Foreign Tourism Falls Short in Philippines

February 16, 2015 at 15:54


VIGAN, The Philippines—Horse-drawn carriages clatter along cobbled streets between rows of 18th-century merchants’ houses in what is widely regarded as Asia’s best-preserved Spanish colonial town.

Domestic tourism is thriving in Vigan, but this gem of the Philippines—a Unesco World Heritage site recently picked in an online poll as one of the “New Seven Wonders of the World”—isn’t attracting anywhere near the number of big-spending foreign tourists that local officials would like.

At the start of tourism season in “Visit the Philippines Year 2015,” the challenges facing Vigan are replicated nationwide, effectively capping the Philippines’ tourism growth.

Shortages of modern airports and hotel rooms are seen as the main barriers, while a spate of severe natural disasters and a Chinese travel advisory portraying the Philippines as dangerous have also deterred some potential guests.

Even so, the number of foreign tourists coming here has been increasing, thanks partly to a colorful marketing campaign that branded the country as a sunny getaway of powdery beaches and world-class dive sites, crowned with a winning slogan: “It’s More Fun In The Philippines.”

Last year the archipelago nation drew around five million foreigners, according to initial estimates from tourism officials—a record. But that still fell short of the targeted 6.5 million, and the government’s main goal of 10 million foreign visitors in 2016 is looking out of reach.

Meanwhile, neighboring Malaysia and Thailand each pull in five times as many foreign tourists.

“We’re still playing catch-up,” said Mark Evidente, president of Manila-based tourism development consultancy TwoEco Inc. “Ten million [tourists by 2016] was always very ambitious. Even if we’d built the airport capacity to bring in the 10 million, we’d have had nowhere to put them.”

But the Department of Tourism hasn’t given up.

“The target of 10 million has not changed,” said Undersecretary for Tourism Development Benito Bengzon Jr. “The entire tourism industry has shifted to high gear as we roll out ‘Visit the Philippines Year 2015,’ ” he said, referring to the government’s newest campaign.

Mr. Bengzon rejected the idea that tourism was underperforming: the sector generated $5 billion in foreign tourist income—equivalent to 6% of gross domestic product—in 2014 and employed three million people, he said.

In Vigan, tourism has shot up—from virtually zero 20 years ago to nearly half a million in 2013, largely due to the town’s dedication to conserving its heritage architecture, Mayor Eva Maria Medina said.

But the boom is domestic, she said, with relatively few foreign visitors venturing here. Vigan has a small airport, Ms. Medina said, and difficulty of access deters foreigners with limited vacation time.

Those kinds of challenges aren’t limited to Vigan.

After years of planning, new airports are now under construction on the popular resort islands of Bohol, Boracay and Cebu. Clark International Airport—a converted U.S. Air Force base north of Manila—is also being expanded.

But the main bottleneck, Manila itself, which currently handles 32 million passengers a year in a facility designed for six million, won’t be fixed soon, with plans for a replacement airport still on the drawing board.

As with airport expansions, new hotel developments are belatedly catching up with surging demand.

“The shortage of good hotels has historically been a factor in holding back the country’s tourism sector,” said Jose Emmanuel Jalandoni, senior vice president at Ayala Land Inc., one of the Philippines’ biggest property developers.

Ayala Land is expanding its hotel portfolio from 650 rooms in 2013 to 6,000 rooms by 2020, Mr. Jalandoni said, and rival developers are expanding at a similar rate. Colliers, a property consultancy firm, said the number of hotel rooms in Manila increased around 23% last year to over 21,000—still a long way behind Bangkok, for example, which has around 100,000.

Mr. Evidente said more rooms would have been built by now if the government had done more to incentivize the developers of hotels and resorts. He said the government had drawn up plans for 78 special Tourism Development Zones offering tax breaks, but had failed to set them up. “That’s five years lost,” he said.

Mr. Bengzon said the government was sticking to its National Tourism Development Plan, which includes proposals for the 78 tourism zones, but didn’t say how soon they would be up and running.

On the island of Boracay, resort owner Nenette Graf said she hoped the government would patch up its rocky relations with China. Beijing’s travel advisory telling people to steer clear of the Philippines had cost Boracay up to 200,000 Chinese tourists since September, she estimated.

China has been a fast-growing market for Philippine resorts, though Mr. Bengzon said South Korea, the U.S. and Japan are still the top three.

But the biggest turnoff is the “terrible experience of air travel here,” said Ms. Graf, recalling how thousands of tourists spent Christmas stranded in Manila airport as a result of flight cancellations and overbooking by local airlines.

That’s no fun, she said, even in the Philippines.



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