Acesite (Phils.) Hotel Corp., a hospitality firm led by businessman William Gatchalian, is shelving the reconstruction of the fire-damaged Waterfront Manila Hotel & Casino for at least two years.

In a disclosure to the Philippine Stock Exchange, the firm said the decision comes after estimated costs more than doubled to ₱3.6 billion, compounded by a prolonged slump in tourism and the local gaming sector.

“The management of Acesite (Phils.) Hotel Corporation is currently revisiting the business prospects of reopening the Waterfront Manila Pavilion Hotel,” the firm reported.

Reconstruction of the 22-story structural shell, which was severely damaged by a fatal fire in 2018, commenced in 2019 using ₱1.5 billion recovered from insurance claims.

The company slowed rehabilitation work during the pandemic, expecting to ramp up operations once international visitor arrivals established a clear trajectory toward recovery. Instead, persistent inflation and supply-chain pressures have altered the economic outlook for the development.

“The revised reconstruction estimates today of ₱3.6 billion have shown a marked increase in refit costs as compared to original cost estimates made during the pre-pandemic era,” Acesite said.

Both material and labor costs have spiked alongside rising fuel prices, pushing the budget far beyond the insurance collected. Acesite added that imperative structural and civil corrective measures, alongside important design re-layouts, have driven the overall reconstruction budget even higher.

The phasing plan initially conceived and submitted to regulators targeting a soft opening in 2026 was meant to balance the investment timing with the reconstruction program's cash requirements.

“However, the inability of the local market to generate sufficient foreign room sales in 2026, as well as the weak indications of an uptick in tourism arrivals projected for 2027 due to the ongoing, protracted US-Israel-Iran War, are issues that need serious attention,” Acesite said.

The company also noted that Manila's gaming market is facing a plateau as online gaming grows in popularity. Despite a no-visa policy for Chinese tourists, inbound tour operators from China have been reluctant to bring back the players who frequented the city when Philippine Offshore Gaming Operators (POGOs) were still permitted.

“These considerations have prompted management to reconsider pouring additional considerable sums into reopening the hotel at this point in time. Until industry indicators on visiting tourist arrivals stabilize, management elects to adopt a cautious stance toward committing the sizeable investments needed to rebuild the hotel,” Acesite said.

The firm added that construction will only restart when projected marginal increases in average room rates, room occupancy, and gaming revenues are evident enough to cover loan repayments and investment returns. The earliest estimate for this is 2028.

To improve the company’s balance sheet, ₱764 million in retained earnings was recently appropriated for the hotel's reconstruction. Moving forward, Acesite said it will put an annual maintenance budget in place to keep the hotel superstructure in a safe and usable condition. (James A. Loyola)