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A broader look at today’s business Saturday, April 20, 2024 Vol. 19 No. 186
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Imminent hotel room shortage—and resulting higher room rates—could derail PHL’s ambition to lure more visitors
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By Ma. Stella F. Arnaldo Special to the BusinessMirror
Inflationary risks
LAY could not say exactly by how much the hotels’ ADR will rise, but
in Singapore, which also has a hotel shortage, their ADR has risen about 25 percent. The Philippines may not follow exactly the same path, with hotels here usually adjusting their rates seasonally, i.e., they jack up their room rates during long weekends and holidays, while these are kept mostly steady for the remainder of the year. What may further stymie the construction of more hotels in the country, he noted, is “a high inflation environment that is stubborn for the coming two to four years. [This] will certainly make for some significant challenges to hotel development, in that the cost of funding will continue to stay high and make it very, very difficult, because interest rates and borrowing is the grease that makes the real-estate market churn,” he underscored. The Philippine Statistics Authority recently reported a headline inflation rate of 3.7 percent in March, quickening from 3.4 percent in February, as food prices, specifically that of rice, surged. This led to the policymaking Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) to keep its key policy rate at 6.5 percent, which is used by banks to price their loans. BSP Gov. Eli Remolona, in a news briefing after the MB policy meeting on April 8, warned of continuing inflationary risks due to rising food prices, an increase in crude prices, geopolitical concerns, and a possible wage adjustment. As such, he said, it will be unlikely for the MB to cut BSP’s policy rate by October this year, unless the next months’ inflation data show a slowdown in the rise of consumer pric-
‘KEYS MUNA’ NICOLETA RALUCA TUDOR | DREAMSTIME.COM
Well, don’t look now, but the average daily rates (ADR) of these hospitality establishments are projected to rise further in the medium term, and likely imperil government’s ability to attract 12 million international arrivals by 2028. In a recent news briefing, Leechiu Property Consultants (LPC) Director for Hotel, Tourism, and Leisure Alfred Lay forecast an impending hotel shortage with only 87 properties in the pipeline from 2025 to 2028, adding just 25,000 keys to the country’s hotel room supply. As such, by LPC’s projection, there will only be 308,000 hotel rooms available by 2028. For government to attract 12 million inbound tourists by 2028, from its 7.7-million target this year, arrivals need to grow annually by some 10 percent per year. “[In contrast], we’re going to see less than one-percent growth in hotel keys between 2025 and 2028,” he noted. “That is a significant factor because it may, in fact, limit our ability as a country to reach 12 million arrivals. As a result of this, room rates and occupancy rates will undoubtedly start increasing. And it will become a more expensive pastime for us to travel locally and for foreigners to come here,” he stressed. Based on LPC research, a large chunk of these new hotels, at 40 percent, are located in Metro Manila (9,668 keys), 16 percent in Cebu (3,880), and the rest distributed among Boracay, Davao, Palawan, and other destinations.
OIL MARKET UPDATE
SKYPIXEL | DREAMSTIME.COM
OMESTIC tourists, destination management companies, even lawmakers, have long been complaining about the high cost of going on vacation here in the country, so much so that many now prefer traveling abroad where P20,000 can buy them airfare, a three-day/twonight stay and tours. Not only is domestic airfare expensive, but many hotels, especially those in Metro Manila, have raised their room rates considerably, even exceeding prepandemic levels.
Continued on A2
OIL ERASES ADVANCE AFTER IRANIAN MEDIA DOWNPLAYS ISRAEL’S ATTACK Oil wiped out an earlier sharp jump as Iranian media appeared to downplay the impact of Israeli strikes that followed last weekend’s unprecedented bombardment by Tehran. Story on A4.
Climate change to cause $38 trillion a year in damages by 2049, says PIK By Laura Millan Bloomberg
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limate change will inflict losses to the global economy worth an annual $38 trillion by 2049, as extreme weather ravages agricultural yields, harms labor productivity and destroys infrastructure, according to researchers at the Potsdam Institute for Climate Impact Research (PIK). Continued on A2
MITZI JONELLE TAN, of the Philippines, center, participates in a Fridays for Future protest calling for money for climate action at the COP27 UN Climate Summit, November 11, 2022, in Sharm el-Sheikh, Egypt. AP/PETER DEJONG
PESO EXCHANGE RATES Q US 57.0950 Q JAPAN 0.3693 Q UK 71.0262 Q HK 7.2906 Q CHINA 7.8880 Q SINGAPORE 41.9261 Q AUSTRALIA 36.6550 Q EU 60.7833 Q KOREA 0.0415 Q SAUDI ARABIA 15.2208 Source: BSP (April 19, 2024)