Philippine tourism positioned for take off

The year 2019 will be a banner year for Philippine tourism. If we are to go by the trends from January to September, the Philippines is poised to surpass its 8.2 million visitor target, clocking in a growth rate of 14.37%. At this pace, we are likely to supersede the 12.5 million arrival target by 2022.

Philippine tourism is finally positioned to take off in a massive way with all the pillars for robust growth slowly falling into place. In the last two years, several new domestic airports have become operational, nearly a thousand kilometers of roads were built to connect ports to tourism sites, new destinations have been developed (e.g. Romblon, Camiguin, and Siquijor) to complement established ones, and thousands of new lodging options have been integrated to the grid.

It took many years of hard work to get here and government will do well to capitalize on our position today. The objective is to accelerate growth to 20% or more. This was the growth rate of Thailand in the 1990s. Growing at this rate will generate an additional 1 million jobs per year and will allow us to double our tourism revenues in five years to $15 billion.

At this point, the name of the game is to achieve seamless travel in and out of the Philippines. It is all about making the end-to-end journey of the travelers as smooth and stress-free as possible. Doing so opens the way for the creation of fond memories and favorable endorsements, not horror stories and bad feedback.

The Word Economic Forum has identified 16 steps in a traveler’s journey, from pre-trip planning to post-trip assessment. Among them, five were identified as the cause of the most stress. They are: 1.) Visa Application; 2.) Airline booking; 3.) Airport departure gate and exit security controls; 4.) Immigration clearance; and, 5.) Customs screening.

Clearly, the airport experience is the most stressful part of the journey, which is why progressive governments spend billions to make these processes as painless as possible. Singapore’s Changi Airport started the trend of on-line check-in and bag drops to make the check-in experience less burdensome. The Dubai airport was the first to introduce facial biometrics for outbound immigration clearance. Qatar Airport was the pioneer in body scanning as well as facial and fingerprint biometrics. Vancouver airport was the first to utilize electronic immigration kiosks to make inbound immigration less intimidating.

In the Philippines, certain measures have been put in place to simplify airport procedures. Among them is the integration of travel tax and terminal fees to the ticket price (unless the traveler opts for a ticket that does not include these fees); on-line check-in, seat selection, and bag drops are now available in all airports; electronic generation of boarding passes are offered by some airlines; and electronic immigration kiosks are now installed in NAIA, Clark, Mactan, and Davao, although limited to Filipino passport holders only. While Philippine airports still have a long way to go in terms of technology adoption, authorities maintain that they are all in the plan and will be rolled-out in due course.

Liberalizing visa requirements not only relieves travel stress but also contributes towards boosting inbound travelers. Between 2013 and 2018, a wave of Asian countries, notably Japan, liberalized their visa policies by introducing visa-on-arrival and electronic-visa options. They have also increased the period of visa validity and expanded the list of visa-free nationalities.

The Philippines grants visa-free entry to 157 nationalities for a maximum of 30 days. China is our second largest inbound market while India is the 10^th — both nationalities are required visas for security and immigration reasons. However, Indians have recently been granted visa-free entry if they have a valid Schengen, Japanese, American, or Canadian visa.

The Philippines is a part of the ASEAN Common Visa Scheme whereby an ASEAN visa holder can gain access to all 10 nations in Southeast Asia. It is similar in form and intent to the Schengen visa. The scheme is scheduled to come on-line by 2025, if not sooner.

Achieving seamless travel means having the appropriate infrastructure to give tourists a pleasant airport experience and to get them to their final destination (and back to the airport) in the fastest way possible.

In 2017, 99% of arrivals to the Philippines came by air. This decreased to 95% in 2018 due to the increase of cruise passenger arrivals.

Airport development is a priority of both the Departments of Transportation and Tourism

Last year, the opening and/or expansion of the international airports in Mactan, Panglao, Clark, Iloilo, Kalibo, and Davao resulted in 40 new inbound flights from Australia as well as various parts of Asia and the Middle East. This translated to an addition of 1.6 million in-bound air seats. The Philippines posted a 10% increase in inbound air-seats, 4% more than ASEAN’s average.

In the first semester of 2020, Terminal 2 of Clark International Airport will be opened and will boost its capacity from 4 million to 12.2 million passengers per year. Meanwhile, the upgrade, rehabilitation, and expansion of the NAIA complex just merited NEDA approval and is now on the Swiss challenge stage. Given the slow pace in which the process is moving, the project proponents will likely receive their Notice to Proceed by 2022.

As for the much awaited Bulacan Airport, Finance Sonny Secretary seems to be throwing one monkey wrench at the project after another. Despite having settled all terms and conditions for the PPP deal, the Finance Secretary continues to ask for more concessions, in effect putting the project in limbo. The good Secretary must realize that we, the citizens, want this project to push through simply because the country needs it. Clark will not be enough now and in the future. We resent the fact that he is standing in its way of this project. As for seaport infrastructure, we can look forward to a proper cruise ship terminal to be built on reclaimed land behind Solaire Hotel at Entertainment City. Constructed by Bloomberry Cruise Terminals Inc. at the cost of $308 million, the luxurious Solaire Cruise Center will be inaugurated by 2021.

To compliment the Manila port, the Philippine Ports Authority will further develop the seaports of Boracay and Puerto Princessa. The three ports, taken collectively, are known as the “Turquoise Triangle.” Also in the pipeline is the expansion of the ports in Coron, Curmimao, Iloilo, Salomague, and Tagbilaran.

As far as land transport is concerned, the public works department has constructed 962 kilometers of new roads to link ports to tourist hotspots. For 2018 and 2019, it is spending an additional P49 billion to build even more roads. All these should translate to reduced travel time, better mobility, and greater convenience for our visitors.

Achieving seamless travel is the silver bullet that will take us from 8.2 million visitors to 15 million and beyond. Lets hope government keeps its eye on the ball and does not lose the momentum.

Andrew J. Masigan is an economist.