Record-high supply of new hotels to open in 2023

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Hotel developers encouraged to build more MICE facilities



A record-high 5,300 new hotel rooms are projected to be completed in 2023, according to data released by leading diversified professional services and investment management company Colliers (NASDAQ, TSX: CIGI).

According to Colliers’ Director of Research, Joey Roi Bondoc, this is a positive development for the Philippine tourism sector, especially now that the sector is rebounding. “With the continued rise in international and domestic tourists as well as return of more in-person events, hotel developers are now lining up their expansion plans for the near to medium term. Colliers sees more foreign brands opening while Filipino homegrown brands are also expanding.”

Among the new hotels that will be completed include Seda Manila Bay, Lansons Place Manila, Grand Westside Hotel, Red Planet Hotel The Fort, Hotel 101 The Fort, and Ibis Styles Hotel. We project that more than a third (35%) of the new hotels that will open for the remainder of the year will be foreign brands. From 2023 to 2025, we estimate the completion of 3,000 new hotel rooms every year.

The reinvigorated hotel sector remains as one of the most vibrant property segments in the country, said Bondoc. Foreign arrivals are likely to breach the Department of Tourism’s (DOT) 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 meetings, incentives, conferences, exhibitions (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 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 DOT’s refreshed strategy



Recommendations


1. 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 DOT 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.



2. 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.” 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.



3. Align strategies with the DOT’s latest initiatives

Colliers Philippines believes that hotel developers and operators should align their programs and offering with the DOT’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.



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