DUE to strong demand for accommodation facilities on the back of tourism growth in the Philippines, the hospitality industry’s capacity is seen lacking to host both the foreign and local visitors, according to Pinnacle Real Estate Consulting Services Inc. (Precsi).
In its Market Insight report for the third quarter of 2017, the real-estate company cited the Philippine Hotel Owners Association’s (PHOA) projection that Metro Manila will have a room gap of 69,185 in the coming years.
Hotel-room inventory in the metropolis currently stands at 24,000. They are in the deluxe category, or the three- to five-star hotels. The estimated weighted occupancy is at 65 percent to 70 percent.
While international and homegrown hotel brands are now introduced in the market to attract the increasing tourist arrivals, Precsi Director of Research and Consulting Jose Romarx Salas said the room supply in the country is still lower than its counterparts in Southeast Asia.
In Metro Bangkok, for instance, the number of available hotel rooms aggregates to 44,000.
The room inventory in the domestic market is more likely to decrease further, he added, with the increasing requirements in other parts of the country.
In Cebu-Mactan, the group of local hotel owners projected a need of 14,931 rooms, while Boracay will have a gap of 17,775 rooms.
“Thus, PHOA is seeking incentives from the government to compensate for the handicaps faced by the Philippine tourism industry,” Salas said.
At present, the incentive provisions of the Tourism Act of 2009 being enjoyed by hotel players include the income-tax holiday (ITH) for new enterprises in the Greenfield and Brownfield Tourism Zones for a period of six years from the start of business operations. This may be extended to a maximum of another six years, depending on the substantial expansion or upgrade to be undertaken by the enterprise before the expiration of its ITH in the first six year.
Newly registered tourism economic zone enterprises shall, likewise, be allowed to carry over as deduction from gross income their net operating loss for the immediate past year taxable year. This could be done for the next six consecutive years immediately following the year of the loss..
A 5-percent income tax on gross income in lieu of all other national and local taxes, license fees, imposts and assessments, except real-estate taxes and such fees, may be imposed by Tourism Infrastructure and Enterprise Zone Authority after the ITH.
Other privileges would include exemption from all taxes and customs duties on importation of capital investment and equipment, as well as tax deduction not exceeding 50 percent of the cost of environmental protection and cultural heritage preservation activities, sustainable livelihood programs for local communities and similar activities.
But all these are not enough to convince more players to build hospitality structures in the country, Salas said. It was reported that the PHOA is asking the government additional incentives, such as the retention of “Pioneer” status for hotel projects, the grant of Board of Investments fiscal incentives for tourism developments throughout the country, the lifting of all investment restrictions in the accommodation sector.
Precsi earlier reported that top developers have been gearing up their local brands given the bullish tourism outlook.
The Robinsons Land Group has been expanding its Go Hotel operations to 16 hotels. The Gokongwei-owned real-estate business is looking to replicate its successful Summit Hotel in its Robinsons Magnolia development.
Meanwhile, Ayala Land Group has rolled out six Seda Hotels, while the Vista Land Group is building four hotels under the Mella Brand to add to its current operation of the Boracay Sands Hotel.
The second-tier Eurotower Group, on the other hand, has ramped up its operations to nine Eurotel branches and 39 Sogo branches.
Department of Tourism (DOT) statistics say the country’s overall international arrivals for the first half of 2017 reached 3.36 million from 2.98 million during the same period last year.
Despite the Marawi conflict, there is a significant increase of 12.73 percent in tourist arrivals between the two periods. Given this, the tourism industry is on track to meet the target of 6 million arrivals by end of the year, the DOT said.
More important, revenues generated from visitor receipts amounted to P146.33 million from January to June 2017, or 14.89 percent higher than the P127.37 million for the same period last year. This could be attributed to strong spending power of both the local and foreign travelers.