Semi-annual | Manila | 27 July 2023

Retaining winning streak

PH leisure sector’s rebound continues as
government recalibrates strategy
Insights & recommendations
The reinvigorated hotel sector remains as one of the most vibrant property segments in the
country. Foreign arrivals are likely to breach the Tourism department’s target for 2023 while the
domestic market continues to lift occupancies and daily rates. The return of business travelers
and in-person corporate events have also been propping up the demand for MICE facilities.
Colliers believes that the bolstered leisure sector will continue to expand given the record-high
supply of new keys in 2023. Stakeholders should seize opportunities by -
• Building more meetings, incentives, conferences, exhibitions (MICE) facilities to maximize the
return of in-person events
• Developing more homegrown hotel brands or acquiring foreign ones
• Aligning programs and offerings with the Tourism department's refreshed strategy
2023–25
H1 2023 Full Year 2023 Annual Avg
Foreign arrivals reached 2.7 million as of H1
2023 and has surpassed FY 2022 arrivals.
The rise in arrivals and spending for the
2.7 million 4.8 million 6.1 million
Demand remainder of the year should lift hotel
arrivals arrivals arrivals
occupancies and ADRs across the country.
In H1 2023, Colliers recorded the delivery of
797 rooms. By end-2023, we expect the
completion of 5,300 rooms, a record-high,
Supply 797 rooms 5,300 rooms 3,000 rooms
with the Bay Area and Fort Bonifacio
covering more than half of the new supply.
Annual Avg
HOH/ YOY/ Growth 2023–27/
End H1 End 2023 End 2027
Occupancy improved to 61% due to
sustained demand from the local staycation +6pp +10pp +2pp
market and foreign business and leisure
Occupancy travelers. By end-2023, we project
61% 65% 70%
occupancy to reach 65% from 55% in 2022.
ADRs rose by 5.2% in H1 2023. Colliers sees
+5.2% +6.0% +4.4%
its forecast of a 6% growth in 2023 likely
Room supported by recovering demand from
Rates** USD76 USD77 USD94
leisure and business travelers.
Source: Colliers.
Note: USD1 to PHP56 as of the end of H1 2023. Demand is tourist arrivals.
†Average Daily Rates.

1
“The return to normalcy has been a positive for the Philippine leisure sector. More face-to-face events
across the country should boost the meetings, incentives, conferences, and exhibitions (MICE) segment.
Developers are lining up major projects across the archipelago and these include foreign and homegrown
brands, anticipating demand from business and leisure travelers. The recalibration of the Tourism
department’s strategy, including its branding, should entice more international travelers to throw the
country a glance and explore the multitude of reasons to love about the Philippines. ”
Joey Roi Bondoc
Director, Research

Recommendations Align strategies with Tourism department’s

Development of more MICE facilities
People are now more willing to attend face-to-
face meetings. Corporations, business groups,
and even families have been holding in-person
events especially after the government relaxed
restrictions on face-to-face meetings and
dropped mask mandates. Colliers believes that
hotel developers and operators should assess
the future demand for MICE facilities given the
segment’s potential for a strong rebound. This
should also be aligned with the government’s
thrust of modernizing existing and building new
airports across the country. The Tourism
department is also priming the Philippines as a
major MICE destination, and this should enable
the country to corner major global MICE events
and further boost tourist arrivals and spending
across the archipelago.
Homegrown or foreign brands in key areas
Colliers believes that developers need to
strategically plan their expansion especially now
that the sector is gradually recovering. According
to the Philippine Hotel Owners Association
(PHOA), the “tourism industry is likely to recover
to pre-Covid levels by 2024.”1 In fulfilling their
expansion plans, developers should carefully
assess whether to launch or expand their own
homegrown brands or partner with foreign hotel
operators. Colliers data show that about 42% of
new hotels that will open in Metro Manila from
2023 to 2024 are foreign brands. While we see
more Metro Manila openings in the pipeline,
Colliers believes that there are also opportunities
to build more accommodation facilities in key
destinations including Pampanga, Cebu, Bohol,
Davao, Palawan and Bacolod. Aside from the
traditional growth areas, developers should also
build hotels near major convention centers and
newly-modernized and expanded airports.
1Does PHL tourism rely unduly on China?
latest initiatives
Colliers Philippines believes that hotel
developers and operators should align their
programs and offering with the Tourism
department’s latest initiative. Aside from
expanding provincial presence given the
department’s thrust to boost domestic tourism
spending, developers should also maximize the
government’s plan to rehabilitate Ninoy Aquino
International Airport (NAIA), modernize other
airports across the country, and digitalize visa
issuance in potential major source markets such
as China and India.
Foreign arrivals and Metro Manila hotel
occupancies, 2016 – H1 2023
Visitor Arrivals (LHS) Average Occupancy (RHS)
10M 90%
60%
5M
30%
0M 0%
Source: Colliers; Department of Tourism
H1 2023 arrivals breach
FY 2022 level
Data from the Department of Tourism (DOT)
reveal that foreign arrivals as of H1 2023 reached
2.7 million, already surpassing the 2.65 million
arrivals recorded in 2022. Among the top source
markets during the period were South Korea,
USA, Australia, Japan and Canada, covering 58%
of arrivals. By end-2023, the DOT expects
international visitors to reach 4.8 million, still far
from the record-high 8.3 million arrivals in 2019
but 453% higher than the paltry 1.5 million in
2020. The Tourism department has launched its
new tourism slogan, “Love The Philippines” to
entice more tourists to visit the country and
reach its target of 12 million arrivals by 2028.2
2DOT aims for 12m annual tourist arrivals until 2028

2
Historical arrivals of top markets
(2017 – H1 2023) Record-high supply
2017 2018 2019 2020 2021 2022 H1 2023 In H1 2023, Colliers recorded the delivery of
797 rooms, following the completion of Westin
1500K
Manila (303 rooms) in Ortigas CBD, Brittany
1000K 674K 516K Hotel (125 rooms) in Fort Bonifacio and The
428K 505K 115K 128K Suites at Torre Lorenzo Malate (168 rooms) and
500K
40K 100K
Lyf Malate (201 rooms) in Manila. By the end of
K 2023, we expect the completion of 5,300 new
South USA China Japan rooms, an all-time high.
Korea Among the new hotels likely to be completed for
Source: Department of Tourism
the remainder of the year are Hotel 101 The
Data from the Philippine Statistics Authority Fort, Seda Hotel Bay Area, Red Planet The Fort,
(PSA) show that the share of the tourism Ibis Styles Hotel, Lansons Place Manila and
industry to the country’s economy reached 6.2% Grand Westside Hotel. The Bay Area and Fort
in 2022, up from 5.2% in 2021. However, this is Bonifacio are likely to cover about 61% of the
lower than the record-high 12.8% share in 2019. new supply.
Domestic tourism expenditure grew by 92.3% in Metro Manila hotel annual new supply and
2022 to PHP1.5 trillion (USD26.7 billion) from forecast (2017-2025)
only PHP782.6 billion (USD14 billion) in 2021. 6,000
Meanwhile, employment in tourism-related 4,500
industries rose by 9.3% in 2022 to 5.35 million 3,000
jobs from 4.9 million in 2021. 1,500

Occupancy to reach 65% 0

In H1 2023, average hotel occupancies in Metro Source: Colliers

Manila reached 61%, higher than the 55%
recorded in H2 2022. Colliers attributes the
increase in occupancy to the continued rise in
foreign tourists, return of in-person events and
sustained demand from the local staycation
market. By the end of 2023, Colliers projects
average occupancy in the capital region to reach
65% partly driven by holiday spending as well as
year-end Meetings, Incentives, Conferences and
Exhibitions (MICE) activities. Metro Manila
occupancy is now near pre-covid level. In 2019,
average occupancy peaked at 70%, before
plummeting to 20% in 2020 due to covid
disruptions arising from mobility restrictions.
Hotel occupancy per star classification
Segment H2 2022
ADRs to grow by 6%
In H1 2023, ADRs grew by an average of 5.2%
HOH. Five-star hotels, especially those in key
business hubs, continue to post the fastest
growth in ADRs due to sustained demand from
business travelers and corporates for MICE
events such as pharmaceutical product
launches. Colliers retains its forecast of a 6%
ADR growth in 2023. Our projected increase in
ADR in 2023 is likely to be tempered by the
delivery of substantial number of keys in H2
2023.
Average daily rates by classification,
H2 2022 vs. H1 2023
Star % change
H1 2023 H2 2022 H1 2023
classification (YOY)

 60% 59% PHP3,559 PHP3,553

3-star -0.2%
 52% 59% (USD65) (USD63)

 54% 62% PHP5,084 PHP5,186

4-star +2.0%
(USD80) (USD93)
 59% 65%
PHP11,148 PHP12,253
5-star +9.9%
Overall 55% 61% (USD207) (USD218)
Source: Colliers Source: Colliers; Note: USD1 to PHP56 as of the end of H1 2023; USD1
to PHP55 as of the end of 2022
3
For further information, please contact:

Joey Bondoc Richard Raymundo

Director | Research | Philippines Managing Director | Philippines
+63 2 8858 9057 +63 2 8858 9028
Joey.Bondoc@colliers.com Richard.Raymundo@colliers.com

Martin Aguila Brent Respicio

Senior Analyst | Research | Research Analyst | Research |
Philippines Philippines
+63 2 8863 4116 +63 2 8863 4197
Martin.Aguila@colliers.com Brent.Respicio@colliers.com

About Colliers
Colliers is a leading diversified professional services and investment management company. With
operations in 66 countries, our 18,000 enterprising professionals work collaboratively to provide expert
real estate and investment advice to clients. For more than 28 years, our experienced leadership with
significant inside ownership has delivered compound annual investment returns of approximately 20%
for shareholders. With annual revenues of $4.5 billion and $98 billion of assets under management,
Colliers maximizes the potential of property and real assets to accelerate the success of our clients, our
investors and our people. Learn more at corporate.colliers.com, Twitter @Colliers or LinkedIn.

Legal Disclaimer
This document/email has been prepared by Colliers for advertising and general information only.
Colliers makes no guarantees, representations or warranties of any kind, expressed or implied,
regarding the information including, but not limited to, warranties of content, accuracy and reliability.
Any interested party should undertake their own inquiries as to the accuracy of the information.
Colliers excludes unequivocally all inferred or implied terms, conditions and warranties arising out of
this document and excludes all liability for loss and damages arising there from. This publication is the
copyrighted property of Colliers and /or its licensor(s). © 2023. All rights reserved. This communication
is not intended to cause or induce breach of an existing listing agreement.