Manila's hotel room supply poised to boom in coming years

In spite of "concerns of a glut," Metro Manila still has some solid opportunities to offer hotel investors and developers.

Julius Guevara, head of advisory services at Colliers Philippines, told Business World Online that the hotel room inventory in Metro Manila is poised to grow in the next three to four years, adding roughly 11,000 rooms to the current total of 24,000. The bulk of the new supply will come from gaming districts that have recently shown signs of slowing demand, Guevara told the paper.

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While growth of this sector is expected to be sustained short-term, there are challenges in the medium term, among them the lack of airports—the biggest obstacle to increasing foreign tourists who drive demand for hotel rooms, Claro dG. Cordero, Jr., head of research and valuation at Jones Lang LaSalle, added. “As a result of slower to no growth in tourist arrivals due to lack of new facilities, the new developments will add further supply and will displace the old developments,” Cordero added. “This will likely result in an oversupply scenario that may also adversely affect the revenue and baseline of operators and developers.”

 

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Hotels that do not restructure will not be able to compete with those that do, and revenues ultimately lag the comp set.