Hotels may now operate at 100% capacity in areas with relaxed lockdown measures, the Tourism department said on Wednesday. — PHILIPPINE STAR/ MICHAEL VARCAS

THE Philippines may only see a significant rise foreign tourist arrivals starting late 2021 or early 2022 as uncertainty over the pandemic continues, Fitch Ratings said.

Stephen Schwartz, head of Asia-Pacific Sovereign Ratings at Fitch Ratings, said gradual travel recovery next year would be led mostly by domestic tourism.

“While the Philippines and other countries may seek to build on existing travel corridors and adopt broader regional travel bubbles, a meaningful pickup in inbound international tourism flows may take time, perhaps not until late 2021 or 2022,” Mr. Schwartz said in an e-mail on Tuesday.

Some domestic travel has restarted as Boracay welcomed tourists and the Ilocos Region opened a “tourism bubble” exclusive to the region. Baguio City will start welcoming visitors from Metro Manila, Cagayan Valley and Central Luzon starting Oct. 22.

“The Philippines’ relatively low dependence on inbound tourism flows (compared, say to Thailand, which is closer to 12% of GDP) should limit the overall economic impact of a temporary loss of such spending, although businesses and workers in the tourism sector will still feel the hit,” Mr. Schwartz said.

Inbound tourism expenditure accounted for 3% of Philippine gross domestic product (GDP) last year, while domestic tourism expenditure accounted for 16%. In contrast, Thailand’s inbound tourism was 12% of its GDP.

Mr. Schwartz said Fitch Ratings expects tourism flows in the Asia-Pacific region to be subdued through 2021.

“Cross-border travel restrictions will be lifted slowly, as uncertainty lingers about the evolution of the pandemic and the eventual availability of effective vaccines and treatments. A resurgence of the virus remains an important downside risk to the outlook,” he said.

In a report released on Monday, Fitch Ratings said the pandemic would have a long-lasting impact on international tourism. Some Asia-Pacific economies like Macao and Maldives are more exposed because their GDP relies heavily on the sector.

But tourism-reliant economies that have strong public and external finances are “better placed,” the report said.

The Tourism department said inbound tourism revenues fell by 72% to P81 billion in the first seven months of 2020, with foreign arrivals falling by 73% to 1.3 million. The tourism sector employed 5.7 million people last year.

The Philippine Travel Agencies Association expects some recovery by the first quarter of 2021, as tourism corridors open. The association expects more travel through the Holy Week, Valentines Day and summer next year.

But Tourism Congress of the Philippines (TCP) President Jose C. Clemente III said businesses do not have a definite projection on when recovery will happen. Public reassurance of health safety as well as reasonable costs and ease of travel would help lead to recovery, he added.

Meanwhile, hotels may now operate at 100% capacity in areas under a relaxed lockdown, the Department of Tourism said on Wednesday.

Hotels, including those for “staycations,” can fully operate in areas under a modified community quarantine (MGCQ) and general community quarantine. The Tourism department will release guidelines on the expanded operating capacities.

“The decision to open at 100% operational capacity will be subject to the hotel management’s decision and compliance with the safety guidelines,” Tourism Secretary Bernadette Romulo-Puyat said.

Metro Manila is presently under GCQ, although business, travel and curfew restrictions have been relaxed. The region has been in lockdown since mid-March to curb the rise in coronavirus infections.

On Wednesday, the Health department reported 1,509 new coronavirus infections, bringing the total to 362,243.