Statistics and economic indicators for hotel industry

THE BUSINESS of providing luxury accommodation in any destinations is developmental and supported with updated economic indicators.

Figures from the National Economic Development Authority (NEDA) the Department of Tourism (DOT) and the Board of Investments (BOI) plays crucial roles in planning an investment for hotels, resorts and tourism related undertakings. 

No feasibility studies and business plans are feasible without the economic aspects and the public infrastructures in place. Other Government agencies like the Department of Environment and Natural Resources (DENR) which provides the Environmental Clearance Certificates before any earth moving and constructions will be allowed must be hurdled.

The bureaucratic red tapes in the local Government level follows. No one should complaint in the downstream level as this are provided by autonomies in the local government unit to legislate taxes and licenses and business have to tow their lines to be in business.

In any huge project foremost is the financial capability and integrity of the developer to contract loans and secure financial packages from the different government and private banking institutions. Investments for large scale luxury accommodation run to millions of pesos. For every peso spend a Return of Investment (ROI) is forecasted within a payback period. It should not be solely financed if the developer belongs to multi corporations with different sets of stockholders. Standby funds or loans for construction over-runs and capital expenditures for imported equipment are allocated with provisions for currency adjustments. There are tax and financial incentives in this aspect of equipment acquisition provided by the Omnibus Investment Act of 1987.

Various market forces determine tourism growth. It is not enough that developers listen to bureaucratic propaganda from the Government. While investors have to qualify given data and do in-house research to prove statistics are correct. The business acumen for any major developer plays an important part in the initial analysis of the project. Do they have successful ventures in the locality? Capital sank into the project are actualized over the payback period. Current bank interest rates are added to the cost of money. That should give a rundown how to recoup investments.

Growth of the national product versus capita income (GNP) must be consistent in the last three years. An indicator to determine the economic strata and spending habits of the people covered within the development. Is the present state of the economy sound to invest on luxury? Feasibility of any hotel development is based on its anticipated income generating capability with forecast of income and expense. It must be localized and tied with demographics.

World events associated with trade and bilateral relations with Asian countries, the US and the European communities are examined since the industry is dependent on travel from the foreign market. The frequency of flights from foreign countries to the Philippines and the type of aircraft used by the Airlines are data’s and figures that cannot be ignored. What are the load factors?  Are there any visa restrictions? Is it favorable for tourist travel and how long a foreign businessman can stay in the country? Aviation travel is a source of business for the industry. For every tourist it brings inland, room nights are computed and multiplied with the rack rates to produce the needed room revenues.

Tour Operators can also lure in the inbound market. The Philippines is within the sphere of the Asian Gaming capital which has a base of 20 Million gamblers, on-line gamers and high rollers. Should this niche market be topped? Macau and Genting Heights hotels in Malaysia are filled up from this market mixed. With new and longer airport runways built, aircrafts with long haul load or chartered flights can land and unload passengers from Hongkong, Macau and Malaysia. Gambling in the Philippines has been here since Judas sold someone to the Jews for 30 pieces of silver. PAGCOR which regulate gambling has been institutionalized and plants are rife to make it a Constitutional body. Gambling and Casinos are good source of hotel business. So much so that PAGCOR contributes to the financial operation of the national Government. It further allocates gambling revenue share to the host City.

The MICE market is a number one driving force in the Philippine hotels business. Meetings, Incentives, Convention and Events register millions of pesos periodically. The Pharmaceuticals and Drug companies are spending a lot in their marketing and promotions to gather medical practioners for great events and product launching.  Trade and Associations are not far behind when construction shows and fairs are brought to every corner of the major Cities and urban centers in the Philippines. Most of the industries now are technology driven that requires Engineers and technical people to travel and stay in luxurious hotels to sell their products to the upscale market. Corporate executives will not stay in an average hotel if transactions involve building power plants.

Providing world class accommodation opens the market for the diplomatic circles to bring Head of States or Trade Missions to patronize the hotels. Even Eco-tourism with their relevance to nature and culture are source of business for adventure travel. It contributes to higher revenue generation under the account of Foreign Individual Tourists (FITs) 

There are likewise negative indicators that can easily wash down whatever economic gains and statistical figures the hotel industry can accomplish. Number one of course is peace and order which is the cause of foreign government advisories to their citizens on travel restrictions.  Number two is the weather phenomena that bring in natural calamities proven by science as the resultant factor to the deterioration of the weather and environment and the last one which is not always the least is the Political leadership whether it is business friendly or a Mafia of SOPs.

When hotel business starts to tribe in a community, conscience dictates that ethics and culture must be preserved to prevent cultural bankruptcies and moral degradation. Good business governance has to give back a share of profit it has made in a form of educating the people to preserve the gains of the industry. The same as Government has to give the investors the equity of services and protection in return for taxes paid.