OVER the next three years, property-research firm Colliers International Philippines (Colliers) sees hotel real estate investment trusts (REITs) as an attractive option for developers, given the sustained demand from the traditional sources such as Koreans, Chinese, Japanese and Americans.
Colliers said the growing number of foreign tourists should be supported by rising demand for Meetings, Incentives, Conventions and Exhibitions (Mice) facilities due to local and international events as well as a continued push for more domestic travel, driven by the popularity of the staycation concept in Metro Manila.
In the past three years, foreign arrivals have been growing by an average of 10 percent per year with the Tourism Department projecting arrivals to grow by about 15 percent in 2019 to 8.2 million tourists.
Chinese tourists, in particular, have been rising by 27 percent per annum from 2016 to 2018.
Colliers believes that REIT proceeds can be used by developers to either acquire international brands or build homegrown brands.
The REIT Law was enacted in 2009 with a goal of democratizing wealth and attracting more foreign investment into the property sector.
But the launch of REIT was stalled by a number of regulatory roadblocks, including taxation issues and a high public ownership requirement.
REITs are likely to be implemented this year as the government has agreed to relax the law’s restrictive rules.
Giant property players such as Ayala Land, Megaworld, Rockwell and Filinvest have become more aggressive in launching their own hotel brands such as Seda, Savoy, Aruga and Quest over the past three years.
Cebu players
Meanwhile, local developers, especially those based in Cebu, have been active in bringing in international brands.
These include Cebu Landmasters Inc. with the first Radisson Red in the country, AppleOne Properties’ Resorts Worldwide, Sheraton and Starwood Hotels in Mactan, and Grand Land’s Dusit Hotel.
“We project an occupancy of 70 percent in 2019 as we expect a subdued completion of new hotel rooms during the period. This is higher than the 69 percent posted in 2018,” said Colliers in a statement.
“We see similar occupancy from 2020 to 2021 as the delivery of new hotel rooms in the country’s capital tapers off coupled with a more aggressive completion of new hotels in nearby urban areas such as Clark,” it added.
Developers have been aggressive in building new hotels in Clark, Pampanga as they intend to capture a rise in tourist arrivals coinciding with the scheduled completion of the redeveloped Clark International Airport.
“Colliers International believes that improving the country’s travel and tourism competitiveness plays a crucial role in sustaining hotel occupancy rates and enticing local and foreign businesses to increase their leisure-related investments in the country,” the property research firm said.
“Among the major issues that the Philippine government needs to immediately address are safety and security, air transport infrastructure, and the business registration process. The latter is particularly important if the government wants to attract more leisure-related investments,” it added. (PR)