Why investors are eyeing the Philippines, and where they want to build

(Conrad Manila)

The hotels unit of SM Investments, the Sy family's holding company, is looking to expand outside of Metro Manila. To that end, SM Hotels and Conventions has earmarked $370 million to build five hotels and a convention center in the next five years. Locations for development include Iloilo City in the Visayas; Naga City; and San Fernando, Pampanga, north of Metro Manila.

The plan includes opening a business hotel beside the country's largest mall, SM North Edsa, in Quezon City. Construction is set to start in the third quarter of this year.

This week, SM Hotels opened the Conrad Manila (pictured above), the Hilton group's first hotel in the country under the luxury brand, adding 247 more rooms to the company's current portfolio of more than 1,000 rooms. 

While the Philippines as a whole have not been top-of-mind for many developers looking to gain traction in Asia, the country has been quietly on the radar. Last year, a South Korean businessman announced plans to spend $110 million to bring a Marriott Hotel to Clarkfield, Pampanga, a province in the Central Luzon region of the country. Daesik Han, president and CEO of Widus International Leisure, signed a management agreement with Renaissance Hotels International Corp., the firm that owns the Marriott chain of hotels. At the time, Han said the facility—called Marriott at Clark—would open during the second or third quarter of 2018. And in Manila itself, Philippines-based Century Properties partnered last year with with AccorHotels to build a new Novotel. The 310-room, 41-floor Novotel Suites Manila at Acqua will be the third branded development at the Acqua Private Residences in Mandaluyong City. The hotel is scheduled to open in 2019 and is being developed by Century Limitless Corp., a subsidiary of Century Properties Group.

What's behind the appeal? Tourism to the Philippines is up, with arrivals last year reaching 5.4 million—a growth of 11 percent. On top of that, airfares are down. As such, occupancy rates for guests staying for at least two days at Metro Manila hotels averaged 67 percent in 2015.