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Philippines | Research
11 July 2018
Ceboom!
Developers Capture Cebu's Tourism Gains
By Joey Roi Bondoc
Manager | Research Ceboom!
joey.bondoc@colliers.com Developers Prepare to Benefit from
Cebu's Tourism Gains
Cebu is one of the Philippines' The completion of the second terminal of Mactan-Cebu
International Airport (MCIA) should further boost Cebu’s
most popular tourist destinations. attractiveness as a tourist destination. The opening of
The recent modernisation of its the new terminal also comes at an opportune time given
the national government’s decision to close the popular
international airport should enable Boracay island for six months to pave the way for its
the island-province to attract more rehabilitation.
leisure and business travellers, In 2017, Cebu attracted 4.9 million foreign and domestic
tourists which sustained hotel occupancy of 78%, higher
thereby further propelling demand than the 70% recorded in 2016. MCIA is the country’s
for both budget and luxury hotels. second busiest airport and its expansion should help
sustain Cebu's hotel occupancy between 70% and 75%
over the next 12 to 36 months.
With an improving road network
complementing the expanded Benefiting from the robust tourist arrivals are the city’s
hotels and residential condominiums being offered to the
airport, Colliers projects a more short-lease market. Cebu houses a wide range of
accommodation facilities that cater to both young, urban
pronounced development of hotels professionals on a weekend getaway and investors on a
and resort-oriented condominiums short business trip.
over the next three to six years for Colliers believes that demand for more leisure
the destination. investments such as hotels and serviced residences will
also be fuelled by Cebu’s thriving outsourcing and
industrial sectors. Medical tourism is another bright spot
To complement this, Colliers for the island-province's growing hospitality segment.
believes that local and national Colliers sees tourism becoming a major plank of Metro
developers can create value add Cebu’s economy moving forward. As such, we would
expect the sector’s growth to spill over to other sectors
opportunities in the booming Cebu such as retail and food and beverage and the associated
tourism sector by bringing in more supply chains.
12
We encourage developers with 10
existing hotels to improve loyalty 8
2 Ceboom! Developers Capture Cebu's Tourism Gains | 11 July 2018 | Colliers International
ContentsCeboom! .............................. 2
Contents 3
Locals Go Global........................................ 7
Recommendations ..................................... 9
3 Ceboom! Developers Capture Cebu's Tourism Gains | 11 July 2018 | Colliers International
in terms of hotel and resort development. At present,
Cashing in on the Tourism Boom Cebu has only one-fifth of Bali’s and Phuket’s room
Cebu is one of the most visited tourist destinations in the stock. However, we see Cebu becoming a major leisure
Philippines. It is popular for its beach resorts and cultural investment destination in the region given its improving
tourist destinations. Local and foreign visitors flock to accessibility and the sustainability of traditional demand
Cebu given the comforts of an urban landscape with drivers such as the outsourcing and industrial sectors.
stunning natural attractions.
MCIA Terminal 2: By the Numbers Among the national developers that we see benefiting
from the thriving leisure sector in Cebu are Udenna
Group, Filinvest, Ayala Land, Rockwell, Megaworld,
Robinsons Land, and SM Prime.
Tourist arrivals from China should increase following the Aside from the modernised and expanded airport,
opening of eight new routes to China in 2017. The Colliers sees Cebu’s tourism sector surging due to a
airport's operator is also planning to expand direct flights number of infrastructure projects which should open new
to Japan, India and South Korea. opportunities in the countryside. The completion of these
projects should spur demand for more accommodation
Colliers believes that Cebu has the potential to be at par
with neighbouring destinations such as Bali and Phuket
4 Ceboom! Developers Capture Cebu's Tourism Gains | 11 July 2018 | Colliers International
facilities outside Metro Cebu (which comprises Cebu
City, Lapu-Lapu, and Mandaue) corridor.
Cebu Tourist Arrivals (Million)
Among these road projects are the Cebu-Cordova
bridge; Metro Cebu Expressway; Cebu-Negros Link
6
Bridge; Cebu-Bohol Link Bridge; and the Bus Rapid
Transit (BRT) system.
4
0
2016 2017
Source: Department of Tourism
5 Ceboom! Developers Capture Cebu's Tourism Gains | 11 July 2018 | Colliers International
Average Length of Stay Metro Cebu Hotel Stock
Market 2016 2017 Growth Rate Location Number of Rooms
China 4.2 6.3 50% Cebu City 5,900
South Korea 5.1 5.9 16%
Mactan 3,500
Japan 5.9 6.8 15%
USA 11.2 12.4 11% Mandaue 1,200
Cebu City accounts for more than one-half of the stock We see Cebu’s outsourcing workforce rising by about
with almost 6,000 rooms, about two-thirds of which are 5% to 10% annually over the next three years and this
three-star hotels. Some 1,160 rooms are classified as should also make Cebu a viable market for two and
four-star while only two hotels – Marco Polo and three-star hotels which mainly cater to budget-conscious
Radisson Blu – are classified as five-star. young employees in the city, and their friends and family.
6 Ceboom! Developers Capture Cebu's Tourism Gains | 11 July 2018 | Colliers International
migrant workers coming back to the country for a short hospitality brands. Leisure investors in Cebu have been
vacation with their families and should sustain demand successful in employing these strategies and we see the
for hotels and serviced apartments especially catering to continued implementation of these plans moving
the staycation market. forward.
3) Industrial sector We note that local developers have been partnering with
foreign brands to develop hotels and serviced
Outside of Luzon, Cebu remains a major hub for
apartments. Foreign branding is important particularly in
industrial operations. Manufacturing accounts for a
the high-end (four and five star) markets. Local operators
quarter of Central Visayas’ economy. Colliers sees
hoping to maximize the popularity and experience of
Cebu’s export sector being driven by the continuing
these global brands, are evidenced by the following
strong economy of the Philippines’ top trading partner,
projects.
the United States; implementation of trade deals with
neighboring ASEAN economies and the Eurozone; as Citadines Cebu. We expect this 180-room property to
well as sustained manufacturing investments from Japan open in 2019, as part of Cebu Landmasters, Inc's (CLI)
and China. Cebu’s four- and five-star hotels meet the Base Line Center, a 1.6-hectare mixed use office and
discerning preferences of visiting foreign executives. residential complex. Citadines is planned to be managed
Meanwhile, Cebu’s port is up for a major upgrade by Ascott, a global operator of serviced residences.
following the Korean government's plan to finance its Citadines should complement the hotel and serviced
expansion. This should further buoy industrial activities residence requirement of executives working in and
in Cebu and propel hotel demand from workers, visiting outside of Base Line Center.
foreign investors and expatriates.
The Sheraton Mactan. Cebu-based AppleOne Properties
4) Cebu's potential as a medical tourism hub has partnered with Starwood Hotels and Resorts
Southeast Asian economies such as Thailand, Malaysia, Worldwide to develop the 250-room Sheraton Cebu
Singapore, and India have long been established as Mactan Resort in Punta Engano, Lapu Lapu City.
among the world’s largest medical tourism hubs. But Scheduled to be completed in 2020, the project also
Cebu is planning to capture a larger share of the global offers 154 residential units. The size of the rooms range
medical tourism pie by providing quality health services between 60 sq m (645 sq ft) and 310 sq m (3,300 sq ft)
at a fraction of the cost compared to its Southeast Asian and is reported to be 60% sold as of 1Q 2018. This is
peers. Sheraton’s first branded resort residential development
in Southeast Asia and is planned to open by 3Q 2019.
Cebu has the potential to become a major player given
the number of medical graduates that the island-province The Sheraton Mactan
produces per year (about 12% of Metro Cebu’s more
than 25,000 graduates annually hold relevant medical
degrees) and the relatively cheaper cost of medical
services (about 50% to 80% cheaper compared to cost
of comparable health services in Europe and North
America).
7 Ceboom! Developers Capture Cebu's Tourism Gains | 11 July 2018 | Colliers International
Dusit Princess Hotel. Grand Land is bringing the Dusit Rockwell Land is developing its own Aruga brand as it
hospitality brand to Cebu through Dusit Princess Hotel. cashes in on its image of providing exclusivity and ample
The hotel is scheduled to open in 2020 with 295 rooms. open space to travellers. The 300-room hotel in Punta
Grand Land has also partnered with Dusit International Engano in Mactan, Cebu is scheduled to be delivered in
for the development of Dusit D2 Cebu. The facility will 2021.
have 163 serviced apartments and is slated for
completion in 2022. Ayala’s Seda hotel is scheduled to open in the third
quarter of the year. Located within ALI’s Cebu Business
park (CBP), the 301-room hotel formerly operated by
Dusit D2 by Dusit International and Grand Land
Marriott International should support the accommodation
requirements of foreign and local executives doing
business in and outside of CBP. This is Seda’s largest
in the Visayas region.
8 Ceboom! Developers Capture Cebu's Tourism Gains | 11 July 2018 | Colliers International
Seda Hotel at Central Bloc benefit from the projected boom of Cebu’s hospitality
sector, Ayala has partnered with homegrown Taft
Properties for the development of the 14-hectare
Seagrove, an integrated resort project in Punta Engaño,
Mactan. The project, scheduled to be completed in 2020,
is planned to feature a number of hotels, support
restaurants and shops, an events ground, and a
mangrove forest. Seagrove should benefit from its
proximity to Cebu Airport and accessibility to Cebu City
via the Osmeña and Marcelo Fernan bridges.
Recommendations
Source: Hong Kong Land
More resort-oriented estates
Developing more integrated leisure attractions is a Improvement of loyalty programs and
practical route for local and national developers to packages
benefit from Cebu’s booming tourism sector. Colliers
Colliers believes that local and national hotel operators
sees Mactan and Mandaue benefiting from this
in Cebu can retain and attract customers by offering
developer strategy.
loyalty programs, as international operators very much
Colliers encourages developers with massive landbanks do. Among the perks that operators can provide to loyal
in Mactan and Mandaue areas to pursue resort-oriented customers are free Wi-Fi access, discounts in
projects. National developers with vast experience in restaurants and room upgrades. Operators should
developing integrated communities but lack substantial ensure their loyalty programs are easily accessible
land to develop should firm up partnerships with local online and through smartphones and tablets. Colliers
developers to strategically expand their landbank. believes that operators should be aggressive in
partnering with app developers to access new tourism
National developer Ayala Land focuses on integrated, markets and tailor offerings based on customers’
mixed-use projects in Metro Manila and Cebu. Among its preferences.
projects are Cebu Business Park and Cebu IT Park. To
9 Ceboom! Developers Capture Cebu's Tourism Gains | 11 July 2018 | Colliers International
We also encourage hotel operators to pursue a yield More MICE facilities
maximisation strategy that considers average daily
Colliers encourages developers to complement their
expenditure (ADE) and average length of stay (ALS) of
hotels with MICE facilities as Cebu is becoming a
foreign tourists. Factoring in ALS and ADE should
popular choice for major international events and
enable marketing budgets to be more targeted. This
especially as airlift improves.
should also guide developers in deciding the appropriate
mix of hotel rooms and apartment suites to be
Over the past three years, Cebu successfully hosted a
constructed in the future.
number of major international events such as APEC
ministerial meetings, International Eucharistic Congress,
Emphasis on heritage and preliminary events of the Miss Universe 2017
Colliers encourages local and national hotel operators in pageant. Cebu is also among the cities that hosted a
Metro Cebu to modernize facilities and renovate while number of ASEAN 2017 meetings.
highlighting their hotels’ historical and cultural
characteristics. Enhanced experiential value plays a In 2019, Cebu is scheduled to host the Asia Routes
major role in ensuring historic hotels’ success. Hence, conference and is only the second Philippine city to host
developers should leverage not only Cebu’s rich history, the largest gathering of air transport stakeholders across
but also the hotel’s where available. This strategy the region. Manila hosted the event in 2016. With an
should attract the more affluent travellers that are willing estimated 1,200 foreign and local delegates, we see the
to spend more for a unique guest experience. regional event further boosting Cebu’s overall hotel
occupancy in 2019 and raising Cebu’s stature as a MICE
Colliers also believes that developers should explore destination in the region.
other historical structures in Cebu City, Mactan, and
Mandaue that could be converted into hotels and other Hotels near MCIA are preferred venues for major events
accommodation facilities. To encourage more investors and should maximize this advantage over hotels located
to redevelop historical buildings, both local and national in say Cebu Business Park and IT Park by expanding
governments should tout an attractive set of incentives to and building innovative MICE facilities especially within
potential developers. hotels.
Hotels near new road projects Colliers believes that the concept of medical facilities
being built alongside hotels should become more
Developers should look for hotel development popular in Cebu moving forward as the island-province's
opportunities along the nodes of major infrastructure traditional visitor markets – China, South Korea, and
projects that are planned to be implemented over the Japan – have ageing demographics.
next two to four years such as the Cebu-Cordova Bridge;
Metro Cebu Expressway; Cebu-Negros Link Bridge;
Cebu-Bohol Link Bridge; and Bus Rapid Transit (BRT)
system. Colliers encourages developers to strategically
acquire parcels of land near these public infrastructure
projects given the high level of transit traffic that is
potentially available. Market positioning to consider
should include mid-market and below in particular.
10 Ceboom! Developers Capture Cebu's Tourism Gains | 11 July 2018 | Colliers International
Primary Author:
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made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are
encouraged to consult their professional advisors prior to acting on any of the material contained in this report.