2021 Hotel Sector Briefing Presentation

HOTEL SECTOR BRIEFING
August 18, 2020, 8:00 AM – 12:00 NN
#SGVforABetterPhilippines
Agenda
Topic Duration Facilitator
1. Introduction 15 Minutes Ms. Eleanore A. Layug
2. Philippine Economic Updates 20 Minutes Mr. Alex Dacanay and
Ms. Alma Placido
3. Hospitality Industry Updates
• Hotel Industry Trends 20 Minutes Mr. Joey Bondoc
• Hotel Sector Profile 20 Minutes
Ms. Grail R. Rosario
• SGV Hotel Clients 5 Minutes
• Disruptors in the Industry and Hotel Industry’s New Normal 10 Minutes Ms. Ailyn D. Santiago
4. Hotel Operations Background
• Hotel Owners/Operators Structure
• Revenue Streams 10 Minutes Ms. Ailyn D. Santiago
• Key Performance Indicators/Measures
5. Accounting Considerations of the Coronavirus Outbreak
• Going Concern
30 Minutes Mr. Flloyd P. Dela Cruz
• Impairment Assessment of Non-financial Assets
• Financial Instruments 10 Minutes
• Lease Concessions 10 Minutes Ms. Karen Joan Z. Cunanan
6. Common Industry Issues 10 Minutes
7. Tax/Regulatory Updates 40 Minutes Mr. Meynard L. Sardalla
Page 2 Hotel Sector Briefing

Philippine Economic
Updates
Page 3
Philippine Economic Update
The Philippine economy grew over 6.0% a year in 2015-2019 before
contracting by 9.0% in 2020 S1
Real GDP growth in %, 2015-2020S1
►A low-middle-income economy:
8.0
GDP/capita of USD3,485 in 2019, 6.0
6.9 6.7
GNI/capita of USD3,850 and 4.0
2.0
6.1 6.3 6.0
GDP/capita (PPP) of USD9,980. 0.0
► More households spending on

-2.0
-4.0
more discretionary goods and -6.0
-9.0
-8.0
services. -10.0
2015 2016 2017 2018 2019 2020S1
Source: PSA National Accounts August 2020

Real GDP growth, %
Real GDP growth among selected Asian peers, %
Agency 2020F 2021F 2020F 2021F
8.0
GOP DBCC (5.5) 6.5 – 7.5 6.0
6.2 6.5 6.5 4.1 6.8
7.4
4.0 5.0 5.3
1.8
ADB (3.8) 6.5 2.0
0.1
0.0
World Bank (1.9) 6.2 -2.0

-4.0
-1.0
-4.0 -4.0 -3.8

IMF (3.8) 6.8
-6.0
Developing Asia India Indonesia Malaysia Philippines Vietnam China
Sources: DBCC 2020; ADB ADO June 2020; WB Economic Source: Asian Development Outlook Supplement June
Update June 2020, IMF WEO June 2020 2020
Page 5
Key economic growth drivers
Remittances and FDI inflows dropped, BPOs slowed down
Consumer spending Overseas remittances Offshoring revenues FDI Inflows
(in trillion PhP) (in billion USD) (in billion USD) (in billion USD)
7%
9% 4%
30 21 22 8%
13.9 20 21
12.9 29
11.6 17 10.3
10.7 28 9.8
9.8 8.3
27 7.6
5.6
26
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019* 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019*
► Grew 9% a year to PhP14.3 ► Grew 4.1% to USD30.1 billion ► Increased 4.7% to USD22.4 ► Reached USD7.6 billion in
trillion or USD268 billion in in 2019. billion in 2019. 2019, or 23.2% decrease from
2019, or three-fourths of GDP. ► Fell 6.4% to USD11.6 billion in ► Slowed down to 1.3% to USD4.8 2018.
► Contracted 5.5% for PhP6.4 Jan-May 2020. billion in 2020 Q1. ► Contracted by 32.1% to
trillion in 2020 Sem1. ► 300K OFWs expected to ► BPO (workers) struggling from USD2.0 billion in Jan-Apr
► Inflation 2.5% for 2019, which return in the next 3 months work-from-home (WFH) 2020.
was maintained for Jan-July ► 200K/500K “Abot-Kamay ang arrangements.
2020. Pag-Tulong sa OFWs” ► Two offshore gaming
approved. companies, including Suncity
Group, have left the country
Sources: BSP, IBPAP, PSA websites
Page 6
COVID-19 trends and impact to Philippines
Unabated COVID-19 rise disrupts community mobility
► Global cases: 21.5 million Community Mobility Changes Report, in %

Deaths: 772 thousand
PHIL NCR CAR M Baguio
► Philippines cases: 161 thousand
Deaths: 2,665 Retail and
-53 -65 -59 -60
Recreation
► The Philippines ranks 22nd out Grocery -27 -33 -40 -43
of 188 countries affected by the COVID-
Parks -25 -59 -17 -61
19
► Ranks 1st in the WHO Western Pacific Transit Stations -64 -81 -38 -52
region (ahead of China).
Workplaces -47 -60 -43 -49
► Most affected regions (Cases): Residential +25 +30 +20 +23

National Capital Region 90.1 K
Calabarzon 21.9 K
Central Visayas 18.5 K Source: Philippine Mobility Report August 11 2020
Central Luzon 5.1 K
Sources:
Johns Hopkins Coronavirus Center, accessed Aug 17 2020
WHO Western Pacific Region, accessed Aug 17 2020
Department of Health, accessed Aug 17 2020
Page 7
GDP contracted by 9.0% in 2020 S1
Lockdowns shut down and disrupt business operations
► Agriculture sustained minimal growth.

► Industry declined with contractions in all four sub-sectors.
► Services suffered declines across sub-sectors except for communications, finance, and public administration.
GDP by industrial origin/sector GDP growth by industrial origin, %
PhP18.6 trillion
(in % share) in 2019 Industry/Sector 2019 S1 2020 S1
Utilities 3% Mining 1%
Agriculture 0.6 0.6
Mining 9.1 (22.9)
Publ Manufacturing 3.6 (12.5)
Transportation 6%
ic Construction 2.1 (20.3)
adm
in Utilities 5.9 (0.9)
5% Manufacturing 18%
Transport 6.4 (36.6)
Accommodation 5.5 (41.2)
Construction 8% Communications 7.6 5.9
Trade 7.8 (6.3)
Finance 9% Trade 19%
Finance 11.4 7.9
Professional services 2.2 (10.4)
Real estate 5.0 (11.5)
Agriculture 8% Public administration 11.5 7.1
Education 8.8 (6.3)
Real Estate 13% Health & social work 1.1 (5.9)
Other services
10% Other services 6.7 (37.0)
GDP 5.6 (9.0)
Page 8
The COVID-19 Impact on Philippine business
Impact on firms, operations, financials, and workers
► Two-thirds of firms immediately suspended ► Regular workers granted leave or hours and salaries
business activities, the rest cut their operations by reduced than laid off.
half. Sales of firms declined sharply. ► Half of firms suspended wage payments, more
► Over one-third of firms face product supply pronounced in microenterprises, the trade sector,
bottlenecks due to slow customs clearance, fewer and in NCR.
operating suppliers, limited logistics trucks/drivers, ► Work-from-home not a feasible option for workers in
checkpoints and border shutdown, and most firms, more pronounced in microenterprises,
international suppliers problems. the accommodation & food, manufacturing,
► About two-third of firms are running out of cash to agriculture, construction, and trade sectors.
cover operations. The more significant financial ► Firm assistance to employees include: vitamins and
problems are paying staff wages and social hygiene products, PPEs like masks, accommodation
security charges, repayment of loans, rents, and near workplace, shuttle services, leave credits, and
payments of invoices. internet allowance.
► Most firms rely on their own funds and/or retained
earnings, borrowing from close relatives, business
partners, and informal money lenders during the
ECQ.
Source: ADB The COVID-19 Impact on Philippine Business, July 2020
Page 9
Consumer spending decreased by 7.8% in 2020 S1
Restrained mobility cuts down jobs and livelihood activities
► Slow downs in essential goods and services like food and beverages, housing and utilities, and communication
► Big drops in non-essential categories like restaurants and hotels, recreation, alcoholic beverages, clothing, and
furnishings.
Consumer spending by category
Growth of consumer spending by category, % PhP13.9 trillion
(in % share) in 2019
Category 2019 S1 2020 S1
Food & beverages 5.7 3.5
Clothing 1%
Housing & utilities 6.0 4.6 Alcoholic bev & Others 13%
tobacco 1%
Transport 4.4 (33.8)
Recreation 2%
Education 13.3 (6.1)
Communication 3%
Restaurants & hotels 5.7 (39.0)
Furnishings 4.0 (15.9) Health 3%
Food & non-
Communication 7.0 6.3 Furnishings 4%
alcoholic
beverages 42%
Health 5.0 (1.5) Resto & hotels 4%
Recreation 7.4 (31.9)

Education
Alcohol beverages, tobacco (2.6) (23.9) 4%
Clothing 4.8 (20.4) Transport 11%
Others 7.4 (3.8)

Housing & utilities
Total spending 5.9 (7.8) 12%
Page 10
Households focused on essential goods and services
Government extended SAP to over 20M households
2018 Household Final Consumption Expenditure (HFCE)
Misc goods & svcs
Restaurants & hotels
Education
Recreation & Culture
Communication
Transport
Health
Household furnishings
Housing & utilities

Clothing & footwear
Alco beverages, tobacco
Food & non-alcohol bev.
Ave. Income 97 123 143 168 192 224 263 316 406 760
per Household
(‘000)
Subsistence Poor Near poor Partly skilled Skilled Professional Middle Class
Source: HFCE 2018, Philippines Statistics Office
Page 11
Philippine Program for Recovery with Equity and Solidarity (PH-PROGRESO)
Stages and Key Features of PH-PROGRESO
Emergency Stage Recovery Stage Resiliency Stage
Period March to May 2020 June to December 2020 2021 onwards
Issued or Proposed 2021 & 2022 GAAs and
Bayanihan I Bayanihan II
Measures Other Measures
• Budget and procurement
flexibility
• Budget and procurement flexibility • 2021 and 2022 budgets attuned to
• Subsidy to poor and • Better targeted and implemented actual needs
low-income households Bayanihan programs to raise income • Structural reforms to prepare for
• Support for small businesses and create jobs the new normal, including resilience
• Support to key sectors (e.g., • Reprioritization of 2020 budget to disasters and pandemics
Key Features agriculture and OFWs) • Resumption of Build, Build, Build • Support Balik Probinsya, Bagong
program priorities Pag-Asa program (decongestion of
• Health system, capacity • Liquidity and equity infusion, and major urban centers, balanced and
and insurance guarantee through the financial resilient regional development).
• Support to front liners. sector to support firms
• Targeted tax incentives.
Source: NEDA, President’s Penultimate Report to the People 2016-2020
Page 12
Enabling legislative and reform measures
Enabling Legislative and Reform Measures
Measure Purpose
Bayanihan to • Supplement the Bayanihan to Heal as One Act

Recover as One Act (Bayanihan II) • Include PhP140-billion funding to address the COVID-19 pandemic
• Cut the corporate income levy to 25 percent

Corporate Recovery and Tax • Extend net operating loss carryover to to five years
Incentives for Enterprises • Provide a sunset provision of up to nine years for registered business activities enjoying the five
(CREATE) Act percent gross income earned incentive
• Afford more flexibility for the government to grant incentives
Rural Agricultural
• Remove the distinction between agrarian and agriculture to enhance the access of rural
and Fisheries Development
communities to private sector financing
Financing System Act
Source: NEDA and DOF, President’s Penultimate Report to the People 2016-2020
Page 13
Enabling legislative and reform measures
Enabling Legislative and Reform Measures
Measure Purpose
Financial Institutions Strategic • Set mechanisms to allow banks and other financial institutions to dispose of non-performing
Transfer (FIST) Act loans and assets
Government Financial Institutions

• Provide financial assistance and access to distressed enterprises, including MSMEs and
Unified Initiatives to Distressed
strategically important companies
Enterprises for Economic Recovery
• Allow the creation of a special holding company to assist strategically important companies.
Act
Source: NEDA and DOF, President’s Penultimate Report to the People 2016-2020
Page 14
Towards the “New Normal” Philippine Development Plan (PDP) 2020 - 2022
Banner Programs
Food security Enhanced BBB Digital economy
Health systems and government
Balik-Probinsya
improvement
Page 15
The tourism industry as a whole exhibited exemplary growth and has become a
vital part of the economy
1 The Philippines ranked 75 in Travel & Tourism Competitiveness Report
► In the 2019 Travel & Tourism Competitiveness Report (TTCR), World Economic Forum (WEF) said the Philippines now
ranks 75th out of 140 countries.
► The Philippines had the fastest rate of improvement, moving up four places to rank 75th globally.
2 Share of Tourism to GDP grew in 2019

► In 2019, the contribution of Tourism Direct Gross Value Added (TDGVA) to the Philippine economy as measured by
the Gross Domestic Product (GDP), is estimated at 12.7%.
► The TDGVA amounted to PhP2.5 trillion in 2019, higher by 10.8% compared to PhP2.2 trillion in 2018.
3 Employment in tourism increases further in 2019

► Employment in tourism was estimated at 5.7 million in 2019, higher by 6.5% compared to 5.4 million in the previous
year.
► Share of employment in tourism industries to total employment in the country was recorded at 13.5%.
4 All-time high international tourist arrivals in 2019

► The Philippines' all-time high 8.2 million international tourist arrivals in 2019, contributed USD9.3 billion or
PhP482.2 billion in visitor receipts, 20.8% higher than the 2018 figure of USD7.7 billion.
► The Philippines trails four of the 10 ASEAN member countries in terms of tourist arrivals, namely Indonesia,
Malaysia, Thailand and Singapore.
5 Government support vital for accommodation sector growth

► The number of hotels grew from around 7,100 in 2012 to around 10,550 by 2019 as the government’s
investment incentives continued to yield dividend.
Source: WEF, PSA, DOT, Fitch Solutions

Page 18 18 August 2020 Hotel Industry Briefing #SGVforABetterPhilippines
Heavy co-dependence across various trading groups in the tourism industry
poses high exposure to disruption
Contraction in accommodation, food services, and
transportation in 2020 Q2 is mainly attributed to
Tourism Hotel suppliers Food & Beverage Local Government the travel ban and community quarantine
enforced as a response to the pandemic.
OTAs and other intermediaries COVID-19 restrictions on tourism sector*
Independent hotels
Tour operators hotels Hotel brands
Gross Value Added
Tour Growth Rates, at Constant 2018 prices
Operators
transfers 50.0
Airports 7.6 3.5
-
Tour Operators
Airlines Hotels
Coach transfer
(50.0)
Independent Flight
Operators
TRAVEL ECO-SYSTEM business
(100.0) (73.4)
Accommodation Food Service
(64.9)
Flight and Airport Transfers/

Flight booking operators logistics Private car hire 2019 Q2 2020 Q2
intermediaries
Other
Gross Value Added in Transportation
ground
Oil/ jet Cruises/ other Growth Rates, at Constant 2018 prices
transport
fuel 50.0 17.7
2.2 11.8
prices
Tour operator cruises -
Large cruise business Bespoke holidays/
cruises (50.0)
(100.0) (65.6) (72.8)
(98.3)
$
(150.0)
Land Water Air
Fuel prices 2019 Q2 2020 Q2
Ship yards Nautical regulatory bodies
*Note: Statistics may be negatively impacted by the reversion to MECQ in NCR, Cavite, Laguna, Bulacan, and Rizal.
Source: EY, PSA

Amid the COVID-19 pandemic, the tourism industry has been experiencing a
decline in revenue due to the travel ban and lockdown
The Philippine
tourism industry
has been
bleeding due to
the COVID-19
pandemic Due to the pandemic, the tourism Q1 2020 international travel has The hotel sector has been on the
sector started to decline declined decline even before the lockdown
Due to the pandemic, the ► 81% of the total tourism companies ► Chinese tourists accounted for 1.5 ► Hotel and accommodation
in the Philippines, employing about million or 18.0% of the total tourist companies experienced booking
tourism industry experienced 222,424 workers, were temporarily population, which was at 8.3 million cancellations even before the
closed. in 2019. lockdown was imposed, which
40.6% decrease in revenue resulted in a significant decrease in
► The remaining 19%, employing ► It was estimated by the Department
from foreign travels in Q1 about 88,910 workers, continued of Tourism (DOT) that in 2022, the
revenue and sales.
2020 to operate under flexi work total tourist population would ► It is estimated that hotels are
arrangements. increase to 12 million, 4 million of currently experiencing a 30% - 50%
which are Chinese tourists. decline in room occupancy rate.
Companies expect that ► Majority of these are considered
the occupancy rate at the SMEs and micro-enterprises. As of ► However, due to the pandemic, this ► In March, Waterfront Philippines,
2018, there are a total of 144,535 number is expected to decrease. Inc., which owns and operates two
end of the year would be MSMEs that are engaged in hotels in Cebu, reported that on
decline by 40% Accommodation and Food Service average, room occupancy declined
Activities. by 55% on average.
Source: Oxford Business Group, The Philippine Star, Business World, Leechiu Property Consultants, DTI, DOT, Business Mirror

Update on rehabilitation programs for tourism destinations and travel
restrictions in other countries
Update on Rehabilitation Programs Inbound Travel Restrictions as of 16 August 2020
Foreign tourists are not allowed to enter the Philippines aside from
Boracay Island - Ongoing
Filipinos, only holders of permanent immigrant visas and foreign
► Beach easement recovery 67% accomplished spouses, minor dependents, and foreign parents of Filipino minor
► Improvement of the Boracay Circumferential Road 50% accomplished children.
► Ongoing rehabilitation and recovery of wetland ecosystems
Filipinos
► Ongoing implementation of the Boracay Drainage Improvement Project % Share of
Filipinos allowed to living/working/strand
visitor arrivals
Manila Bay - Ongoing leave PH may (✓) or ed in the following
Country by country of
may not (✘) enter the countries may (✓) or
► Decreased coliform levels in major Manila Bay Outfalls residence in
following countries may not (✘) leave the
Daily treatment of about 205 million liters of wastewater 2019
► following countries
► Dredging and clean-up of the Tullahan-Tinajeros (TuTi) River System
► Transforming the Baseco Beach shoreline into a sustainable coastal area Korea 24.1 ✓1,4 ✓1
► Relocation of 42,886 informal settler families (ISFs) residing in danger zones China 21.1 ✘2,3,4 ✓1
Burnham Park – Pipeline USA 12.9 ✓1 ✓
Japan 8.3 ✘3,4,5 ✓1,4
► Allocated budget of PhP480 million had been repurposed for national health
programs which aims to contain the spread of COVID-19 Canada 2.9 ✘3 ✓
► Close talks with the Department of Tourism and the Asian Development Bank for Australia 3.5 ✘3, 5 ✓1
the rehabilitation funding. Taiwan 4.0 ✘2,3,4 ✓1
United Kingdom 2.5 ✘3,4 ✓
Germany 1.3 ✘3,4,5 ✓1, 2
Malaysia 1.7 ✓1,2,4,5 ✓1, 5
India 1.6 ✘3 ✓1
Singapore 1.9 ✓4,5 ✓1, 5
1Subject to flight availability and other special arrangements/commercial flights
2Transit allowed
3Except diplomatic and UN passport holders/citizens of destination country/individuals with work or residency
permits/those with special permission by the foreign government/and/or/for essential travel purposes
4Subject to the country’s medical protocols on arriving and departing international passengers
Source: DENR, DFA, DOT 5Subject to approval from authorities/host government/destination country’s visa regulations at this time
*See full list in this link: https://www.dfa.gov.ph/dfa-news/statements-and-advisoriesupdate/27305-public-advisory-dfa-reports-

40-countries-have-relaxed-inbound-travel-restrictions
The government has actively responded to mitigate the effects of the COVID-19
pandemic to the tourism industry
Policies Expected outcome
Accelerated Recovery and Investments Stimulus for the Economy (ARISE)

1 Mitigate the impact of COVID-19
► ARISE will help the tourism industry to recover from the
► Stimulus package that aims to protect Filipino families and jobs, assist workers pandemic by implementing monetary policies beneficial to them
and business entities impacted by COVID-19 such as interest-free loans and issuance of loan guarantees.
► A total of PhP58 billion assistance is allocated to fund Tourism Response and ► ARISE will allow affected tourism companies to utilize resources
Recovery Plan to aid the revival of the tourism industry and empowerment of such as tourist tracking system for emergency response, IT
workers and businesses. resources for the improvement of tourism services and other
resources to mitigate the economic effects of COVID-19.
► Bayanihan II’s PhP10 billion allocation is expected to generate
2017 Investment Priorities Plan around PhP35 billion in economic activity for the industry.
► Amendments to the Modernization Policy and Specific Guidelines on tourism ► Bayanihan II will likewise provide wider access to credit facilities
industry to tourism enterprises and help finance the programs of the
tourism infrastructure and Enterprise Zone Authority (Tieza)
Bayanihan II ► Through the National Accreditation Standards, businesses will
► Provides assistance, subsidies and other socioeconomic relief while restoring be required to properly clean their facilities.
public trust and confidence in social economic institutions
► Allocated P10 billion to help the tourism industry recover
2 Attract local and foreign investments
► The 2017 Investment Priorities Plan will attract investments by
National Land Use Act giving an opportunity to be granted income tax holiday for a
► Intends to achieve environmental stability and ecological integrity, ensure a minimum of three years.
balance between resource use and the preservation of some areas with ► Through the National Accreditation Standards, investors will be
assured that the facilities that they will utilize will be well
environmental, aesthetic, educational, cultural, and historical significance. maintained.
► The CREATE bill will attract investors through the reduction of
National Accreditation Standards corporate income tax and grants of fiscal and non-fiscal
► Amendments to include additional measures related to sanitation, disinfection, incentives.
promotion of proper hygiene, and responsible information sharing for all
tourism enterprises. 3 Effective utilization of resources
► The National Land Use Act will make sure that land will be used
Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) accordingly by classifying the said resources to different
► Aims to aid the recovery of businesses negatively affected by the COVID-19 categories.
pandemic and enhance the ability of the Philippines to attract highly desirable ► Through the Investment Priorities Plan, unused resources could
potentially be productive due to the incentives given by the said
investments. plan.
Source: DBM, Congress, DOF, DOT

The tourism industry prepares to slowly reopen amid the pandemic
Hotels and restaurants operate to accommodate OFWs, stranded passengers, and

vulnerable workers
• Department Order No. 211 series of 2020 issued by the Department of Labor and Employment
(DOLE) provides guidelines governing the provision of hotel accommodation for distressed land
based and sea based Filipino workers during the period of enhanced community quarantine or
the OWWA Project Care.
DOT prepares for the reopening of Philippine tourist destinations

• During his State of the Nation Address, President Rodrigo Duterte called on Filipinos to help
boost the economy by traveling locally.
• The DOT continues to outline plans of action and protocols at every tourist site in the country,
particularly, the premier destinations of Palawan, Boracay, Bohol, Davao, and Baguio City.
Online Learning Program: Leadership Excellence Series (LES) 2020

• The DOT launched an online training program for the country's tourism stakeholders to
recharge and revitalize the country’s tourism industry players while offering creative ways to
retool and reskill them as they face the challenges and opportunities of the "new normal".
• The DOT has mounted 26 webinars since the project was launched last 17 April 2020.
Source: PNA, DOLE, DOT

The tourism industry is projected to recover from 2021 onwards
Tourist Arrivals & International Tourism Receipts Overnight Stays & Total Domestic Spending,
(2018 - 2024) Hotels and Restaurants (2018 - 2024)
10,000 12.5 80,000 600
7,500 10.0 500

60,000
400
5,000 7.5
40,000
300
2,500 5.0
20,000 200
0 2.5 2018 2019 2020f 2021f 2022f 2023f 2024f
2018 2019 2020f 2021f 2022f 2023f 2024f
Total domestic spending, hotels and restaurants, PHPbn
Total arrivals, '000 International tourism receipts, USDbn Total overnight stays, '000
► Due to border closures, flight suspensions, health concerns, and rising ► Total domestic consumption on restaurants and hotels will decrease by
economic uncertainty brought about by the COVID-19 pandemic, 51.3% in 2020 to PHP254.1bn as the hospitality sector businesses take a
international arrivals is expected to decrease by 65.4% in 2020. hit this year
► From 2021 to 2024, total arrivals is expected to increase by an average of ► This year, it is forecasted that the number of properties would decline by
30.7% y-o-y and by 2024, arrivals would total 8.3 million. 10.8% as the government incentives to limit bankruptcies in the
► It is expected that arrivals from the Asia Pacific region would drive the accommodation sector will cushion the shocks. However, from 2021 to
momentum in the aftermath of the COVID-19 pandemic. 2024, it is expected that the number of properties would grow by 3.4% y-o-y
► South Koreans is expected to remain as the primary source market over the to reach a total of 10,741 by the end of 2024.
next years. ► Overnight stays are set to fall from 72.8 million in 2019 to 26.9 million in
► Post-COVID, in order to effectively compete with neighboring countries, the 2020 before recovering to 76.6 million by 2024. Over the same period, the
Philippines will need to reinforce our promotional efforts, hotels average length of stay will also grow from 9.0 days in 2019 to 9.9 days by
investments, transport links and the domestic security apparatus. 2024, and occupancy rate will reach 68.3% in 2024.
► Due to the current administration’s favorable development incentives, it is
expected that investor sentiment for the medium-term outlook is brighter as
compared to this year.
*The forecasts presented were predicated upon the Covid-19 pandemic shocks subsiding and travel beginning from Q420, with industry outlook improving from Q121. If there is a second wave of infections in Q420/Q121, the medium-term outlook would have
further severe adverse consequences.
Source: Fitch Solutions
A resilient enterprise adopts a holistic framework for leading through
uncertainty and complexity
Promoting employee safety & well- We recommend
being
Supply chain (SC) resilience
Supply chain
Employee
Public health Information (CDC, WHO)
starting with
Third-party service providers health and
and global
well-being Support for impacted employees people-related
trade
issues before
moving to other
Business interruption Employee relations
Insurance & Talent and areas, which can
Supply chain claims Talent initiatives
Event cancellation
financial
recovery
workforce
Business traveler
be addressed in
any order.
Leadership and
Technology Customer Safety-based customer experience
Infrastructure framework communication safety and
and Direct to consumer and e-retail
Cyber resilience information brand
Digital customer channels security protection Packaging and delivery innovation
Disruption
Tax strategies
Regulatory/disclosures
Financial
Geopolitical and country risks Government and Investor trust
and public investor
Regulatory changes Liquidity, credit and capital
policy
Leadership and public policy Enterprise risk planning
engagement
Risk Risk identification
Scenario planning
Continuity and recovery
Response and monitoring
Source: EY
Players must look across the three horizons of the NOW, NEXT and BEYOND to
identify relevant positive actions
NOW NEXT BEYOND
Safeguard business continuity through Ignite recovery through business adaptation Deliver long-term value creation by
effective crisis response planning and stronger enterprise resilience reframing and transforming business
6 months 1 year and beyond
Impact diagnosis ► Continue crisis management and stakeholder ► Stage return to long-term productivity
management ► Lower cost structures long term and
► Operational continuity
► Customer bookings and ► Continue monitoring of regulatory increase agility
cancellations environment ► Re-engineer supply chain for lower risk
► Alternative sources of revenue ► Evaluate the impact and proportion of exposure and greater flexibility
(e.g., partnership with government business from countries / regions most ► Increase workforce flexibility
and BPO companies for affected by COVID-19
accommodation of OFWs and ► Optimize digital customer access
► Avoid financial distress, use state aid if
employees, respectively) ► Establish stronger risk monitoring and
needed
► Working arrangements management for the future
Essential vs non-essential ► Secure viable alternate route to market
► ► Analyze mega trends and implications for
spending ► Hyper-communication with clarity of strategy business model
► Government policies under new and direction to employees and stakeholders
► Start to revisit product/ service strategies
normal ► Put reaction schemes for continued supply based on shifting customer behaviors
► Supply chain resilience chain disruptions in place
Liquidity and solvency pressure
► Identify opportunity for growth via
►
► Reset viable “new normal” financial baseline acquisition or other strategic partnerships
► Availability of cash buffer
► Reduce cost and increase cash short term amid increasing industry consolidation and
► Access to credit
► Sustain minimum viable operational levels right-sizing of brand portfolios
► Collectability and recoverability of
receivables ► Focus on communication based on needs of
► Obligations (i.e., salaries, loans) each function/stakeholder
Source: EY
Business plan revalidation and transformation, with focus on trust and safety,
will be the likely catalyst of the revival of tourism under the “new normal”
Key pillars in creating an environment of trust and safety for clients through people, communications & governance, finance and operational
management, ultimately leading to business plan revalidation and business transformation in order to adapt to uncertainty and complexity in
the industry post-COVID19.
REVIVED TOURISM INDUSTRY UNDER “NEW NORMAL”
TRUST SAFETY
BUSINESS PLAN REVALIDATION BUSINESS TRANSFORMATION
People Communications & governance Finance Operations

► Proper dissemination of policies, ► Reevaluation of internal spending ► Alternative use of assets
► Cross-training of staff and
procedures and information on the Investment in technological ► Enhanced routine cleaning and
personnel ►
disease infrastructure (e.g., smart rooms, sanitation procedures
► Provision of proper PPE
► Preparation of Integrated guest-facing smart kiosks, keyless ► Contactless services &
► Proper scheduling and rotation of Emergency Preparedness entry, mobile amenities) experiences (check-in, check-out,
workforce Action Plan ► Identification of more resilient payments)
► Review of flexible sick leave Adherence to health and safety
► revenue streams, pricing models, ► Temperature and health screening
policies standards promulgated by and partnerships for guests and employees
► Provision of medical consultation relevant government agencies ► Brand & property consolidation ► Hotel redesign (e.g., optimized
benefits, mental and psychological Ongoing risk monitoring and
► floor plan for social distancing)
support reporting ► Grab-and-go F&B
Source: EY
Recent transactions
Value and implied EV/EBITDA multiple of recent transactions
Implied
Target Value (USD’m) Stake acquired
21.0 EV/EBITDA
19.1 Dusit Thani Public Company
Implied EV/EBITDA
16.3 5.0% 19.1

Limited
15.3 14.9
Kimpton Onyx Hotel 5.4 100.0% 15.3
8.0 Hotel Auberge GmbH 1.3 100.0% 8.0
Kimpton Hotel Palomar DC 141.5 100.0% 14.9
Jinmao (China) Hotel

-100 0 100 200 300 400 500 Investments and 411.7 33.2% 21.0
Management Limited
Value (USD’m)
Buyer Ananda Development Public Boylston Properties Safestay plc Service Properties Trust China Jinmao Holdings Group
Company Limited Limited
Dusit Thani Public Company Hotel Auberge GmbH provides Kimpton Hotel Palomar DC Jinmao (China) Hotel Investments
Target Kimpton Onyx Hotel operates a and Management Limited operates
Description Limited owns and operates hotels hotel and accommodation services operates a boutique hotel in the
and resorts in Thailand and hotel in Boston. in Germany. District of Columbia. hotels in the People’s Republic of
internationally. China.
Location Thailand USA Germany USA China
Date of 05 February 2019 15 November 2019 25 February 2019 12 June 2020

25 April 2019
Acquisition
Source: CapitalIQ
Hospitality Industry
Updates
Hotel Industry Trends

Hotel Sector Profile
SGV Hotel Clients
Disruptors in the Industry
Page 30 Hotel Industry’s New Normal
Hotel Industry Trends

Global Hotel Sector Performance for January to May 2020
Global Performance (Data in US Dollar)
Reflecting the continued

impact of the COVID-19
pandemic, hotel industry in
Asia Pacific, Americas, Europe
and Middle East/Africa
reported unprecedented
performance lows in the three
key performance metrics in the
first five months of 2020.
Source: STR Global, https://www.hotelnewsnow.com/Media/Default/PDFs/GlobalHotelReviewMediaVersionConstantCurrencyEdition_May_2020.pdf

COVID – 19 Timeline
Consistent with prior year forecast, the year The Trump Administration announces a
2020 for the hotel sector had a good start. temporary travel restriction barring US Hotel companies closes to help curb the
The hotel industry in US, Central and South entry by foreign nationals who had traveled spread of the virus outside of the initial
America, Europe and South Africa posted to China in recent weeks. The travel industry outbreak areas. The Macau government
growth across the three key performance begins to feel the impact of restrictions and suspends gaming operations on February
metrics. While Asia Pacific and Middle East cancellations due to flight cancellations, and 4; and by February 7, hotel companies are
regions posted mixed results. other early restrictions. closing properties.
January January February February

January
30 31 4 7 – 26
As the novel coronavirus (COVID-19) As the COVID-19 outbreak began in Wuhan,

spreads around the world and signaling an China, preliminary data shows hotel
impact beyond the initial outbreak in China, occupancy decline by 75% in Mainland
the World Health Organization (WHO) China. Performance during the Chinese
declares a global health emergency around Holiday period was significantly worsened by
the spread of the COVID-19. the outbreak of COVID-19.
Page 33 1 January 2014 Hotel Sector Briefing

With regards to the unfolding developments Wynn Resorts and MGM Resorts both announce the
around the spread of the virus, WHO closure of all Las Vegas properties starting 17 March.
designates COVID-19 as a pandemic. Disney, announces the closure of all Walt Disney World
The US Department of States issues a Global resort hotels and Vero Beach Resort on 20 March. The
Level 3 health advisory urging US citizens to U.S. Centers for Disease Control (CDC) calls for more
"reconsider travel abroad" due to the virus. group limitations, which spurs several state
governments to call for restaurants and bars to close.
February March March March March

7 – 26 11 14 15 16
On February 10, Hilton reports 150 hotels

March numbers show hotel declines across U.K. Prime Minister Boris Johnson
including 33,000 rooms have closed. On
the globe. On March 14, Spain's government advises citizens to avoid gatherings and
February 13, Wyndham Hotels and Resorts
announces that hotels are on a list of all non-essential travel. At the same
reports 1,000 hotels closure in Mainland
non-essential business that must close time, Canadian Prime Minister Justin
China. On February 17, InterContinental
effective immediately, reported by the Trudeau announces Canada will close its
Hotels Group reports 160 of its hotels in
Associated Press. borders to all non-citizens/non-
Greater China are partially to fully closed. On
The epicenter of the COVID-19 outbreak permanent residents, except for U.S
February 26, Marriott International reports
starts to shift to Western Europe. citizens.
90 of its hotels in Greater China are closed.

Australia and New Zealand closed borders to Majority of hotels in the Middle East and World regions record further
non-citizens/residents, with some Africa dropping below 30%. Dubai hotel performance drops in April.
exceptions. The ban is in place because most occupancy dropped 75% in February and Data shows occupancy in London and
COVID-19 cases in the country had come March, and Saudi Arabia’s holy cities of Dublin was down 80% for the week
from overseas. The U.S Department of State Makkah and Medina hit all-time occupancy ending 22 March, compared to the
raises the global travel advisory to Level 4, lows, according to STR, likely because visas same week in 2019. In Europe, Prague
the most severe level, which advises U.S to Muslim pilgrims were suspended in 27 recorded a 97% decline for the same
citizens to avoid all international level. February. week.
March March March March

April 1
17 – 23 21 – 24 26 28
States in the US adopt varying levels Mainland China shows early sign of recovery. Some
of partial to full lockdown protocols, of the demands from corporate travel, primarily
which include hotels in some locations. within the same province, as well as small-scale
On March 24, India's prime meetings. Additionally, hotels are seeing business
minister announces "a total ban of coming from those travelers quarantined after returning to
out of your homes" for 1.3 billion people China from other countries as well as those
living in India for 21 days. returning to cities for work.

Germany, the Czech Republic, Norway, South Korea and China strike a bilateral agreement to
Poland and Albania join Italy, Spain, Austria facilitate some business travel between the countries by
and Denmark among countries lifting some easing some border controls. Beginning 1 May, South
coronavirus-related lockdown restrictions, Korean business travelers are free to travel to seven
Restrictions around hotels, travel, large provinces and three major cities in China, and Chinese
gatherings and vacation home usage vary by business travel to South Korea is open, with health-
country and region in most cases. screening protocols in place.
April April April

April 3 May 4
20 24 29
Four billion people – roughly half the Alaska, Oklahoma and Georgia begin to Many countries and states around the
world’s population – are some form reopen their economies to select world begin to ease pandemic-related
of stay-at-home or shelter-in-place businesses, lifting some restrictions on restrictions for various types of
order, according to the New York hair and nail salons, restaurants and businesses, while others continue to
Times. others gradually lift restrictions

U.K executives says the country may eventually
allow travelers from countries with low coronavirus
infections rates to enter. On 16 May, Lithuania,
Latvia and Estonia opened a “travel bubble”. Some
EU countries have lifted some restrictions for
controlled business or government travel.
Government leaders of Australia and New Zealand
agreed they would pursue a travel bubble once
travel is deemed safe.
May May
16 18
Massachusetts and Connecticut, the final

states to outline reopening plans, are
partially reopening this week. States across
the U.S. continue to vary in their approaches
to reopening, with hospitality sector
reopening guidelines varying widely.

Hotel Sector Profile - Philippines
March March March

April 24
12 16 19
President Duterte announced The President placed Luzon Foreign Affairs Secretary The President announced the
a general community under enhanced community Teodoro Locsin announced extension of the ECQ in
quarantine (GCQ) in the quarantine (ECQ) until April the temporary suspension of selected areas until May 15.
National Capital Region (NCR) 12. Then Presidential visa issuance and visa-free Other areas will be placed
and Cainta, Rizal from March spokesperson Salvador Panelo entry privileges of under GCQ on May 1. Areas
15 until April 14. Land, relayed instructions that local foreigners. DILG orders LGUs under GCQ will observe more
domestic sea and air travel government units are required to mobilize Barangay Health relaxed quarantine rules and
coming to and from these to implement specific health Emergency Response Teams health protocols under the
areas were suspended. measures. and Isolation Units for ‘new normal’ will be put in
asymptomatic virus-positive place.
individuals.
Under GCQ, ECQ, and MECQ, no hotels or similar establishments shall be allowed to operate, except those
accommodating the following:
• For guests who have existing booking accommodations for foreigners
• Guests who have existing long-term bookings
• Distressed Overseas Filipino Workers (OFWs) and stranded Filipinos or foreign nationals
• Repatriated OFWs in compliance with approved quarantine protocols
• Non-OFWs who may be required to undergo mandatory facility-based quarantine
• Health care workers and other employees from exempted establishments under the guidelines
Source: Department of Tourism (2020) / Inter-Agency Task Force on Emerging Infectious Diseases

April 30 May 12 May 14 May 16

Areas that remained under Malacañang confirmed that The Regional Inter-Agency Task The IATF amends order,
ECQ include NCR, Pangasinan, NCR, Laguna and Cebu City Force on COVID-19 (RIATF) retains ECQ in the cities of
Benguet (with Baguio City), will be placed under modified postponed the shift to GCQ in Cebu and Mandaue from May
Region 3 (except Aurora), enhanced community selected areas in Region 3: 16 to 31. Six other local
Region 4A, Iloilo (with Iloilo quarantine (MECQ) until May Pampanga, Bulacan, Bataan, government units are added
City), Cebu (with Cebu City), 31. Other areas with low to Nueva Ecija and Zambales will to Metro Manila and Laguna
Bacolod City and Davao City. moderate risks will be placed instead be placed under MECQ as MECQ areas while the rest
under GCQ or modified GCQ until May 31. Only Tarlac and of the country is under GCQ
(MGCQ) Olongapo City will shift to GCQ. until May 31.
Total inbound revenue for the
• On June 1, hotels may again operate, but only at 50 percent operational capacity in areas, which will be
period January to May 2020 placed under modified general community quarantine (MGCQ), according to the Department of Tourism.
P81.05 billion • Prior to the resumption, businesses offering accommodations to tourists must first secure a DOT certification
of authority to operate. This is required of all accommodation establishments, which will commence
commercial operations under all types of community quarantine.
a decrease of • Upon business resumption, accommodation establishments operating under MGCQ with checked-in guests
60.56% are required to report to the DOT every Friday the number of staff comprising the skeleton workforce;
number, nationality, classification, and length of stay of guests; and the details about the employees of
Total inbound revenue for the business enterprises and companies who are booked in other temporary shelters. In addition, establishment
period January to May 2019 owners are also mandated to produce the same report when accepting food orders for delivery and take-out
P205.5 billion services.

May 31 July 16 August 1 August 2

The ECQ in Luzon ends, and Cebu City shifts to MECQ. Cebu City downgrades to GCQ In response to the medical
most local government units Meanwhile, Metro Manila due to the decreasing number of groups' call for ECQ in the
downgrade to either GCQ or remains under GCQ for cases. Metro Manila remains country as a time out due to
MGCQ. another two weeks as it has under GCQ until August 15, the increasing number of
been since June 1, 2020. 2020. cases, the President
announced that Metro Manila,
Bulacan, Cavite, Laguna, and
Rizal will be under MECQ from
August 4 to August 18, 2020
In line with the ease of restrictions and quarantine protocols on cities and provinces since June, the following considerations related to
the hospitality industry were proposed:
• On July 1, government considered increasing restaurant dine-in capacity and resetting the level of permitted hotel activity in areas
under general community quarantine (GCQ)
• Restaurants were allowed to fill 30% of their dine-in capacity in areas under GCQ, and up to 50% in areas under MGCQ. Authorities
considered increasing capacity to 40% or 50% in areas under GCQ.
• DTI Secretary Ramon Lopez said in a briefing that he will also present to the IATF the possible reopening of travel agencies after an
industry association indicated that agencies have taken a big financial hit from refunding canceled bookings.

SGV Hotel Clients
Page 41
Makati Area
► Channel 2
► Channel 2

BGC, Parañaque, Alabang and Las Piñas Area

Manila and Pasay (Bay Area)

Ortigas and Quezon City Area

Central Luzon and Northern Luzon Area
► Channel 2
► Channel 2

Southern Luzon Area

Southern Luzon Area - Palawan

Central Visayas Area
► Channel 2

Western and Eastern Visayas Area

Mindanao Area

Hotels Under Development – Luzon
Seda Bay Area, Seda Arca South,

Project Wyndham Garden Solaire North Ibis Styles Hotel
Paranaque Taguig
Wellworth
Bloomberry
Properties and
Owner AyalaLand Hotels and Resorts Group Resorts Araneta Group
Development
Corporation
Corporation
Management Wyndham Hotels & Solaire Resort &

N/A AccorHotels
Resorts Casino
Rooms 350 200 235 Not specified 300
Opening Not specified Not specified 2021 2022-2023 2021

Hotels Under Development – Luzon
The Westin Manila,

Project GoHotels, Tuguegarao GoHotels, Naga Summit Hotel Naga
Sonata Place
Owner Robinsons Land Corporation
Management N/A Marriott International
Rooms 136 102 60 303
Opening 2021 2021 2021 2021

Hotels Under Development – Visayas and Mindanao
Hotel101, Sheraton Emerald Bay

Hotel101, Hotel101, Hotel101, Somerset
Project Cebu-Mactan Cebu Mactan Resort and
Boracay Bohol Palawan Gorordo Cebu
Airport Resort Casino
Worldwide
AppleOne
Owner Double Dragon Properties Corp Central Udenna Corp.
Mactan
Properties
Management Marriott
Hotel of Asia Ascott Limited Not specified
International
Rooms 1001 502 502 225 155 250 838
Opening Not specified Not specified Not specified Not specified 2021 2021 2022

Permanent Closure due to COVID - 19
Victoria Court – Chain of

Hotel Marco Polo – Davao Sun Cruises, Inc.
Hotels
Date of closure June 15, 2020 June 2020 May 16, 2020

Temporary Closure – Luzon
Best Western Plus

Hotel Seda Lio Club Punta Fuego The Ivywall Hotel
Puerto Princesa
Date of closure March 18, 2020 March 15, 2020 April 2020
Date of reopening No specified date August 2020 October 2020

Temporary Closure – Visayas and Mindanao
Radisson Blu Summit Hotel Dusit Thani Mactan

Hotel Feliz Hotel Boracay Go Hotels Davao
Hotel - Cebu Tacloban Cebu
March 19,
Date of closure May 1, 2020 March 22, 2020 March 25, 2020 March 19, 2020
2020
No specified
Date of reopening August 2020 September 1, 2020 No Specified date No specified date
date

Disruptors in the Hotel Sector
► Facial recognition
► Voice assistants
► Robots

Disruptors in the Hotel Sector
Corona Virus
Disease
(COVID) - 19

Hotels adapting to the 'New Normal'
Source: https://www.cbre.ie/-/media/cbre/countrycbrehotels/images/research/cbre-asia-pacific-hotels-update-june-2020.pdf?la=en and https://www.cbre.ie/-

/media/cbre/countrycbrehotels/images/research/cbre-asia-pacific-hotels-update-june-2020.pdf?la=en

► Use of UV Light for
sanitation
► Contactless payment
► Luggage misting

► Use of mobile app for

contactless check-in, keyless
room entry and guest
requests
► Disinfecting using
ultraviolet light
sanitation devices

► Protective barriers and at
reduced capacity
► Use of digital menu
► Contactless in-room dining

In Residence
✓ This serves as a highly-customized innovation in long-term accommodation.
Park Inn Hotels ✓ Room rates start at Php 1,100 per night, inclusive of tax and service charge, and additional
perks for a minimum stay of thirty (30) continuous nights at participating RHG hotels of
SMHCC.
Working-on-the Go Private Offices

Guests can enjoy the convenience afforded by the remote work arrangement.
Summit Hotels and
Home to Go Go Hotels
This addresses the needs of young urban professionals searching for budget-friendly
place in the city to stay that is near their place of work or school.
Page 64
Hotel Operations
Background
Hotel Owners/Operators
Structure
Revenue Streams
Key Performance Measures
Page 65
Hotel Operations Background

Owner Operated Hotel
Robinsons Land
Corporation
(Owner)
Summit Ridge Tagaytay Summit Galleria Cebu Summit Hotel Magnolia
Summit Hotel Greenhills Summit Hotel Tacloban Summit Circle Cebu
Summit Hotels and

Resorts
Page 67 (Hotel/Brand)
Managed Property AccorHotels
(Managing Company)
Philippine Plaza
Holdings, Inc.
(Property Owner)

Revenue Streams

Rooms
Group
Transient Contract
Others

Food and Beverage
Banquet,
In-room dining conference,
catering
Venue food Mini bar

Other Operated Departments
Swimming pool and beach
Golf course and pro shop
Tennis and pro shop
Health club and spa
Laundry and dry cleaning
Transportation
Retail store
Business center
Parking
Others

Miscellaneous Income
Cancellation fees
Commissions
Foreign currency transaction

gains/losses
Package breakage
Resort fees
Space rental and concessions
Others
Movenpick Cebu - Ibiza


Example of Management Report based from USALI

The Peninsula
Rooms Statistic and Occupancy Ratios

► Total Room Inventory ► Number of Guests per Category
► Rooms Available ► Total Guests
► Number of Rooms Occupied ► Arrivals
per Category ► Length of Stay
► Total Rooms Occupied

Nuwa
Operating and Profitability Ratios
► ROOMS
Occupancy Percentage Rooms Revenue per Available Room (RevPAR)

= Rooms occupied = Total Rooms Revenue
Rooms Available Room Available
Average Daily Rate (ADR)

= Total Rooms Revenue
Rooms Sold

Sofitel
Operating and Profitability Ratios
► FOOD AND BEVERAGES
Average Food Check Food Cost Percentage
= Total Food Revenue = Cost of Food Sales
Number of Covers Total Food Revenue
Average Beverage Check Beverage Cost Percentage

= Total Beverage Revenue = Cost of Beverage Sales
Number of Covers Total Beverage Revenue

El Nido Resorts
► OVERALL PROFITABILITY
► Gross Operating Profit
► Net Operating Profit
*As a result of the COVID-19 pandemic, the hotel properties have to consider the estimated cash
flows for going concern assessment.

Accounting
Considerations of the
Coronavirus Outbreak
Page 82
COVID-19 Considerations: Going Concern
Going Concern Considerations
Management Assessment: Entity’s ability to continue as a going concern
► Management takes into consideration the existing and anticipated effects of the pandemic on the
entity’s activities in its assessment of the appropriateness of the use of the going concern basis.
► Given the unpredictability of the potential impact of the outbreak, there may be material
uncertainties that cast significant doubt on the entity’s ability to operate under the going-concern
basis.
Reminders:
► Management should consider all available information obtained after the reporting date including
measures taken by Government and financial institutions (banks) that might have an impact to our
clients in their going concern assessment.
► Hotel operations are limited or for some are close under the ECQ/MECQ/GCQ period. Hotel’s are only
allowed to accept returning OFW’s, businesses that are allowed to operate (BPO’s, medical front liners)
and long-saying guests.

Examples of events or conditions that may cast significant doubt on the entity’s ability to
continue as a going concern:
External matters Internal matters Negative financial Other indicators

trends
• Legal proceedings or • Hotel operation • Default on loans
similar matters shutdowns/closures • Recurring operating
losses • Dividend arrearages
• Loss of key franchise, • Limited hotel bookings
license or patent • Negative working • Denial of usual trade
• Postponement of capital credit from suppliers
• Interest rate events
movement • Negative operating • Debt restructuring
• Low hotel occupancy cash flows
• Labor difficulties • Noncompliance with
rates
• Adverse key financial debt covenants
• Shutdown of food and ratios • A need to seek new
beverage outlets sources of financing or
to dispose of substantial
assets

Examples of plans that management may implement to mitigate events or conditions that may cast
significant doubt on the entity’s ability to continue as a going concern:
Disposal plans Debt financing Reduce or delay Equity financing

expenditures
• Restrictions on • Availability and terms • Feasibility of plans to
disposal (i.e., of new and existing • Feasibility of plans to increase ownership
covenants or debt financing reduce overhead or equity
encumbrances) administrative
• Existing or committed expenditures • Existing or committed
• Marketability of the
arrangements to arrangements to
asset or business that • Postpone
restructure or to reduce current
management plans to maintenance, or to
subordinate debt dividend requirements
dispose of lease rather than or to accelerate cash
• Possible direct or • Existing restrictions on purchase assets infusions from others
indirect effects of additional borrowing
disposal or the sufficiency of
available collateral

Are the criteria met for the liquidation basis of Apply the liquidating
Y
accounting? basis of accounting
Are there events or conditions identified that may cast

No further action
significant doubt on the entity’s ability to continue as a N required
going concern
Y
Is the going concern basis of the accounting Qualified or adverse
appropriate? N opinion
Y
Applicable financial framework requires specific disclosure or N
Does material uncertainty (MU) exist? N disclosures are required to achieve fair presentation (Emphasis
of matter)
Y
Y
Adequate disclosures relating to the material uncertainty
are made in accordance with the financial reporting Adequate disclosures relating to the material
framework or to achieve fair presentation uncertainty are made in accordance with the financial Y
reporting framework or to achieve fair presentation
Y N
N
Include material Management amends
uncertainty section in Y disclosures Management amends disclosures appropriately? Y
auditor’s report appropriately?
N
N Unmodified
Qualified or adverse opinion
Qualified or adverse opinion opinion

Audit Considerations
► When management identified events or conditions that may cast significant doubt on the entity’s ability to
continue as a going concern:
Review: Read:
► Management’s assessment made 12 months from ► Terms of debentures and loan agreements and
the balance sheet date determining whether any have been breached
► 12 month (month-to-month) cash flow projection ► Minutes of the meetings reference to financing
from reporting date difficulties
Confirm existence, legality and enforceability: Obtain:

► Arrangements to provide or maintain financial ► Management Representation Letter
support with related and third parties
► Letter of financial support from parent company
► Credit facilities

Disclosure Requirements
Use of the Going Concern Basis of Accounting Is Appropriate but a Material Uncertainty Exists
► Management’s evaluation of the significance of the events or conditions relating to the entity’s ability to meet its
obligations
► Significant judgments made by management as part of its assessment of the entity’s ability to continue as a going
concern
► Magnitude of the potential impact of the principal events or conditions, and the likelihood and timing of their occurrence.
Adequacy of Disclosures When Events or Conditions Have Been Identified but No Material Uncertainty Exists
► Principal events or conditions
► Management’s evaluation of the significance of those events or conditions in relation to the entity’s ability to meet its
obligations
► Management’s plans that mitigate the effect of these events or conditions
► Significant judgments made by management as part of its assessment of the entity’s ability to continue as a going
concern.

COVID-19 Considerations: Impairment Assessment of Non-
financial Assets
Risk Areas
Management Estimate: Impairment assessment of non-financial assets

► Entities need to identify whether there are indications of impairment. The impairment test only has to be carried
out if there are such indications.
What should our hotel clients be doing?
1
External indicator:
Sources of Impairment Indicators ✓ Significant developments that may adversely affect the entity’s economic environment
Internal Indicators:
✓ An asset is not performing as well as had previously been expected;
✓ Changes in the entity’s operations, such as a restructuring, result in a reduction in the asset’s
usefulness to the entity;
✓ A current period operating or cash flow loss combined with a history of operating or cash flow
losses

financial Assets (cont’d)
Risk Areas

2
Due to the COVID-19 pandemic, the following are the impairment indicators for Hospitality
Identify Impairment Indicators Industry are:
Hotel operations
Limited bookings Postponement of events
ECQ Skeletal shutdowns/ closures
MECQ Skeletal
Low hotel occupancy Shutdown of food and
Assets becoming idle
GCQ Skeletal rates beverage outlets
MGCQ 50%

financial Assets (cont’d)
Risk Areas

3 Perform Impairment Testing
Determine the extent of SaT involvement for

the determination of the recoverable amounts
Measurement:
Recoverable amount is the higher of Fair Value Less Cost of Disposal and
Value In Use.
Valuation techniques:
of the asset. ▪ Market approach
▪ Income approach
▪ Cost approach

financial Assets
Audit Considerations
Obtain identified events or considerations
1 that indicates impairment of non-financial
assets from management
Assess consideration of SaT involvement for 2

the impairment testing
3 Determine the Cash Generating Unit (CGU)
Obtain and review the prospective financial

information on the CGU (e.g. appraisal 4
reports).
Obtain cash flows projections covering a
5 period of 3 years or until the useful life of
the CGU.
Obtain the recoverable amount
6
computations made by the client.
7 Verify how the discount rate is determined

financial Assets
Disclosure Requirements:
The nature of the assumption or other estimation uncertainty
The sensitivity of carrying amounts to the methods, assumptions and estimates

underlying their calculation
The expected resolution of an uncertainty and the range of reasonably possible

outcomes within the next financial year
Disclosures may be necessary to enable users to understand whether or not the

outbreak has been considered for the purposes of FVM at the reporting date

Impact of COVID-19 on PFRS 9
Change in the entity’s business model

Classification and measurement
for managing financial assets
of financial assets under PFRS 9
Changes in the terms of a loan

Borrowings and other financial agreement may result to derecognition or
liabilities recognition of modification gain or loss
Disclosure of concentration and liquidity

Concentration and Liquidity Risks risk considering the near-term severe
impact of COVID-19

COVID-19 Considerations
Individual and Corporate Borrowers for Hotel Sector
Corporate Clients Travel Agencies
BORROWERS
IN THE Related Parties
Government Agencies HOSPITALITY and Employees
INDUSTRY
Credit Card
`
Individual Travelers Companies

ECL Computation
KEY RISK AREAS
What is happening now?
► Increase in expected credit losses (ECL)
► Liquidity issues on certain entities may arise due to the occurrence of large scale disruptions
in the travel eco-system. The deterioration of credit quality of loan portfolios as a result of
the pandemic will have a significant impact on the ECL measurement.
What should our hotel clients consider?

► PFRS 9 requires entities to assess changes in the risk of a default occurring over
the expected life of a financial instrument.
► Changes in economic conditions should be reflected in macroeconomic scenarios and in
their weightings.

ECL Computation
AUDIT CONSIDERATIONS
The use of reasonable and

supportable information
Re-segmentation of loan portfolios

or group or receivables
Individual and collective assessment of

loans, receivables and contract assets
Extension of payment terms, financial

support and credit enhancements

Debt Covenants
KEY RISK AREAS
Modification of terms
Entities should be able to determine whether any changes to existing contractual arrangements represent
a substantial modification or potentially a contract extinguishment, which would have accounting
implications in each case.
Modification PFRS 9 provides guidance on determining if a modification of a financial liability is

substantial, which includes a comparison of the cash flows before and after the modification, discounted
at the original effective interest rate, commonly referred to as the ‘10% test’.
Treatment of borrowers who breach debt covenants

► Lender’s Credit Risk Management
► Distinguish difference between “Normal” covenant breaches and those that are result of COVID -19
► Charges or restrictions on borrowers following covenant breach
► Effect of breaches or waivers on staging assessment and default

Covid-19 Considerations
Debt Covenants
What should our hotel clients consider?
Debt repayment and classification
01 Management will need to access whether the change in terms represent a
modification or extinguishment of the debt obligation and revisit the portion
of the debt that is considered current vs non-current
Derecognition of debt
02 Management needs to carefully consider the point in time when the liability
is discharged and can be derecognized with the corresponding accounting
treatment
Government Assistance
03 Management may need to establish an accounting policy regarding
government assistance in accordance with IAS 20 “ Accounting for
Government Grants and and Disclosure of Government Assistance”
Guarantees
04 Management should consider the impact of the current global situation
on the other entity from which it has guaranteed a loan

Industry Issues, Rent Concessions
On May 28, 2020, the International Accounting
Standards Board issued an amendment to
PFRS 16, Leases that provides an option
to lessees not to account
as lease modification Covid-19-related lease
concessions that meet all of the following criteria:
Direct consequence of COVID-19
Change in lease payments results in revised lease

considerations that is substantially the same, or less
than, the lease consideration immediately
preceding the change
Reduction in Lease Payments affects

only payments originally due on or
before June 30, 2021
No substantive change to other

terms and conditions

Presentation title
Industry Issues, Rent concessions
Required Disclosures
A lessee that chooses to avail of the option shall disclose the following:
Practical Amount
expedient applied recognized in P/L
to all rent to reflect changes
concessions in lease payments

Industry Issues, practical expedient:
not accounted as lease modification (lessee)
In the form of forgiveness or deferral of lease payments:
1 2 3
as a resolution of a
as a negative contingency that fixes
variable lease as if the lease
previously variable is unchanged
payment lease payments

Common Industry
Issues
Page 107
PFRS 15, Revenue
from Contracts with
Customers
Unbundling
Service Charge
Customer Loyalty Program
Contract Balances
Page 108
Industry Issues, PFRS 15 Unbundling
“When (or as) a performance obligation is satisfied, an entity shall recognize as revenue the
amount of the transaction price (which excludes estimates of variable consideration) that is
allocated to that performance obligation.”
Hotel
Packages
Accommodation
Complimentary breakfast
The transaction price should be allocated to each performance obligations based on the
relative stand-alone selling price of the goods/services in the hotel.

Industry Issues, Transaction Price
Rooms Price
Service Charge
Rooms Bundled Selling
Price
P11,200.00 ➨Published Rate

VAT (1,094.24) ➨12% VAT
Published
Rate
(911.87) ➨10% Service Charge
(75.23) ➨.825% Local Tax
Transaction Price
Local Tax
P9,118.66
Local taxes are dependent on
the Municipality where the
hotel operates

Industry Issues, Elements in unbundling
Information produced by entities

Information produced by the entities (IPE) may not identify
the requirements of the standard in unbundling the services.
PERFORMANCE TRANSACTION REVENUE

OBLIGATIONS PRICE SCHEDULES
OTHER
ROOMS PRICE F&B PRICE SERVICES
PRICE
Stand-alone selling prices

Stand alone selling prices of the commodities or services
included in the bundles services may not be determined due to
the nature of the product/services.

Industry Issues, Customer Loyalty Program
Principal vs. Agent Relationship
PRINCIPAL AGENT
Control over the

Has control specified goods or No control
service2
Satisfaction of Arranges the goods or

By itself or may engage services to be provided by
performance
another party the other party
obligation
Revenue
6
at GROSS amount at NET amount
recognition

Industry Issues, Customer Loyalty Program
Principal vs. Agent Relationship
Hotel Guest A (Customer Loyalty Program Member) books a hotel room for one night amounting to P5,000.
Hotel as Principal Hotel as Agent
Fact pattern: Fact pattern:
► For every P10 spend, there is an equivalent 1 point which can ► Hotel as Agent participates in the Customer Loyalty Program
be used as payment for hotel services. Each point is of a Managing Company.
equivalent to P1. The Hotel expects 80% of these points to be ► According to its management agreement, the Hotel will pay
redeemed. marketing fee to Managing Company amounting to 2% and
earn commission income of 1.5% on its qualifying rooms
revenue.
Accounts receivable - Hotel Guest A P5,000
► For every P10 spend, there is an equivalent 1 point which can
Rooms revenue P4,650
be used as payment for hotel services. Each point is
Contract liability 350 equivalent to P1.
To record revenue and liability on the room booking and points earned
Selling Price % Transaction Price Allocation
Room 5,000 93% 5,000 4,650
Points [(5,000/10) * 80%] 400 7% 5,000 350
Accounts receivable - Hotel Guest A P5,000
Total 5,400 100% 5,000 Rooms revenue [Selling price less amount
retained to account (Php100 Marketing P4,975
In September, Guest Hotel A decided to redeem his points to pay fee – Php75 commission)]
for his hotel accommodation. Accounts payable – Managing Company 25
To record revenue on the room booking
Contract liability P350
Rooms revenue P350
To record revenue on the points redemption

Industry Issues, Service Charge
“All service charges collected by hotels, restaurants and similar

establishments shall be distributed completely and equally among
the covered workers except managerial employees,”
Covered employees Managerial employees

Refers to all employees, Refers to any persons
PIC Q&A 2019-01
except managerial vested with powers or
employees, under direct prerogatives to lay down
employ of the covered and execute management should be
establishment, regardless of policies or hire, transfer, 100% EXcluded from
their positions, designations suspend, lay-off, recall,
or employment status, and discharge, assign or
the transaction
irrespective of the method discipline employees or to price.
by which their wages are effectively recommend such
paid. managerial actions.

Industry Issues, Contract Balances
► Contract Asset ► Contract Liability
CONTRACT
FOOD & HOTEL

LONG STAYING BEVERAGE SERVICES
GUEST
CORPORATE
AGREEMENTS
BEFORE: NOW:
BEFORE:
NOW: DEFERRED REVENUE CONTRACT
ACCRUED
CONTRACT UNEARNED REVENUE LIABILITY
RECEIVABLES
ASSET REFUND LIABILITY

Industry Issues, Contract Balances
Required Disclosures
1 Receivables
Beg. Balance, 1/1/20X9 Pxxx
A
End. Balance, 12/31/20X9 Pxxx
2 Contract Asset
3 Contract Liability
MOVEMENT:
(+) Addition
Revenue (-) Reversal
B Amount included in the contract liability balance

at the Beginning Period
C Amount recognized from PO* satisfied in PY
*Performance Obligations

Hospitality
Industry Briefing
Tax Updates and Common Tax Issues
Global Compliance and Reporting Group
Outline
1 Recent Tax Updates

2 Common Tax Issues
Recent Tax Updates
CREATE BILL
Accelerated CIT Rate Reduction Enhanced NOLCO
Corporate Recovery and July 1, 2020 25% 5-year carry forward of net
operating loss for taxable year
Tax Incentives for January 1, 2021 25%
2020
Enterprises January 1, 2022 25%
January 1, 2023 24%
(CREATE) January 1, 2024 23%
January 1, 2025 22% taxpayers not identified by the
January 1, 2026 21%
Commissioner as large taxpayers
January 1, 2027 onwards 20%
ITH and Special CIT Rate Enhanced Deductions Sunset Provisions

Income Tax Holiday In lieu of ITH and SCIT Sunset No. of years under GIE
2 to 4 years 4 More than 10
Include among others:
5 5 to 10
Depreciation allowance on qualified
Special CIT Rate capital expenditure 7 Below 5
Based on Gross Income Earned in lieu 100% exporter;

additional deduction on labor expense
of all taxes with at least 10,000
Research and development 9 employment;
training, reinvestment allowance to footloose projects
(8% - 2021, 9%-2022, 10%-2023)
or activities
manufacturing industry
Digital Economy Taxation Bill
Last May 19, 2020, the House of Representatives,

through Representative Joey Sarte Salceda,
introduced House Bill (HB) No. 6765 otherwise known
as the “Digital Economy Taxation Act of
2020”. This bill proposes to effect five (5) key
changes to the way the digital economy is currently
taxed, to better capture value created into the tax
system.
1 Make “network orchestrators” like Grab, Angkas, and other similar services
that link customers and providers withholding agents for income taxes
Network Orchestrator
(Withholding Agents)
Goods/ Goods/
Services Services
Income
payment Payment
Individual Buyer
Seller (Citizens/ Withholding Tax
resident aliens) (Income Tax)
BIR
Clarify that services rendered
2 electronically in the course of

trade or business are subject to
Value-Added Tax (VAT) ▪ Electronic services
▪ Digital advertising
▪ Subscription-based services
Clarify that such services as

digital advertising by internet
3
giants such as Google and
Facebook and subscription-
based services such as those of
12%
Netflix and Spotify, are subject VAT
to VAT
Make network orchestrators for lease services such as AirBnB, and

4 electronic commerce platforms such as Lazada and Shopee withholding
agents for VAT
Withholding Network Orchestrator

Agents E-commerce platform
Goods/ Goods/
Services Services
Gross sales/
receipts Payment
Deadline:
Seller 10 days from 12% VAT Buyer
end of month
BIR
5 Require that those who render digital services must do so through a

resident agent or a representative office in the Philippines
1. Advertising services
2. Subscription-based service
3. Similar services
Representative
office/agent
(Resident
corporation)
Non-
resident Buyer
Supplier*
*Non-resident Supplier
1. Digital services
2. Network orchestrators or E-commerce platforms
BOI Memorandum Circular No. 2020-004
Implementation of the 2017 Investment Priority Plan in relation to Tourism
Investment incentives for tourism and tourism-related industries that are upgrading and
modernizing their facilities aimed at ensuring the health, safety and wellness of their
clients in view of the new normal brought about by the COVID-19 pandemic.
Qualified Entities Modernization Project

Tourism enterprises that are
eligible to apply for investment Renovation of tourism facilities
incentives include hotels and covered under Tourism in compliance
resorts, meetings, international with health emergency protocols to
conventions, and events (MICE) enhance health and safety
facilities, and tourist transport procedures.
companies nationwide.
Modernization Project
• Negative pressure floor;
• Expansion and/or renovation of guestrooms, F&B outlets, function
rooms/meeting rooms, recreation areas, and other common areas;
• Investment in new or upgrade of laundry, kitchen, housekeeping, employee
facilities, and other back of house facilities;
• Building of full or partial or movable partitions, installation of built-in
thermal scanners, hygiene gates, and/or booths;
• Upgrade of ventilation, air conditioning, air filtration systems, water
systems, water treatment facilities;
• Mobile check-in systems;
• Non-touch or no-contact door locks and non-touch control panels in
elevators and other areas
Modernization Project
• For tourist transport, these should be locally-assembled vehicles with

sanitation features. The motor vehicles to be acquired or to be
upgraded/modernized will have such sanitation and hygiene features
including but not limited to barriers, payment portals, deionizers, seat
organizers for sanitation kits, and other features that would promote
physical distancing.
Incentives
• Projects registered under the modernization program without increase in

capacity may be entitled to THREE (3) years of income tax holiday and
other incentives, without prejudice to compliance with other requirements.
Republic Act No. 11360
An Act Providing that Service Charges Collected by Hotels,
Restaurants, and Other Similar Establishments Be Distributed
in Full to All Covered Employees
• All service charges collected by hotels, restaurants, and

similar establishments shall be distributed completely and
equally among the covered workers except managerial
employees.
• In the event that the minimum wage is increased by law or

wage order, service charge paid to the covered employees
shall not be considered in determining the employer’s
compliance with the increased minimum wage.
Common Tax Issues
3 Common Tax Issues
Taxability of service charges
Are the service charges received from customers subject to income tax
and VAT?
Republic Act No. 11360 CTA Case No. 9349

An Act Providing that Service Charges Service charges collected by hotels,
Collected by Hotels, Restaurants, and restaurants and other similar
Other Similar Establishments Be establishments, earmarked and set
Distributed in Full to All Covered aside for purposes of distributing the
Employees same to the employees should NOT be
subject to VAT.
3 Common Tax Issues
Taxability of deposits and advances
Advanced collections of Hotel Revenues not subject to income tax/VAT
upon receipt (e.g., Advanced Bookings, Deposits, Reservations)
Effect of refundability of advanced bookings and deposits
RMC No. 50-2018 dated May 11, 2018
In general, all deposits received are included in the definition of Gross

Receipts under Section 2(g) of RR No. 8-2018. However, returnable deposits
or deposits held in trust and recorded as Liability are excluded.
3 Common Tax Issues
Zero-rating of hotel services
Sale to PEZA-registered Enterprises Sales to International Carriers
Hotel services rendered to PEZA Hotel services for crews of international

enterprises are not covered by VAT zero- airlines are not covered by VAT zero-
rating rating
Sale to Non-residents in the

Sales to Embassies and Diplomats
Philippines
VAT exemption is based on the list or
endorsement submitted to the BIR by
Hotel services to non-residents DFA, the Government of the concerned
individuals who are in the Philippines embassy allows similar exemption to
may not qualify for VAT zero rating Philippine Embassy personnel on their
purchase of goods and services in that
country
3 Common Tax Issues
Compliance with the use of POS machines
• Each machine being used for business operations must be registered with the
BIR and must have a Permit to Use (PTU) that must be conspicuously attached
thereto
• All receipts/invoices generated from CRM, POS, and other Sales Receipting
System Software must be in compliance with the provisions of Section 5 of RR
No. 10-2015. Taxpayers’ adherence to registration, bookkeeping, and
invoicing/receipting (manual receipting) requirements shall also be verified
during the Post Evaluation.
Ensure that all sales transactions generated in the POS machines are recorded
as revenue in the Company’s books and are properly subjected to income tax.
3 Common Tax Issues
Deductibility of expenses
Cost of Sales for MCIT Provisions, losses and

purposes breakages
For MCIT purposes, “direct costs and Losses actually sustained during
expenses” shall pertain to those costs the taxable year and not compensated
exclusively and directly incurred for by insurance or other forms of
in relation to the revenue realized by indemnity shall be allowed as
the sellers of services. These refer to deductions:
costs which are considered (a) If incurred in trade, profession or
indispensable to the earning of business;
the revenue such that without such (b) Of property connected with the
costs, no revenue can be generated. trade, business or profession, if the loss
arises from fires, storms, shipwreck, or
other casualties, or from robbery, theft
or embezzlement.
3 Common Tax Issues
Senior Citizen Discounts
Senior Citizens are entitled to a 20% discount and exemption from VAT
on utilization of services in hotels and similar lodging establishments,
restaurants, and recreations centers
The cost of the discount shall be The discounts shall be treated as an

allowed as a deduction from ordinary and necessary expenses
gross income, not as a reduction deductible from the gross income of the
of sales to arrive at net sales, for seller using itemized deduction and can
the taxable year that the discount only be claimed if the seller does not
is granted, provided that the opt for the Optional Standard Deduction
amount of sales that must be during the taxable quarter/year.
reported for tax purposes is the
undiscounted selling price and not
the amount of sales net of the
discount.
3 Common Tax Issues
Senior Citizen Discounts
Compliance Requirements
1 The seller must record its sales inclusive of the discount granted.
The discount can only be allowed as a deduction from gross income for the
2 same taxable year the discount is granted.
3 Seller is required to keep a separate and accurate record of sales, which shall
include:
▪ Name of the Senior Citizen
▪ OSCA ID
▪ Gross sales/receipts
▪ Sales discount granted
▪ Dates of transactions
▪ Invoice numbers of every sale transaction to Senior Citizen
4 In the case of VAT exemption on the sale of goods and services to Senior
Citizens, the seller must follow the invoicing requirements for VAT purposes.
If the seller uses a Point of Sale Machine or a Cash Register Machine in lieu of
the regular sales invoice, the machine tape must properly segregate the
exempt sales from the taxable sales.
3 Common Tax Issues
Transactions with concessionaires
If the Hotel will collect in behalf of the concessionaire, the following
rules will apply:
❑ Third party (i.e., concessionaires) supplier invoices/receipts should be in the name of
the client/hotel guest.
❑ Hotel should issue non-VAT acknowledgment receipt if it will collect in behalf of

concessionaire.
❑ If Hotel Guest/Client is a Corporate entity required to withhold EWT:
• Hotel pays concessionaire net of EWT (if applicable), and issues BIR Form No.
2307 (CWT Certificate) to concessionaire in behalf of the client.
• Client remits EWT on third party supplier expenses.
Note: Expenses that redound to the benefit of the Hotel may still form part of gross receipts,
notwithstanding compliance with the documentary requirements for reimbursable expenses.
3 Common Tax Issues
Withholding taxes on royalties
Royalties paid to Royalties paid to non-

domestic corporations residents
If deemed passive, applicable Royalties from Philippine-sources

withholding tax is 20% FWT (Payee include, among others, the use of or the
cannot deduct any costs related to the right or privilege to use in the
Royalty Income). Philippines any copyright, patent,
design or model, plan, secret formula or
If royalties are deemed active, process, goodwill, trademark, trade
applicable withholding tax may be brand or other like property or right.
subject to EWT (i.e., possible
10%/15% EWT, if deemed a form of Preferential treaty rates shall be applied
management fee, or 2% EWT if payor outright by the withholding agents upon
is a Top Withholding Agent, if deemed submission of a CORTT Form by the
service only). non-resident (RMO No. 8-2017 dated
March 29, 2017).
Thank you.
Tax Updates and Common Tax Issues
Global Compliance and Reporting Group
Thank You!
#SGVforABetterPhilippines
Hotel Sector Briefing

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HOTEL SECTOR BRIEFING

August 18, 2020, 8:00 AM – 12:00 NN

Page 2 Hotel Sector Briefing

GDP/capita (PPP) of USD9,980. 0.0

► More households spending on

Source: PSA National Accounts August 2020

World Bank (1.9) 6.2 -2.0

-4.0 -4.0 -3.8

Sources: BSP, IBPAP, PSA websites

► Global cases: 21.5 million Community Mobility Changes Report, in %

► Most affected regions (Cases): Residential +25 +30 +20 +23

► Agriculture sustained minimal growth.

Source: ADB The COVID-19 Impact on Philippine Business, July 2020

Recreation 7.4 (31.9)

Clothing 4.8 (20.4) Transport 11%

Others 7.4 (3.8)

Source: PSA National Accounts August 2020

Housing & utilities

Source: HFCE 2018, Philippines Statistics Office

Source: NEDA, President’s Penultimate Report to the People 2016-2020

Enabling Legislative and Reform Measures

Bayanihan to • Supplement the Bayanihan to Heal as One Act

• Cut the corporate income levy to 25 percent

Enabling Legislative and Reform Measures

Government Financial Institutions

2 Share of Tourism to GDP grew in 2019

3 Employment in tourism increases further in 2019

4 All-time high international tourist arrivals in 2019

5 Government support vital for accommodation sector growth

Source: WEF, PSA, DOT, Fitch Solutions

Flight and Airport Transfers/

Page 19 18 August 2020 Hotel Industry Briefing #SGVforABetterPhilippines

Page 20 18 August 2020 Hotel Industry Briefing #SGVforABetterPhilippines

*See full list in this link: https://www.dfa.gov.ph/dfa-news/statements-and-advisoriesupdate/27305-public-advisory-dfa-reports-

Accelerated Recovery and Investments Stimulus for the Economy (ARISE)

Page 22 18 August 2020 Hotel Industry Briefing #SGVforABetterPhilippines

Hotels and restaurants operate to accommodate OFWs, stranded passengers, and

DOT prepares for the reopening of Philippine tourist destinations

Online Learning Program: Leadership Excellence Series (LES) 2020

Source: PNA, DOLE, DOT

Page 23 18 August 2020 Hotel Industry Briefing #SGVforABetterPhilippines

7,500 10.0 500

REVIVED TOURISM INDUSTRY UNDER “NEW NORMAL”

People Communications & governance Finance Operations

16.3 5.0% 19.1

8.0 Hotel Auberge GmbH 1.3 100.0% 8.0

Kimpton Hotel Palomar DC 141.5 100.0% 14.9

Jinmao (China) Hotel

Location Thailand USA Germany USA China

Date of 05 February 2019 15 November 2019 25 February 2019 12 June 2020

Hotel Industry Trends

Page 31 Hotel Sector Briefing

Global Performance (Data in US Dollar)

Reflecting the continued

Source: STR Global, https://www.hotelnewsnow.com/Media/Default/PDFs/GlobalHotelReviewMediaVersionConstantCurrencyEdition_May_2020.pdf

Page 32 Hotel Sector Briefing

January January February February

As the novel coronavirus (COVID-19) As the COVID-19 outbreak began in Wuhan,

Page 33 1 January 2014 Hotel Sector Briefing

February March March March March

On February 10, Hilton reports 150 hotels

Page 34 1 January 2014 Hotel Sector Briefing

March March March March

Page 35 1 January 2014 Hotel Sector Briefing