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By Krista A. M. Montealegre
National Correspondent

Conflict fails to unnerve hotel developers

Posted on June 27, 2017

HOTEL developers and operators remain bullish on the country’s tourism prospects despite feeling the pinch of “short-term pains” from the conflict in Marawi City that is now on its fifth week.

Hotel operators in Mindanao said the clashes in Marawi that exacerbated the impact of the lean season have translated to relatively lower occupancy rates, although business has started to regain traction.
Developers have yet to scale back hotel launches, but they could be forced to do so if the conflict in Mindanao “persists for a little more time and conflict spreads out in other areas,” said Claro dG. Cordero, Jr., head of Jones Lang Lasalle (JLL) Philippines’ research, consulting and valuation advisory services.

“Tourism is more of an image buildup or marketing, and the more time you expose the area, specifically Mindanao, to undesirable image or perceptions, it might become more challenging to recover lost ground in the long term,” Mr. Cordero said in a mobile phone message.

Hotel operators in Mindanao said the clashes in Marawi that exacerbated the impact of the lean season have translated to relatively lower occupancy rates, although business has started to regain traction.

“The hotel business is very resilient. After a minor hiccup, things start to pick up again,” Michael Alexis C. Legaspi, AyalaLand Hotels and Resorts Corp. (AHRC) chief operating officer, said in an interview.

AHRC may even surpass its target to build 6,000 rooms by 2020 by a “few hundred more rooms,” Mr. Legaspi said.

Jose Mari R. del Rosario, Microtel Inns & Suites (Pilipinas), Inc. president and chief executive officer (CEO), said the “temporary” effect of the fighting has been limited to its Mindanao sites, adding that the domestic market remains “robust.”

At the same time, Mr. Del Rosario said: “It feels like we are walking on eggs -- the eggshell is so thin. It can easily break.”

“Tourism -- especially the foreign tourist segment -- is largely a perception issue,” he cautioned in a separate text message.

“We have to protect what we have now.”

Microtel has pushed back a plan to develop 20 hotels to the end of the Duterte administration in 2022 from the original target of 2016, citing a lack of supporting infrastructure.

Comments of others in the industry show that the fighting in Marawi has failed to dent the confidence of foreign and local hotel operators alike, as they chart expansion programs in the face of the government’s infrastructure push and warmer ties with China.

Dusit Thani is embarking on such expansion in the Philippines with the launch of the Dusit Hospitality Management College, an integrated hospitality school and hotel, in Metro Manila as well as two hotels in San Juan, La Union and Davao under the dusitD2 brand.

“The Philippines, as a destination, is quite exciting. There are a lot of things going on in the Philippines and I have full confidence in this lovely country,” Dusit International Group CEO Suphajee Suthumpun said during the signing ceremony for a partnership with Robinsons Land Corp. to operate its five-star beachfront resort hotel in Mactan, Cebu.

The Gokongwei-led developer targets to open three hotels a year depending on market conditions, Robinsons Hotels and Resorts General Manager Elizabeth Kristine D. Gregorio had said in an interview on Friday last week.

Likewise, Vista Land & Lifescapes, Inc. is gearing up for the expansion of its tourism and hospitality business in the next three years to complete its existing residential, commercial and office leasing portfolio. Development of industrial estates is also on the horizon in the next five years.

The optimism of the Villar-led integrated property developer is anchored on the Duterte administration’s “golden age of infrastructure” that will entail development and expansion of airports to increase the country’s capacity to accommodate more tourists.

“We’re very bullish on tourism,” Vista Land President Manuel Paolo A. Villar told reporters last week.

“As you know the Chinese has been more open to come to the Philippines. I think there have been more and will be more Chinese tourist arrivals in the Philippines, so you’re looking at the big growth in tourism.”