Asian market fuels Cebu tourism growth in 2012

CEBU, Philippines - Although the visitor arrivals and occupancy rates have been outperformed with the oversupply of rooms, the stability of the tourism industry in Cebu has mirrored the growth of the local hotel, resort and restaurant sector for this year which was fueled by the continued performance of Asia as an open market, improvements of local and foreign airlines and the constant tourism campaign “It’s More Fun in the Philippines.”

This is according to Hans Hauri, president of the Hotel, Resort, and Restaurant Association of Cebu (HRRAC), who is also the general manager of Marco Polo Plaza Cebu.

He cited in the industry’s yearend report released recently that although 2012 could not be considered as a record year for the sector, the overall tourism industry has showed good growth with its increased visitor arrivals which was also quickly consumed by the additional supplies in rooms available.

Its stability is manifested in the occupancy levels recorded across Cebu with 66% in 2008, 56% in 2009, 61% in 2010, 59% in 2011 and an estimated 61% in 2012.

In terms of various categories of hotels, occupancy levels posted 67% in the deluxe class, 72% in the first class, 51% in the standard class and 57% in the economy class.

The room supply growth in Cebu City, on the other hand, showed a 20% increase to 3,325 rooms available in 2009, 19% increase in 2010, 15% increase in 2011 and 11% increase this year for a total of 5,083 rooms available in the deluxe, first and standard class hotels.

Hauri further noted that the industry projects another 10% increase for 2013 or an addition of 500 rooms which are now under construction.

He added that room supply is to be measured against a backdrop of movements of tourist arrivals which are estimated to surpass the two-million mark this year with its 9.8% growth in 2010, 13% last year and an estimated 11% for 2012.

“In another way, room supply outpaces arrivals, hence there is stagnation in both occupancy and oversupply,” he said.

He expressed optimism though that the 2,000,000-mark will be passed before yearend.

It is evident with the increase of tourist arrivals for Cebu in double-digit figures at 11% from January to September 2012 of which foreign arrivals account 13% while domestic shared 9.8%, he said.

With a difference of 10%, the average occupancy rate between Mactan resort and city hotels posted 71% and 61% respectively with an average length of stay estimated at 4.8 days for resorts and 2.9 days for city hotels.

Leisure visitors and business and meeting travellers both account 50% of the total tourism market share. 

Corporate travels are attributed by industries such as the information and communications technology, business process outsourcing, banking and financial services, manufacturing, trading and education.

While the pharmaceutical and insurance industries drive the meetings, incentive, conference and exhibition business.

National associations, on the other hand, rotate their annual members meetings nationwide particularly in Manila, Cebu, Baguio, Davao and Subic.

Asked which quarter of the year the industry did well, Hauri pointed out that there is no exact seasonality with real peaks or troughs in Cebu as the variance between high and low seasons differ only at 73%  and 58% occupancy rates respectively across the whole hotel and resort industry.

He cited that the first quarter of the year is traditionally considered the busiest period for the industry with the observance of the festive season, Sinulog and Chinese New Year celebrations and the general traffic of balikbayans and “sun-seekers” from colder areas like Russia and Scandinavia.

Another peak season that he noted is the period July and August that is conditioned by school-holidays in major countries.

He further commended the airlines spearheading the initiatives to drive new business opportunities. These include the 5 major airlines such as Philippine Airlines, Cebu Pacific Air, AirPhil Express, Zest Air and Sea Air/Tiger Airways which are all servicing both domestic and international routes.

“When looking at their recent purchases of new aircrafts made, and knowing that these new aircrafts are not replacement for older equipment but adding capacity to the market, we count ourselves fortunate in sitting in a growth-filled tourism arena, driven mostly from within Asia,” he stated.

He also cited that contribution of foreign airlines such as Air Asia, Jeju Air, Busan Air, Korean Air, and Tiger Airways on the international route-network.

Hauri also said that the relative stability of the Asia as a more independent market place and the strengthened tourism campaign of the Department of Tourism are among the new developments that influenced the industry performance as a whole.

He added that the increased level of income from more developed economies to fulfill the dream of a voyage and the limited service carriers offering advantageous fares are the determining factors that attract the eyes of potential travellers.

He also described the campaign “It’s More Fun in the Philippines” as the new “wind in the sails” that draws out rest-and-recreation-seekers while enticing first-time travellers to return with its varied and attractive tourism products.

Hauri said that the sector aims to grow the foreign arrivals due to their lucrative higher spending capacity that generates income to those engaged in the tourism industry.

He also cited the need to more air-connections from major continents like Russia, USA and Europe with a connection via the Middle East as a must. 

To attract foreign carriers, government has initiated a number of remedial measures such as the abolishment of the Common Carrier Tax and Gross Billing Tax and the current placement of Air-Safety at Category 2 back to Category 1 that will give local carriers the space necessary to expand further into overseas markets, and overseas carriers with the necessary backing to service the Philippines.

Amid the present dispute over the Spratly Islands that brought the market to a literal standstill, he noted China as the most potential market among the neighbour countries of the Philippines.

“Naturally we are concerned about the China-market as the most potential in our neighborhood; we truly hope that politics might be put aside and the resumption of a normal flow of travelers can be envisaged. The Philippines is a pre-destined area for the mostly first-time travellers to stimulate the interest to travel through the soft and friendly service delivery, its attractive scenic beauty and natural environment,” he continued.

He added that incentives should also be offered to both new investors and major capital expenditures for the maintenance and preservation of a property.

Meanwhile, Hauri perceived the Philippine tourism industry to further flourish through air-traffic and other actions related to foster and support its goals.

These include the acceleration of negotiations of bilateral agreements, and the cancellations of existing air-agreements that are not consummated by either carrier, local or foreign to make space for new entrants.

He also cited visa on arrival as a priority for the industry to resolve the hurdle of obtaining a visa prior to travelling to the country.

“It must be seen as a priority, but I am quick at saying “it’s not all for free”. We can collect visa fees on arrival as other countries do but the necessity to obtain a visa prior to making the journey to the Philippines is a real obstacle to facilitate the numbers of tourists expected,” Hauri concluded.

Tourism is considered to be the 3rd largest industry globally with 60% of its potential visitors comes from within ASEAN and 40% of the global population within the neighborhood. (FREEMAN)