The Philippine tourism and hotel industry continues to face headwinds, showing marginal performance in 2024 and subdued growth in international visitor arrivals in the first quarter of 2025.
A strong catalyst is needed to drive recovery and enable substantial growth beyond pre-pandemic levels, according to Leechiu Property Consultants.
“With hotel performance showing limited progress and recovery in foreign arrivals facing difficulties, it’s clear that a more coordinated effort between the public and private sectors is needed,” said Alfred Lay, director for hotels, tourism and leisure at Leechiu Property.
“A decisive catalyst is essential to spark substantial growth in tourism—one that is resilient enough to withstand economic challenges and elevate the industry beyond its current plateau,” he said.
The Philippines saw a 0.5-percent decline in foreign arrivals in the first quarter of 2025, largely due to drops in key source markets, including South Korea and China. South Korea, while still the top source market, experienced a 14-percent year-on-year drop, partly due to the weakening Korean won against the US dollar amid ongoing political tensions.
China fell out of the top five source markets for the first time in nearly 20 years, further contributing to the slowdown.
In 2024, the Philippines’ average daily rate (ADR) surpassed 2019 levels, but growth was minimal compared to 2023.
Despite strong domestic tourism and higher room rates, occupancy and revenue per available room (RevPAR) have plateaued due to the slow recovery in foreign arrivals.
Overall, the Philippines’ hotel performance aligns with the Southeast Asia regional average, which is experiencing a moderate post-pandemic recovery. Markets like Singapore and Malaysia, with visa waivers, have seen stronger rebounds, with recovery rates of 86 percent and 106 percent respectively, highlighting the need for stronger interventions in the Philippines.
Upper-scale hotel segments are showing resilience, with travelers increasingly seeking higher-quality accommodations. Conversely, the economy and mid-market segments continue to struggle in recovering their pre-pandemic performance, hindered by shifting consumer preferences, economic pressures, and competitive challenges, according to Leechiu.
Leechiu said the Philippine tourism industry is expected to continue facing difficulties in 2025, primarily due to global economic headwinds and slower recovery in key international markets. However, domestic tourism is likely to remain robust, supported by growing local travel demand.
Leechiu Property Consultants estimates that foreign tourist arrivals will stabilize at 6 million by the end of 2025. The hotel sector is projected to continue its recovery, but significant growth in occupancy rates and revenue will require strategic initiatives aimed at attracting higher-yield foreign tourists, better integration of business travel, and enhanced destination marketing efforts, it said.