by the manager. For each statement, kindly put a check
mark that best fit your opinion using the following ratings.

5 - Strongly Agree
4 - Agree
3 - Slightly Agree
2 - Disagree
1 - Strongly Disagree

1. IMPACT OF INFALATION TO THE EMPLOYEE 5 4 3 2 1

1.1 Reduced the number of employees          

1.2 Left wages unchanged          

 51

1.3 Increases in employees’ wages          

1.4 Difficulty in recruiting staffs          

1.5 Inflation affects the number of workdays of the employees          

2. IMPACT OF INFALATION TO TOURIST ARRIVAL          

2.1 Decrease sales.          

2.2 Inflation is the main factor affecting the number of tourists

         
visiting the establishment.

2.3 A high level of inflation means low number of tourist.          

2.4 Inflation affects tourist spending in establishment.          

2.5 Inflation hinders the travellers to travel because of

         
petroleum hike.

3. IMPACT OF INFALATION TO THE STRTAEGIES OF

         
MANAGEMENT

3.1 Promoted greater efficiency and cost-cutting          

3.2 Reconsider new suppliers of raw materials and

         
procurement content

3.3 Increase utility costs          

3.4 Delays or changes in plans for capital investments          

3.5 Increases room rates          

3.6 Enhance after-sale service          

3.7 Inflation causes shortage of suppies leading to lower count

         
of tourist arrivals
 52

3.8 There is a need to change room and service rates for high
         
inflation

3.9 A high percentage of inflation causes shortage of supplies

         
for a establishment

APPENDIX D
DOCUMENTATION
53
 54

ANGELICA R. ARCILLA
Lot 5 Block 8, Casa Mia 2,Subic Zambales
Contact No. 09475315713
Email Add: angelicaarcilla1998@gmail.com

EDUCATIONAL ATTAINTMENT:

Tertiary : Bachelor of Science in Tourism Management

Gordon College
Tapinac Sports Complex East TapinacOlngapo City
2016 - 2019
Bachelor of Science in Tourism Management
Far Eastern University
Nicanor Reyes Sr. St., Sampaloc, Manila
2015- 2016
Secondary : Josephine F. Khonghun Special Education Center
Wawandue Subic Zambales, 2209 Subic, Zambales
 55

2012 -2015
Primary : St. Anne School of Subic
National Rd, Mangan Vaca, Subic, 2209 Zambales
2005 - 2006
St. William's School of San Marcelino Inc.
San Marcelino, Zambales
2006 - 2012

Date of Birth : December 21, 1998

Age : 19
Civil Status : Single
Citizenship : Filipino
Religion : Roman Cathoilic
Weight : 53
Height : 5’5
Mother’s Name : Josephine RoncalDe dios
Father’s Name : Dante G. Arcilla

CARIASO, CARL FRANCIS B.

Mabayo, Morong, Bataan
Contact no.: 09298340189
carlfranciscariaso@gmail.com

EDUCATIONAL BACKGROUND

Tertiary: Bachelor of Science in Tourism Management

Gordon College
East Tapinac Sports Complex, Donor St. Olongapo City
2019 – Present
Bachelor of Secondary Education major in English
East Tapinac Sports Complex, Donor St. Olongapo City
2015 - 2016
Bachelor of Secondary Education major in English
Bataan Peninsula State University
Balanga, Bataan
2014 - 2015
 56

Secondary: Morong National High School-Mabayo Annex

Mabayo, Morong, Bataan
2010 – 2014
Elementary: Mabayo Elementary School
Mabayo, Morong, Bataan
2004 – 2010

Name : Carl Francis B. Cariaso

Gender : Male
Date of birth : August 31, 1997
Place of birth : Morong, Bataan
Height : 5’7
Civil Status : Single
Father : Resty P. Cariaso
Mother : Maricar B. Cariaso
Religion : Born Again Christian
Citizenship : Filipino

MIKEE ANNE A. ULANDAY

14 Wood House Street, Gordon Heights, Olongapo City
Contact No: 09481290615
mikeeulanday@gmail.com

EDUCATIONAL BACKGROUND:

Bachelor’s Degree : Bachelor of Science in Tourism in Management

Gordon college
Tapinac Sports Complex, Donor Street ,East
Tapinac, Olongapo, 2200 Zambales
2019-Present
Secondary : Subic Bay College Inc.
SBCI MAIN BUILDING, #3 W 18th St,
Olongapo, 2200 Zambales
2011 - 2015
Elementary : Gordon Height I Elementary School
 Kauffman St, Olongapo, Zambales
 57

2005-2011

Place of Birth : Olongapo City

Date of Birth : November 20, 1998
Religion : Roman Catholic
Gender : Female
Civil Status : Single
Citizenship : Filipino
Religion : Catholic
Height : 5.3
Weight : 45lb
Mother's Name : Ana Marie E. Ulanday
Father's Name : Michael R. Ulanday