CEBU’S hotel industry is absorbing higher fuel, utility and food costs as weaker domestic travel and airfare volatility weigh on tourism demand, limiting the industry’s ability to raise room rates, according to the president of the Hotels and Resource Association of Cebu (HRRAC).
The group’s president, Mia Singson-Leon, said Cebu’s tourism sector remained resilient despite the fuel crisis and geopolitical tensions in the Middle East, but hotels were feeling pressure on both costs and occupancy.
“We cannot really just increase prices” to match higher operating costs because Cebu remains sensitive to price increases, Singson-Leon said in an interview with SunStar Cebu’s Beyond The Headlines program on Friday, Aug. 21, 2026.
Hotels have been absorbing the higher costs to protect their margins, although she said the industry could not sustain this indefinitely.
The pressure became more pronounced in the second quarter, when higher fuel prices pushed up airfares and led to fewer corporate trips, canceled meetings, incentives, conventions and exhibitions (Mice) events and weaker domestic leisure travel, she said.
Some travelers from Manila and other parts of the Philippines faced airfare increases of two to three times, making Cebu more expensive to reach and putting pressure on hotel occupancy.
International arrivals improved in the first quarter as long-haul markets recovered and new international flights boosted traffic. But the broader first-half decline was largely driven by weaker domestic travel after the fuel crisis, she said.
Still domestic market-driven
Cebu remains largely dependent on the domestic market, which Singson-Leon estimated at about 60 percent of arrivals, with international visitors accounting for the rest.
The industry therefore, needs stronger air connectivity alongside additional hotel capacity, she said.
“Where will they stay?” Singson-Leon said, describing the relationship between flights and hotel rooms as a two-way equation. More rooms alone will not fill up without additional flights, while more flights would require sufficient accommodation capacity.
Despite the near-term pressure, the industry sees Mice as one of Cebu’s biggest growth opportunities from 2027 onward.
The opening of three large venues has improved Cebu’s ability to compete for major international events, Singson-
Leon said. Such events generate business not only for hotels and venues but also for transport operators, restaurants, tour companies, retailers and suppliers, including micro, small and medium enterprises.
She said Cebu was already seeing inquiries for larger Mice events following tourism activities held in the province under the Association of Southeast Asian Nations.
Large Mice events, however, typically require bids several years in advance, making 2027 and beyond the more significant period for the sector.
Cebu is also seeking to broaden its international market base. South Koreans remain the largest international market for the island’s hotels despite a decline in arrivals, while Japan remains stable. Chinese arrivals are beginning to recover, while the industry is also seeing growth from Australia, the United States and Europe.
Singson-Leon said the longer-term goal should be a less seasonal tourism market in which different domestic and international markets offset each other’s slow periods.
Industry needs skilled workers
The industry also needs a stronger pool of skilled
workers. Filipino hospitality workers are in demand overseas, creating a potential labor shortage as Cebu’s hotel and tourism capacity expands.
A sign that Cebu is moving in the right direction would be skilled Filipino hospitality workers choosing to return and build their careers in the local industry, she said.
For now, however, infrastructure remains a major constraint. Traffic can consume several hours of a visitor’s day when traveling between Cebu’s tourism destinations, while internet connectivity remains a concern for Mice corporate and leisure travelers.
The industry is also calling for better air connectivity and measures that can help contain fuel, utility and other operating costs to make Cebu more competitive with other destinations. / KOC