Answering a query during the Go Negosyo Tourism Summit held recently in Cebu City, Benito Bengzon Jr., executive director of the Philippine Hotel Owners Association, said there is a need to bump up the number of hotel rooms in major and emerging tourism destinations in the country to catch up with the other popular tourist destinations in Southeast Asia.
Bengzon pressed on the need for this if the country wants to capture a good slice of arrivals from the Mice (meetings, incentives, conferences and exhibitions) markets that come in large groups.
“We did an inventory of the rooms in Boracay, Cebu and Bohol and then we benchmarked them against Bali (Indonesia) and other resort destinations. The inventory is still very low, but it should not really be a cause for concern,” Bengzon said during the May 6 summit.
“But we need to bump up the number of rooms in the key gateways, Manila, Cebu and Davao, as well as in other emerging destinations,” he added.
A 2020 government report showed other island destinations in Southeast Asia having five times more rooms than Cebu.
Large listed companies are already moving to add to the hotel room supply in Cebu, with one property by the SM group expected to come onstream in 2027 yet at the South Road Properties.
The former tourism undersecretary said hoteliers with the support of the government should go after the “value for money” approach wherein tourists are accommodated according to the money they’ve spent.
Another approach is to capitalize on the changing consumer preferences and behavior, serving the needs of consumers looking for a different kind of experience.
“People will be looking for low density but high value, culturally based and unique kind of experience. Cebu and Bohol are in a well-placed position to get that bigger share of the market,” Bengzon said.
If not now, when?
Alfred Reyes, president of the Hotel, Resort and Restaurant Association of Cebu, agrees with Bengzon. In a separate interview, he said Cebu needs to add more rooms with Mice going aggressive this year.
“Mice activities (in Cebu) are starting to return. When are you going to build? When they are already here?” he asked, noting that building a hotel normally takes two to three years.
The revival of Mice activities and in-person events should help propel hotel occupancies and average daily rates in Cebu over the next 12 months, according to Colliers Philippines.
Reyes said Thursday, May 18, that with the revival of travel following the easing of concerns about the coronavirus disease (Covid-19) pandemic, city hotels in the Cebu Business District are already averaging 70 percent occupancy due to domestic tourism and Mice, while resorts are hitting an average of 50 percent occupancy as they await the return in a bigger way of Korean, Chinese and Japanese tourists later this year.
Reyes acknowledged that even before the pandemic, Cebu was already experiencing a shortage of rooms because of Mice activities. This is the reason Cebu lost some Mice events to other island destinations like Boracay.
According to a SunStar Cebu 2020 report, data from the Department of Tourism and Colliers Philippines showed Cebu had around 10,600 three-to-five-star hotel rooms compared to Phuket (Thailand) which had 47,475 rooms, and Bali (Indonesia) with 50,000 rooms.
Hotel projects
Construction of hotels in Cebu was stalled at the height of the Covid-19 pandemic in 2020.
But after the easing of travel restrictions, opening up of economies, and with the anticipated boom in travel, developers are racing to complete their hotel projects in time for the full rebound of the tourism sector.
Homegrown property developer, Cebu Landmasters Inc. announced that two new hospitality projects, namely lyf Cebu City in Base Line Center and The Pad Co-Living in Banilad High Street, are scheduled to commence operations this year. Lyf Cebu City, which targets young travelers, is a 153-hotel property while The Pad Co-Living offers 250 rooms.
The Radisson Hotel Group and SM Hotels and Conventions Corp. also announced their expansion in Cebu.
According to the hotel’s website: “Under current development is the 516-room dual-branded property in Cebu City under the Radisson and Park Inn by Radisson brands, which is scheduled to open its doors in 2027, providing a diverse range of accommodation for travelers visiting the Central Visayas region’s largest city.”
The properties will be part of an integrated development adjacent to the SMX convention center and SM Seaside Arena as well as the SM Seaside City Cebu Mall, a 147-meter-tall Seaside Tower, and a church.
Pricing
Meanwhile, even before these rooms open up, Reyes said hotel room rates have increased compared to the pre-pandemic times.
He cited the elevated inflation, rising costs of labor, and utilities as among the factors that drove prices up.
“This will go up because (the prices of) goods are really increasing. Eventually, you will have to pass these on (to consumers),” he said.
This phenomenon, according to Reyes, isn’t happening only in the Philippines as rising inflation has been happening globally.
“Even in Hong Kong, if you travel now, rates are no longer the same as way back in 2018 and 2019. Even in Singapore, when you travel, rates are already three, four or five times (higher) depending on where you are staying. The more branded, the more star-rated your hotel is, the more it will be expensive,” said Reyes.