Room glut affects growth of branded hotels in Cebu

CEBU, Philippines - As Cebu’s accommodation supply surged by 60 percent in a span of two years, the Hotel, Resorts, and Restaurants Association of Cebu (HRRAC) finds it necessary for Cebu to double its efforts in promoting the province to avoid the glut in hotel room availability.

HRRAC president Hans Hauri said that there is a need for Cebu to attract more travelers, whether in leisure, conventions, and big events, so that the hotel industry can sustain the business. At least 700 rooms have been added to the existing accommodation inventory within the Metro Cebu area alone.

At present, because of the newly-built hotels within Cebu City, Hauri said occupancy rates of branded hotels, such as Marco Polo Plaza Cebu of which Hauri sits as general manager and area general manager for Marco Polo Hotel properties in the Philippines, have been affected.

Industry rate within the city hotels registered an average of 52 percent. Marco Polo because of its sustained active promotional campaign in both local and foreign markets posted 62 percent average occupancy rate at present.

Although, demand for accommodation in Cebu has experienced an all-time-high in the first two months of this year starting with the Sinulog, followed by Chinese New Year season in February.

The occupancy rate has plateaued starting March of this year, probably because of the tragedies that hit Japan, among other issues, Hauri said.

The opening of new hotels such as Harolds Hotel, Radisson Blu, Diamond Suites, among others have provided another 700 room accommodations for Cebu, from over 6,000 room inventories. “Suddenly, customers are getting confused.”

With this development, branded hotels are affected by the entry of new hotel accommodations, as these new hotel facilities offered cheaper, alternative room rates for customers.

However, Hauri said aside from pushing more promotional events to invite a greater number of visitors to Cebu, not just for plain leisure, vacation, but also for big conventions, and the potential MICE (Meetings, Incentive, Conference and Exhibition), Cebu should also invite more internationally-known hotel chains, to help promote Cebu to the global market.

Hauri said the presence of branded hotel names plays a critical role in inviting foreign tourists to the City. The wide network of international hotel chain can lure foreign travelers to an area, also promotions are widely available to the world market, through its network of hotels around the world.

Although, Hauri said he supports the idea of “room supply should be ahead of the market,” the concern now is to sustain the dynamism of hotel business in hotel, while it is almost threaten by glut of room supply, if not given utmost attention.

Unlike in the past, that Cebu’s demand for room accommodation is always at a high level, because it is the commercial hub for Southern Philippines, but the entry of SM retail chain to provincial areas like Davao, Bacolod, Cagayan de Oro, has lessened the number of out-of-town visitors to come to Cebu for shopping.

Moreover, the emerging convention locations such as Cam Sur, Subic, Clark, Baguio, among others has given the local and international MICE market alternative to consider new convention destination, other than Cebu, Manila and Davao.

These developments, has threatened the attractiveness of Cebu, thus affecting the level of occupancy rate especially for City hotels, Hauri said.