Philippine tourism

Michael Alan Hamlin

Posted on June 13, 2007

Will circumstances change?

Tourism is getting more respect in the Philippines for its role as a driver of economic development, job generation, and value-added services growth. But when compared to most member countries of the Association of Southeast Asian Nations (ASEAN), the Philippines continues to lag its neighbors. Two events, one last week and another coming up this week, had me wondering again what it will take for the Philippines to fully leverage its great potential as a center for tourism.

Last week I spent a couple of days in Hong Kong and one of several Philippine-related conversations I had there had to do with tourism. The top executive I talked with noted, as others have, the rapid emergence of Vietnam as an attractive tourist destination and magnet for foreign investors. He couldn’t figure out why Vietnam was viewed more favorably than the Philippines.

For one thing, he noted the rampant corruption in Vietnam. While the Philippines is also perceived to be among the world’s most corrupt nations according to national competitiveness surveys, the Hong Kong executive told me that Vietnam is in fact far worse. In his extensive business dealings in the Philippines, the curious executive told me he has never been asked to do something unethical, but that clients with operations in Vietnam have a far different experience doing business there.

This week, the Cebu Chamber of Commerce & Industry (CCCI) will conduct what has become an annual tourism conference in conjunction with its month-long annual business festival known as Cebu Business Month. I’ve been asked to do a fifteen-minute introductory talk on Asian Success Stories: Marketing Asian Places. So I’ve been doing some research for the short presentation.

There are plenty of Asian success stories, if we go by the number and quality of visitor arrivals. As many of the Philippines’ neighbors have learned over the years, it’s not just how many people visit, but how much money they spend. For example, international conference delegates spend almost US$1,000 a day according to a study cited in FORTUNE magazine. Backpackers and other casual tourists spend far less: typically just 10 percent of what a conference delegate spends.

A look at the arrivals numbers is fairly sobering for the Philippines. Last year, four other ASEAN countries attracted more visitors, including Vietnam. The number one tourism destination was Thailand, with nearly 14 million visitors. Next came Malaysia with about 13 million, down from over 16 million in 2005, which is an interesting development. Singapore welcomed close to 10 million visitors, and Vietnam received about 3.6 million.

The Philippines, on the other hand, recorded something over 2.8 million tourist arrivals, many of those returning balikbayans whose major contribution to the local economy is regular remittances to their families here, not tourism dollars. On a positive note, Japan, Korea, China, Hong Kong, and Taiwan have become major markets for Philippine tourism. But Vietnam is competing hard for this business, too.

For example, high-end resort developer Adrian Zecha operates the $56 million Nam Hai resort in central Vietnam, where room rates start at approximately $600 a night. Nearby, Singapore-based Banyan Tree Hotels & Resorts is constructing its own exclusive resort. Four Seasons Hotels & Resorts is completing another luxury facility on an island near Da Nang, and the Raffles Da Nang, a project of Dubai’s Kingdom Hotel Investments, is expected to open in 2011.

To be sure, the Philippines is also seeing a surge in interest by international resort developers and investors. Shangri-La Hotels & Resorts, Four Seasons, and Banyan Tree are also developing luxury resorts in Boracay, and Kingdom Hotel Investments founder and chairman Saudi Prince Alwaleed bin Talal bin Abdulaziz Alsaud recently announced a $153 million deal with Ayala Land to develop a luxury hotel complex in Makati.

Why, then, is Vietnam moving ahead of the Philippines in marketing itself as an attractive tourist destination? Why does Thailand, with serious issues of its own, continue to far outpace the Philippines as do Malaysia and Singapore?

There are a number of factors that account for the Philippines’ fifth-place showing, but foremost among them is the Philippines’ failure to generate the buzz that popularizes these competing destinations. Each of these countries invests significant sums in marketing themselves to well-heeled travelers. Now, however, the Philippines may be belatedly learning its lesson.

According to reports, the Department of Tourism recently appointed BBDO Guerrero Ortega to overhaul the WOW Philippines campaign it created in 2001. But unless government invests more to communicate the campaign, the Philippines will continue to trail its neighbors in the competition for awareness and recall among big-spending tourists looking to take an exotic vacation or attend a conference in Asia.

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