A CHILLING effect.
That was how tourism stakeholders essentially described the closure of the 22-year-old Marco Polo Davao on the country’s tourism industry. The hotel, founded by a company of Finance Secretary Carlos G. Dominguez III from which he has divested, confirmed reports over the weekend that it would close on June 15, due to the effect of the novel coronavirus disease (Covid-19) on guest bookings. The company that owns the hotel, Halifax Hotel Davao Inc., said it is giving retirement or separation pay to its 270 organic employees.
“Everyone was speechless. People really didn’t know how to react,” said Marge Munsayac, VP for Sales and Marketing of Maribago Bluewater, which operates a hotel and resort in Mactan and Bohol. “Of all hotels, why Marco Polo? It’s an icon of Davao. We never had an inkling that business was pretty bad. Then you start to ask, if a big company like Marco Polo can close, what more the smaller companies? It’s a bit worrisome.”
For his part, Tourism Congress of the Philippines president Jose C. Clemente III said, “This is a reality that most stakeholders are facing as a result of the Covid-19 pandemic, not only here, but around the globe. It shows that even the tallest of giants can also fall. Yet, we remain hopeful that tourism will again rise and we will see this and other properties that have ceased operations back in business sooner than later.”
Still, he said many hotels were already pondering their own possible closures since Covid-19. “If it was just being discussed before in hospitality circles, it’s now a reality, especially in places which cannot expect an immediate return of tourism, whether local or international. They probably have one to three months maximum to make a decision on how to proceed, not unless something miraculous happens [i.e., a vaccine],” he added.
‘Not a white flag of surrender’
Commenting on the closure, Dominguez messaged a colleague in the Cabinet that he had nothing to do with the decision because he already divested from Halifax. “The board’s decision is, however, very rational and responsible as they prioritized the interests of the employees and suppliers by paying them while they still could, instead of continuing operating at a loss and risking not having the funds in the future.”
He underscored though, “The action should not be taken as a signal to the rest of the economy, but only as a decision of one private enterprise that is acting in the interest of its employees. They have not raised the white flag but executed a strategic ‘advance to the rear’ as the US Marines did in a crucial battle during the Korean War. The hotel will reopen when the market signals a return of demand for its services.”
The Sultan of Brunei, Hassanal Bolkiah, is a personal friend of Dominguez and has long been rumored to be a major investor in the hotel. As such, with seeming infinite resources, the hotel decision to shut down is telling about the immense impact of Covid-19 on the tourism industry, in the view of some stakeholders.
“There’s too much uncertainty. It is so hard to plan. And of course, all governments were taken by surprise and we know money is finite [in terms of financial assistance]. So I feel, more [hotels], will close, especially the smaller players,” said TCP’s Clemente. “If a large player [like Marco Polo Davao] has closed, although they said it was temporary, what more the smaller ones?”
He ventured that the large hotels are already thinking of going the way of Marco Polo Davao. “They are just surviving here in the NCR (National Capital Region) because they still service essential businesses. But for beach resorts, they’re probably considering it already. It’s about who has the longest lifeline, or would they continue flushing down money at this time,” he stressed.
Downturn began in 4Q 2019
For her part, Pearl Peralta Maclang, DOSM of Marco Polo Davao, told the BusinessMirror the hotel’s troubles began in the last quarter of 2019, when the city was hit by two earthquakes. “We were averaging at 60 percent occupancy then, but we were still breaking even, maybe not in the way we should, but our performance for the entire year was still pulled up by the earlier quarters.”
Then the ash fall from Taal Volcano in January 2019 happened, and soon after, Covid-19. “As business deteriorated, we reduced the number of staff, of course, we didn’t need casual employees anymore. People were then asked to take their leaves. We cut on costs and all unnecessary expenses, only essentials [were allowed],” she explained.
Asked how much the separation pay will cost Halifax, she said, “sizable.” All employees of retirement age—“some have been here for 22 years”—will be paid one month for every year of service. For those not of that age, “we will follow what is in the law,” said Maclang.
But she stressed the closure was “indefinite,” and intimated there may be a chance for it to reopen. Asked whether this means it will still be a partnership with Marco Polo or some other global hospitality group, Maclang said, “As far as I know, it will still be retained as Marco Polo Davao. I don’t know if there are discussions about reopening with other partners.”
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