Domestic tourism: Hot as summer
SUMMER is here—the Philippine Atmospheric, Geophysical and Astronomical Services Administration declared on April 5 the start of the dry season for this year.With the coming of summer, which coincided with the school vacation and the Holy Week, we expect a surge in travel all over the country beginning this week, with many Filipinos and their families going to popular vacation sites like Baguio, Boracay and Palawan, and many other destinations.
Domestic tourism is booming, and is even outpacing the growth of international tourism.
About a year ago, I predicted that tourism could be the third of a three-legged stream of foreign-exchange earnings for the Philippine economy, the other two being remittances from overseas Filipinos and the business-process outsourcing (BPO) industry.
Now, it’s clear that foreign exchange and dollar investments are not the only benefits we get from tourism. Domestic travelers are increasing their share in the industry.
The growth of domestic tourism has several important implications. First, it reflects the growing middle-class population of the Philippines. Second, it helps generate more employment than if the industry would depend only on foreign visitors. Third, it increases the tourism industry’s contribution to the economy.
Foreign visitor arrivals, according to the Oxford Business Group, have been increasing at an average of 8 percent a year in the past five years, based on statistics from the Philippine Statistics Authority (PSA).
On the other hand, the Oxford Group’s report, titled “The Philippines’ Tourism Sector Poised for Gains”, notes that domestic tourism has been growing much faster— by an average of 14 percent a year. The report attributes this to the expansion of the budget airlines and the young and growing middle class, thanks to the booming BPO industry.
While foreign visitor arrivals, at 5.9 million, fell short of the original target of 10 million, the target of 56 million domestic tourists was likely reached because that number was already breached in 2015.
In a separate report, the World Travel and Tourism Council (WTTC) says travel and tourism generated 2.22 million jobs directly in 2016 (5.5 percent of total employment in that year). The tourism industry’s total contribution to employment (including wider effects from investment, the supply chain and induced income impacts) was 7.36 million last year (18.1 percent of total employment).
For 2017, direct employment in the tourism industry is expected to increase by 5.3 percent to reach 2,336,500 jobs, while total contribution to employment (direct and indirect jobs) is projected to grow by 4.4 percent to reach 7.68 million.
With respect to the economy, the WTTC’s report on the Philippines’s tourism industry estimates the total contribution of the industry to GDP at P2.85 trillion ($60.1 billion), or 19.7 percent of GDP, in 2016.
The tourism industry, according to the WTTC, received a total of P89.6 billion ($1.9 billion) worth of investments last year.
Spending by domestic tourists is expected to reach P2.097 trillion this year, up 6.9 percent from last year. Foreign visitors, on the other hand, are expected to spend P351 billion, up 11.1 percent from a year ago.
Beyond the numbers, the booming domestic tourism is difficult to ignore, as the private sector responds by building more hotels and restaurants.
We see the flurry of activities at the Entertainment City and the progress at the Bonifacio Global City, as well as in Davao, Cagayan de Oro and many other places.
The global brands of hotels have established presence in the Philippines—Crowne Plaza, Grand Hyatt, Holiday Inn, Conrad and Marriott, to name a few. The Oxford Group says the next few years will see hotels under the management of Novotel Emerald Suites, Okura, Radisson Clark, Savoy, Sheraton, Shangri-La, Swiss-Belhotel and Westin.
Hotel brands are also rising outside Metro Manila, including a Courtyard by Marriott in Iloilo City, and Crimson Resorts in Boracay. A Dusit Princess and a Sheraton are scheduled to open in Mactan, Cebu, in 2018.
The good thing about tourism is its nationwide scope—the top destinations are spread throughout the country—so the benefits of growth are able to reach the countryside, which makes tourism more significant in the government’s efforts to make economic growth more inclusive.