Cebu’s hotel sector positioned for more developments — Colliers

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CEBU-CORDOVA LINK EXPRESSWAY (CCLEX) — CCLEX.COM.PH

CEBU’S LEISURE sector continues to perform well as shown by impressive rise in hotel occupancies and average daily rates. This is understandable given that Cebu remains as one of the most visited domestic destinations in the Philippines. This has been resulting in more property developers scouting aggressively in Cebu for the next viable location for a hotel or a leisure-oriented township.

Data from the Department of Tourism (DoT) revealed that foreign arrivals reached 3.96 million as of the first eight months (8M) of 2025, down 1.6% from 4.03 million a year ago. Given the current pace, the Philippines is again unlikely to breach even the 7.7 million arrivals set by the Philippine government in 2024. Tourists from South Korea dropped by 19% to 877,700 in 8M 2025, while arrivals from China also plummeted by 24% year on year. In 2019, China accounted for about a fifth of the 8.26 million international arrivals recorded during the year.

DOMESTIC MARKET FILLING THE VOID
Despite lackluster arrival figures, the Tourism department reported that the share of tourism to the country’s economy rose to 8.9% in 2024 from 8.7% in 2023. The Philippines also has the largest domestic tourism market in Southeast Asia, accounting for more than a third of the region’s total, with domestic tourism expenditure growing by 16.4% from P2.7 trillion ($48 billion) to P3.1 trillion ($55 billion). Tourists are also spending more and staying longer, with average expenditure per arrival at $2,073 in 2024 (from $1,218 in 2019) and length of stay at 11 nights in 2024 (from nine nights in 2019). In our view, domestic tourism will continue to be a catalyst for Philippine tourism. In 2023, the Tourism department recorded 55.3 million overnight travelers, up from 39.9 million in 2022, with Cebu attracting four million travelers.

Property developers planning to expand their leisure footprint need to keep an eye on Cebu. We remain bullish with our growth projections for Cebu as it continues to receive a good mix of foreign and domestic tourists. Cebu continues to corner more foreign investment pledges and the investors’ oculars and due diligence should have a positive impact on the demand for business hotels within the city’s information technology and business parks.

STABLE HOTEL OCCUPANCY IN FIRST HALF
To provide context let’s look at Metro Manila hotel occupancy then compare it with Cebu hotels’ average occupancy at the peak of covid crisis versus 2024 occupancies.

In the first half (H1) of 2025, average hotel occupancy in Metro Manila remained stable at 64% (+1% YOY). In 2025, we project average occupancy to hover at 60%, as international arrivals have yet to return to pre-pandemic levels and a sizeable number of new hotel rooms are expected to come online in H2 2025, putting a downward pressure on occupancy and daily rates of three-star hotels.

Metro Manila occupancies are pretty decent already compared to pandemic period occupancies of only 20% to 30%, when most hotels were used as quarantine facilities.

As of end-2024, key destinations outside Metro Manila have recovered from their pandemic lows especially Cebu. From hotel occupancies of between 10% and 40% in 2020 and 2021, these locations are now recording 50% to 80% occupancies, with Cebu already at pre-pandemic occupancy level. Colliers believes that occupancy will likely be sustained due to the steady demand from domestic and business travelers.

From 2025 to 2028, Colliers expects the delivery of nearly 4,000 rooms in Cebu, with foreign brands accounting for 65% of the new supply. Among the new foreign-branded hotels likely to be completed during the period include Radisson Red Mandaue, Fairfield by Marriott Mahi Mactan, Somerset Gorordo Cebu, Mercure Mactan Cebu, Sofitel Cebu City, Park Inn by Radisson Cebu South Road, Citadines Mactan, Pullman Cebu Mactan Hotel and Residences, Asai Hotel Oslob, and Hilton Garden Inn Mactan. Foreign brands continue to expand in Cebu thru partnerships with local players and this should further excite leisure and business travelers.

Colliers believes that hotel and leisure-themed developments generally benefit from improving connectivity. Major hotel projects in the Cebu-Bohol corridor, for instance, are taking advantage of improving access and road network within Central Visayas. These projects will only enhance Cebu and its environs’ tourism attractiveness moving forward.

Joey Roi Bondoc is the director and head of Research of Colliers Philippines. joey.bondoc@colliers.com