THE Philippine tourism industry is bouncing back this year, but it may take a while for international arrivals to return to prepandemic levels.
As such, stakeholders admit that their profits, although finally growing, are still meager, with many still operating with less number of employees, or relying mostly on domestic travelers.
And with the current ban of Beijing on outbound leisure travel due to its zero-Covid policy, other sectors in the tourism industry, such as those in Meetings, Incentives, Conventions and Exhibitions (MICE), continue to struggle organizing trade shows, just to earn some revenue.
The Philippines was the first in Asia to reopen to fully vaccinated foreign leisure travelers and scrapped quarantine procedures for them. The Department of Tourism (DOT) reports, from February to October 22, foreign tourist arrivals in the country reached 1.82 million. Of this, 1.3 million were foreign nationals, while 507,610 were overseas Filipinos, either those working abroad coming for a short visit, or balikbayans eager to see family after years of living abroad.
While this year’s arrivals have exceeded the private sector’s own projections, this is still a far cry from the 8.26 million who arrived in 2019, prior to the Covid-19 pandemic. In contrast, Singapore received 3.74 million tourists from January to September, while Malaysia received 3.23 million from January to August, Thailand 4.4 million, and Bali alone, 1.48 million.
Small promotions budget
The country is unable to play catch-up with its neighbors due to the lack of Chinese tourists. Prepandemic, China was the second largest source of foreign tourists for the Philippines, contributing 1.74 million in 2019. Current DOT data show the United States (345,213) as the top market this year, followed by South Korea (248,746); Australia (85,452); Canada (77,819); the United Kingdom (69,086); and Japan (66,855).
Attracting other markets to make up for the loss of Chinese tourists, however, remains a challenge owing in part to the low budget given to government tourism agencies for promotions and marketing abroad, as well as the seemingly unfriendly entry procedures into the Philippines.
During a Senate Finance subcommittee hearing on the DOT’s budget, Tourism Secretary Christina Garcia Frasco revealed the Philippines’s budget for tourism promotions is the lowest in Asean. Indonesia, for instance, receives a tourism budget of $645 million; Malaysia, $358 million; Singapore, $376 million; and Thailand, $111 million, while the Philippines had a measly $59 million. (See, “PHL tourism budget is lowest in Asean,” in the BusinessMirror, October 11, 2022.)
For 2023, the DOT has projected international tourists to reach just 3.23 million as it receives a P3.58-billion budget, most of it going to maintenance and operating expenses. Its marketing arm, the Tourism Promotions Board (TPB), has access to just P1.1 billion to sell the country both to domestic and international travelers. A seeming disconnect, considering President Ferdinand R. Marcos Jr. has been citing the tourism sector’s crucial role in growing the economy.
Unfriendly arrival procedures
At the recent Philippine Tourism Industry Convergence Reception hosted by the DOT, Marcos Jr. said, “This [tourism] is a driver of our economy and we must immediately do all that we can to make sure that this asset that the Philippines has, must be used to bring jobs to people, good jobs to people, to bring visitors to our country to once again, as we have said during the trips that we have taken these past few weeks: to reintroduce the Philippines to the world.”
Pending the launch of a new international brand campaign still anchored on the “It’s More Fun in the Philippines” slogan, the DOT has pushed for the ease of travel in and around the country, better tourism access with the construction of more roads to tourism destinations, and the construction of tourist pit stops in the countryside.
Through Frasco’s efforts, the One Health Pass (OHP) has been replaced by the e-arrival card, although inbound travelers continue to complain of the long queues upon arrival at the airport, just to have their QR codes scanned. After that, they have to line up again to have their passports scanned at the Immigration counter, when in other countries like Singapore, Immigration officers process both health declarations and passport scanning.
The DOT chief has also persuaded the Inter-Agency Task Force on the Management of Emerging Infectious Diseases to recommend that Marcos issue an executive order relaxing the indoor masking protocol, to help attract more tourists to the country. The EO will also allow unvaccinated foreigners to enter the Philippines “with only the requirement of presenting an antigen test taken 24 hours before departure, or an option of taking an antigen test upon arrival in the Philippines,” said Frasco in a news conference. (See, “PBBM agrees to make indoor face mask use voluntary to boost tourism–Frasco,” in the BusinessMirror, October 26, 2022.)
Earlier, Marcos already made mask-wearing outdoors voluntary.
On Friday (October 28), Marcos signed Executive Order 7, lifting the mask mandate for indoors. However, wearing of facemasks remains mandatory for health facilities, medical transportations, and public transportation.
The new issuance still “encouraged” mask wearing for the elderly, individuals with comorbidities, immunocompromised individuals, pregnant women, unvaccinated individuals, and symptomatic individuals.
Despite the easing of the rules for mask wearing, everyone is enjoined to continue to comply with the minimum public health standards (MPHS).
Grateful to still be around
Meanwhile, most stakeholders are grateful that business has been picking up.
Veteran hotelier Jose Mari del Rosario, president of Phinma Hospitality, says average hotel occupancy for Microtel by Wyndham and TRYP by Wyndham is 60 percent this year, with the return of domestic travelers, mostly “corporate road warriors.” These are travelers from multinational FMCG (fast-moving consumer goods) companies, pharmaceutical firms, auditors and engineers returning to their projects.
He also notes the resurgence in the small meetings market, which is “very encouraging. What was a pleasant trendsetter is the government MICE business in Mindanao,” which has benefited their hotels in Davao and General Santos.
Phinma’s hotels are also seeing an uptick in foreign travelers, but mainly from balikbayans (homecoming Filipinos). “It will take a bit more time to see the foreign leisure travelers come back. Whatever foreign business is coming [for our group], it’s the locators within the industrial zones.”
The important thing, stresses Del Rosario, is their hotels survived. “That in itself was a feat and we were fortunate enough to just remain open. Profitability, while a primary objective, took a backseat.”
To sustain the hotel industry’s recovery, he hopes for a “resurgence in international travel soon, based largely along the increased connectivity/flights, and strong demand build-up from key source countries.”
From zero to revenues
With a surprising surge in bookings due to the reopening of the country’s borders in February, Rajah Tours Philippines will likely end the year with about P15 million to P18 million in revenue, a sharp turnaround from “our zero revenue last year,” says its president Jose C. Clemente III. Of course, this is still a far cry from the P80 million to P90 million in revenue the company was raking in annually, prepandemic. Its clients this year are mainly from Canada and Europe.
He admits that, even if they will see any profit this year, “It will be very thin,” adding, “majority of our profits are still being used to pay for the debts we accrued during the pandemic.” Rajah Tours was one of the companies which tapped the Small Business Guaranty Corp. loan facility for micro, small, and medium tourism enterprises, which was set up with P6 billion in funds from the Bayanihan 2 Act under the Duterte administration.
To keep costs down even as they see an increase in business, Rajah Tours is operating with just seven employees, compared to 27 prior to the pandemic. “We’re keeping our overhead down and adopting hybrid work modes to maximize our revenues. We can still handle the business [with seven staff members] as we continue to ramp up. But we don’t see adding new staff until the first quarter of 2023, at the earliest, and depending on prevailing conditions.”
Still, Clemente is optimistic about a stronger rebound in 2023; “forward bookings are looking good.” The tour operator participated in the recent Philippine Travel Exchange of the TPB, and got “solid leads” from their meetings with travel buyers from the US, Europe and Asia. “Most of them are coming in for next year and beyond, most likely towards their summer and winter of 2023.”
He looks forward to attending travel trade shows abroad, such as Fitur in Madrid and ITB Berlin, in the first quarter of 2023. “As we start attending trade shows and talk to our partners, I think we can give buyers a better picture of what they can expect when they come here. Sometimes you just really need the face-to-face meetings.”
MICE still struggling
While travel agencies, tour operators and accommodation establishments are benefiting from the increase in foreign tourist arrivals, this is not the case for the MICE sector.
Marisa Nallana, president of the Philippine Exhibitions and Trade Corp., shares, “Because of China’s policies, they are absent in our MICE events. They had a large presence prior to pandemic and was able to fill up a lot of spaces in convention centers [for trade shows]. These days, we are contending with smaller, local events. [Event managers and organizers] who rarely consider government projects are now actively participating in bidding for these projects.”
A number of these organizers have resumed their business just to show their presence in the market, “hoping to break even. Some shifted to the digital business, concentrating on local MICE events,” she added.
The situation is slightly better for event venues with more local MICE shows being held this year.
Agnes Caparas Pacis, vice president-Commercial, SM Hotels and Conventions Corp., says, “We expect to finish 2022 with over 1,000 percent better in revenues versus 2021. This, however, will still not make up for the major slowdown in business in 2020 and 2021. The revenues in 2021 set us back by more than 80 percent of our usual prepandemic revenues for the eight SMX Convention Centers across the country.”
A long way to go
She notes the relaxing of alert levels allowing for freer movement of the public, along with the reduction in Covid cases, helped SMXCC’s business pick up by the second quarter.
“This last quarter of the year is starting to show some level of normalcy compared to pre-pandemic levels as far as number of event inquiries is concerned, with a good number of full in-person yearend parties, trade shows and association conferences returning, though on a smaller scale. The trade shows especially are seeing some downsizing of their usual leased spaces, with the China contingent still not able to participate, for one,” echoing Nallana’s sentiment.
In the case of event organizers, “there is still a long way to go, 2023 included,” says Nallana. Aside from trying to determine a MICE model that will address the new market behavior resulting from the current pandemic, event organizers are still pained by the loss of personnel. “It’s a challenge. The industry has to re-train people; most left, retired, or were retrenched. So, 2023 will remain about connecting/global linkages, hoping for partnerships, and getting a piece of MICE events to be held in the country.”
Image credits: Nonie Reyes, DOT