Metro Manila’s hospitality sector set for further growth

The Philippine hospitality market showed resilience and growth in 2024, emerging as a key driver in the country's economy. International tourist arrivals reached 5.9 million in 2024. While this fell short of the government’s 7.7 million target, it represented a 9.2% year-on-year growth. Moreover, tourist receipts climbed to over PHP 760 billion in 2024, a 9% year-on-year increase, surpassing the pre-COVID level of PHP 600 billion in 2019.

Metro Manila’s overall hotel occupancy rose to 83.2% in Q4 2024 from 78.4% in Q3 2024, driven by strong demand from leisure and corporate guests. Occupancy levels increased across segments during this period, bolstered by high demand during the holiday season. The midscale, upscale, and upper-upscale occupancies benefited from group bookings for corporate events, including Christmas parties, weddings, and staycations.

Room rates continued to rise as well, reflecting the strong occupancy in Q4 2024. We project room rates to climb further to around PHP 8,300 to 8,400 per room per night by the end of 2025 as new stock enters these upper segments. However, this remains below the pre-pandemic average of PHP 9,100 per room per night. Hotel rates increased across all segments, with the midscale segment registering the highest growth at 5.6% quarter-on-quarter.

Between 2025 and 2029, Metro Manila expects an influx of around 2,300 new rooms. Makati CBD, Pasay City, and Parañaque City will account for about 54% of the upcoming supply. Notably, foreign operators such as Marriott International, The Ascott Limited, Okura Nikko Hotels, Raddison Hotel Group and Polaris Holdings Co., Ltd. (Red Planet Hotel) will manage around 82% of the upcoming stock. Meanwhile, Ayala Land Hotels and Resorts will operate the remaining 17%.

The Philippine hospitality market is positioned for further development and growth. Tourist arrivals are expected to continue rising, backed by a sustained recovery in the global hospitality sector. This trend should boost hotel occupancy over the long term as business and leisure guests continue to visit the country. Consequently, room rates are likely to increase on the back of this solid demand recovery. Overall, the Philippine hospitality industry remains an attractive and dynamic market with significant potential for sustained growth in the coming years.