According to Colliers Philippines’ latest report on the hotel sector, the country’s hotel occupancy remains steady, and daily rates are increasing, despite a drop in foreign arrivals, particularly from South Korea and China. Domestic tourism is boosting the industry, especially the growing demand for MICE venues, as well as the emergence of new markets.

For the first part of the year, 2.5 million foreign tourists visited the country, compared to 7.7 million from the same period in 2024. South Korean arrivals declined by 19 percent, while Chinese arrivals shrank by 32 percent.

The slump in foreign arrivals was attributed to political upheavals in South Korea, the depreciation of the Korean won, and crimes involving South Korean nationals in the country. Meanwhile, the POGO companies, which proliferated from 2017 to 2019, exited, significantly contributing to the downtrend in Chinese arrivals. To fill in the gap, the Department of Tourism is drawing visitors from India, Taiwan, France, Australia, and Canada.

Joey Bondoc, Colliers Philippines research director, said, “In attracting foreign visitors, we are behind our neighbors when it comes to travel and tourism competitiveness due to poor infrastructure as well as a business environment. While foreign arrivals are declining, we are still sustaining hotel occupancies.”

Despite the lower arrivals, hotel occupancy rates are stable at 64 percent, with the business segment performing well due to increasing MICE (meetings, incentives, conferences, exhibitions) events. Four- and five-star hotels in Ortigas CBD, Makati CBD, and Fort Bonifacio recorded an average of 65 to 75 percent occupancy rates. The hotel rates in Metro Manila are also steadily rising at 3.7 percent, with Fort Bonifacio hotels leading the appreciation of rates.

Soft-launched in June, the Novel Hotel Manila in Taguig is the only hotel completed in the first half of 2025, adding 97 rooms with a function room capacity for 250 people.

From 2025 to 2027, Colliers forecasted an annual room completion of 1,600, with foreign brands coming in, including Mandarin Oriental, Dusit Greenhills Manila, AC Hotel Ortigas, Banyan Tree Manila Bay, and Hotel Okura Bayshore Manila.

However, Bondoc pointed out that the incoming hotels from foreign brands are at a 45 percent penetration rate, one of the lowest in Southeast Asia. “Definitely, the Philippines compares disappointingly against Southeast Asian peers, including Singapore, Indonesia, and Thailand. I think this is one major concern, because we attract the least number of foreign tourists, but what's positive is that these new brands are testing the waters.”

Outside of Metro Manila, new foreign-branded hotels that are scheduled to start operations include the Intercontinental Hotel in Central Luzon, Dusit Princess hotels in Batangas, Cagayan de Oro, and Bukidnon, and the Hilton Garden Inn, the first hotel from the brand to locate in the country, to name a few.

Local hotel operators are also expanding outside the capital region and locating in Pampanga, Tarlac, Cebu, Bohol, Bacolod, Cagayan de Oro, and Davao.

Domestic tourism continues to do the heavy lifting in the industry with a recorded 16.4 percent growth in tourism expenditure in 2024. In the same year, the industry contributed 8.9 percent to the country’s GDP. In 2023, the number of overnight travelers grew from 39.9 million to 55.3 million in 2022.

This year, another key development is the rise of the MICE segment. “We are projecting 510,000 sqm of new supply of MICE facilities in Metro Manila, Tarlac, Cavite, and Cebu. MICE facilities continue to grow, and this is mainly because of property exhibits, previous political campaign rallies, local and sporting events, major concerts, and overseas employment summits. So these are the events that will definitely propel demand for new conference facilities. That's why we're very optimistic,” concluded Bondoc.