After decades of lethargic growth, the Philippine tourism industry is finally riding on strong tailwinds. From January to November last year, foreign tourist arrivals topped 7.46 million, which translates to 15.58% year-on-year growth. This is nearly four times the average global growth rate and 2.5 times more than the Asian average. Although whole year statistics have not yet been consolidated, it is almost certain that the country surpassed its 8.2 million foreign visitor target.
As for domestic tourism, the National Tourism Development Plan set a target of 79.3 million domestic travelers for 2019. This target was breached way back in 2016. Local holidaymakers are expected to have topped the 120 million mark last year. This is due to a trifecta of reasons, namely: the ever-growing number of budget direct flights to domestic destinations, an effective marketing campaign by the Department of Tourism (DoT) and a growing middle class with expendable income.
All this bodes well for the economy. Revenues derived from the tourism industry will surpass P2.888 trillion (roughly 35% more than revenues generated by the IT-BPO industry) whilst generating 5.8 million jobs for our countrymen. The tourism industry is already the second largest contributor to national revenues.
What we are witnessing today is the Philippine’s gold age of tourism. We have reached that critical point where infrastructure development (airports and access roads) are coinciding with the rise of new tourist destinations around the country. We have to give credit to the local governments of El Nido, Sagada, Siargao, and many more for developing their localities into strong tourism products. After many decades, we are no longer Manila-centric, said DoT Undersecretary Benito “Bong” Bengzon, Jr., who was our guest at the Spanish Chamber of Commerce last week.
The next few years will be even robust for the industry. The DoT is looking at an annual growth rate of 12% until 2022. By then, revenues derived from tourism should reach P3.9 trillion on the back of 12 million foreign visitors and over 150 million domestic travelers. Many say, however, that with more provincial airports opening, the 12% growth rate earmarked is inordinately conservative. It could go as high as 17%.
While it is true that our 8.2 million foreign arrivals pales in comparison to Malaysia’s 28.1 million (estimated), Singapore’s 19.2 million (estimated) and Vietnam’s 18 million, we should factor-out the local residents who travel daily across borders by land. To get a more accurate figure of their net foreign arrivals, we should only consider arrivals by air and sea, asserted Mr. Bengzon. In which case, it is safe to shave-off 7 to 10 million from the gross numbers of these countries.
The Philippines, like Australia, cannot be accessed by land. Hence, our declared foreign arrivals are as accurate as it gets. Having said that, Australia is the more ideal model (and benchmark) for Philippine tourism. The Ozzies attracted just 9.8 million foreign visitors last year, but generated a whopping $155 billion in revenues, roughly three times that of the Philippines.
Its all about increasing length of stay and average spend. Records show that foreign visitors to Australia stay an average of 32 nights, far more than in Singapore at 4.4 nights, Malaysia at 6.2 nights and the Philippines at 7.11 nights. Apart from length of stay, Australia’s success is anchored on having multiple destinations, each having premium offerings in accommodations, gastronomy, and attractions.
The thrust is to make the Philippines a premium destination, declared Mr. Bengzon. This is especially true now that we have made a commitment to sustainable tourism. With the preservation of our natural wonders and cultural sites in mind, we can no longer play the numbers game. Our strategy has shifted to one that is value-focused.
Besides, market preferences have changed, noted Mr. Bengzon. Whereas curated tourism estates like Macau and Las Vegas and highly commercialized islands like Bali were the trend before, virgin communities are now the preferred destinations. Authenticity is the new “premium.”
Studies show that affluent professionals, honeymooners, divers, and leisure travelers now prefer off-the-beaten-path destinations where they can experience local culture. The rawer the better. However, they still require all the comforts of luxury dwellings including deluxe accommodations, concierge and chef service, personal security and land transfers.
With this in mind, the DoT considers El Nido, Ifugao, Sagada, Antique and Bondoc as priority destinations for development. Considered “potential destinations” are Siquijor, Camiguin, Batanes, and Sipalay. Both the DoT and the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) are aggressively promoting investments in these areas, with an emphasis on those that cater to leisure markets. Already under construction on an island off the coast of Zabales is an all-villa resort with its own airport that competes in the $1,500 per night category. Operated by an international chain, it is scheduled for launch in 2023. In Camiguin and Quezon province, resorts are on the rise whose rates are pegged at $2,000 per night. Demand for ultra luxury hotels far exceed supply, hence the opportunity for investors.
As far as source markets are concerned, Korea, China, the US, and Japan still lead in foreign arrivals. Unfortunately, we are not attracting as many tourists from the ASEAN as we should. The Philippines is the second to the last among countries visited by ASEAN people. The DoT considers ASEAN as an “opportunity market” and will intensify its marketing efforts, accordingly.
Apart from ASEAN, Turkey and Spain have shown tremendous potential. Spain has registered an annual growth rate of 20.84% since 2013. More than 50,000 Spaniards visited the Philippines last year. Other markets showing promise are Germany, the Netherlands, Italy, Switzerland, and Sweden.
To reach these market, the DoT has decided to tailor-fit its marketing strategies according to what is most effective in each country. Some markets may be heavy on digital marketing while others may rely on billboards. Some may utilize magazine articles while others may depend on TV ads. Gone are the days when ad placements on CNN and ESPN were the end-all-be-all for tourism promotions. The DoT has tapped BBDO Guerrero and Touch XDA as its partner for strategy formulation and media buying, respectively.
In terms of tourism products, the Philippines strength lies in sun and sea, diving, nature, and education tourism (for ESL courses). Still being developed are farm, leisure, and cruise tourism. Admittedly, we are weak in city life. Manila needs a lot of work to compete with the likes of Bangkok and Singapore.
The improvement of Manila is taking baby steps. Intramuros and Fort Santiago, through the efforts of the Intramuros Administration, have improved remarkably. The city of Manila, where our cultural sites and museums are located, is slowly realizing a revival with Mayor Isko Moreno at the helm. Still, the capital needs a massive urban renewal for it to be competitive.
We give kudos to Mr. Bong Bengzon and Secretary Berna Romulo-Puyat for ushering-in the golden age of Philippine tourism. Congress will do well to channel as many resources as possible to maximize the potentials of tourism.
Andrew J. Masigan is an economist