As local tourism and staycations drive up demand, the hotels in the Philippines are optimistic about long-term recovery, however, most Asia Pacific investment interest this year is focused on other countries, JLL Philippines said.
The most affected sector by the pandemic last year is the hospitality industry, the real estate services firm said, yet Philippine hotel operators are optimistic that the industry would transition into recovery.
“Most hotel operators are trying to determine the best-estimated return of airline traffic. Hotels see tourism picking up as soon as flight restrictions are lifted — it is only a matter of timing, which is heavily dependent on the roll-out of the COVID-19 vaccine. Local tourism and staycations are also being encouraged to push demand,” JLL Philippines Head of Capital Markets Ryan Isip said.
“We are already seeing opportunities in the market for opportunistic acquisitions. Several groups are already looking for this type of transaction, typically management contracts in core locations,” he added.
The tourism department said that there has been a significant decline in foreign travelers after pandemic-related restrictions were implemented. It leads to an 83% drop in tourism revenues last year, a total worth of P81.4 billion, lost.
Recently, the Philippines has put up travel restrictions again due to the surge of Covid-19 infections, banning most foreign visitors from entering the country until April 21 to curb the spread of the virus. The stricter lockdown in the NCR Plus regions also restricts local travel.
JLL in January polled 100 of its clients, finding that 70% of investors are positive on the Asia Pacific hotel market this year. The company estimates $7 billion in transactions this year, or 20% higher than 2020.
However, most investors are eyeing Japan, with 52% of them views the country as a desirable hotel investment. Investors are also interested in Australia (31%) and China (22%).
JLL added that a quarter of investors still seek clarity on pandemic recovery first before committing more funds.
“The past year has been all about protecting cash flow and this will continue for the coming 12 to 18 months. Seasoned owners realize that now is the time to invest in existing hotels, with little displaced business,” JLL Hotels and Hospitality Group Managing Director Xander Nijnens said.
“However, it is a balancing act in keeping operating costs flexible, while investing ahead of the recovery to edge in front of competitors and meet guest needs.
Mr. Isip said that JLL Philippines is optimistic about hotel investment in the Philippines in the long term.
“Acquisitions during this period should be opportunistic and investing while the hospitality sector is under pressure will yield good results in the long run.”
Source: Business World Online