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With a fast-growing economy and an aggressive tourism marketing campaign, the Philippines has seen growth in the influx of local and foreign tourists, enjoying an average growth rate of 10.3% the past three years. According to the Department of Tourism (DOT) projections, this rate is expected to reach 16.2% in 2016, in anticipation of the ASEAN integration that is estimated to generate an additional 2 million visitors in 2015. Opportunities in the hotels sector The tourism industry's growth momentum is opening up several opportunities. Currently, aggressive room pricing is being experienced in the hotel industry due to the relatively low supply of hotel rooms compared to its Asian competitors. Aside from putting pressure on prices, this shortage also increased competition for available assets among investors and has spurred developments from major and 2nd-tier property developers in the country. Why invest in Philippine hotels now While global growth stays in low gear, portfolio managers and investors remain in search of alternative markets that offer good yields. The Philippines' hotels and leisure sector offers an opportunity for investors to take advantage of the country's fast-paced growth and get higher yields compared to what's currently being offered by traditional markets.
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Why Philippines Now?
March 2014
Top 3 Reasons to Invest in Hotels
Opportunities in the hotels sector
Growth in the influx of local and foreign tourists
Expected tourist growth rate of 16.2% in 2016 in anticipation of ASEAN integration
Shortage in available assets for
investors
Aggressive room pricing due to low supply
Why Philippines?
The Philippines welcomed a total of 4.6 million foreign visitors in 2013, a 9.6% growth vs. 2012
DOT is targeting to achieve 6.8 million international visitors in 2014 which is more than 20% increase from previous year
They further expect to reach 10 million international visitors by 2016
0
2
4
6
8
10
12
Millions arrivals International Visitors Projections
International Arrivals
Source: Department of Tourism and KMC MAG Group Research
More opportunities for global investors
Why invest now?
Strong demand
Key tourism facts show strong demand.
4.68 million Tourist arrivals (2013)
9.4 nights Average length of stay
(Foreign)
$4.4 billion Tourism revenues (2013)
13.4 nights Average length of stay
(US)
64% Occupancy rate in
Metro Manila
18.8 nights Average length of stay
(OFWs)
Total domestic arrivals in
2013 is at 44.1 million.
Foreign arrivals reached 4.7-M, only 10% of the number of domestic visitors.
Domestic tourism also creates demand.
Source: Department of Tourism (DOT) and KMC MAG Group Research
0
10
20
30
40
50
60
2012 2013 2014
Millions arrivals Domestic Arrivals Projections
1. Manila
2. Cebu
3. Davao
4. Tacloban
5. Puerto Princesa
6. Iloilo
7. Kalibo
8. Bacolod
9. Tagbilaran
10. Cagayan de Oro
Top 10 Domestic Air Travel Destinations 2013
Why invest now?
Room to grow
The Philippines needs more rooms. As of 2013, there are only 23,181 rooms in Manila alone, falling short of the requirement which is at 47,000 hotel rooms.
Budget airlines dominate airline
industry, and yet there remains a gap in market for budget hotels.
In the pipeline (2014-2015), there is only 15% of overall upcoming supply (budget hotels).
Decreased layovers in Manila show higher interest in other PH tourist destinations, providing opportunity for hotel investment and expansion.
Market Brief
Why invest now?
High growth of hotel rates
Average five-star room rates has grown by 3.7% in 2013, reaching $333 per night
Four-star room rates increased by 1.1% to $273 per night
Three-star room rates increased by 9.5%, showing high demand for high-quality budget rooms local and foreign tourists
Corporate rates also grew 15% last year
Average Hotel Room Rates (Manila)
Class
Published Rates (USD)
Corporate Rates (USD)
1H2013 2H2013 2012 2013
5-Star 321 333 209 235
4-Star 270 273 191 224
3-Star 147 161 118 138
Incorporated in 2009
New Headquarters: Sun Life Centre,
Bonifacio Global City
Branch Office: Rufino Pacific Tower,
Makati
Has a pipeline of over 1 million square
feet
1.5 Billion (Php) in Capital Markets
transactions in 2013
About KMC MAG Group
KMC MAG Group key facts
Over 100 competitive staff employed
Strong Media Exposure
600,000+ square feet of commercial &
residential properties which were leased and sold for 2013
300+ companies assisted
in the last few years in their business set up in the Philippines
Recognized globally. #1 Best in Real Estate Agency awarded by International Property Awards
KMC MAG Group is an international Associate of Savills
Savills is a leading international real estate services group listed
on the London Stock Exchange
Savills has approximately 25,000 employees and 500 offices
worldwide
The services of Savills include residential, office, industrial, retail,
leisure, healthcare, hotel and mixed use development schemes
International Network
PHILIPPINES Manila
Service lines overview
Valuation
Investments
Consulting & Research
Tenant Representation
Asset Management
Property Management
Facilities Management
Residential Services
Hotels and Leisure
Project Marketing Project Management
Research & Development
Construction Operation
Serviced Offices
Offshore Corporate Services
Yves Luethi Vice President yves.luethi@kmcmaggroup.com 63 917 869 27 98
Antton Nordberg Research Manager antton.nordberg@kmcmaggroup.com 63 917 599 44 30
For more information, contact us.
(+63 2) 403-5519 research@kmcmaggroup.com kmcmaggroup.com
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