Philippines hotel market recovers in H1 on stronger arrivals

CEBU, Philippines — The Philippine hotel market continued its recovery in the first half of 2026 as stronger international arrivals, domestic tourism and business travel supported demand, according to Colliers.

International visitor arrivals reached 3.16 million in the six months through June, up 5.4 percent from a year earlier. Growth was led by visitors from China and India following the introduction of visa-free entry policies.

Metro Manila hotel occupancy, however, eased to 63 percent as softer meetings, incentives, conferences and exhibitions activity and geopolitical tensions in the Middle East weighed on business and event-related travel.

Room rates continued to rise despite the weaker occupancy. Average daily rates increased 2.4 percent from the previous half, supported by resilient business travel and steady demand in major business districts including Makati and Fort Bonifacio.

Hotel developers and investors remain optimistic, with international brands accelerating expansion in Metro Manila and major provincial tourism and business centers, like Cebu.

About 2,490 new hotel rooms are expected to be completed in 2026, despite project delays and construction challenges. A larger wave of supply is expected to enter the market from 2026 to 2028.

Colliers said hotel operators and developers will need to differentiate their properties and strengthen their market positioning as competition increases.

Lifestyle hotels, serviced residences and MICE-focused properties could help operators capture changing demand, while stronger offerings for business travelers may benefit from a gradual recovery in corporate events and face-to-face meetings.

Investors are also expected to assess hospitality real estate investment trusts as longer land leases improve the stability and attractiveness of hotel assets.

Tourism stakeholders should focus on high-spending international visitors while developing medical tourism and retirement-oriented travel, Colliers said.

Closer coordination with government agencies will also be important to streamline regulations and support new tourism investments.

The outlook remains positive, but the increase in hotel supply means operators will need stronger tourism partnerships and more targeted investment strategies to sustain occupancy, room rates and long-term competitiveness.

In Cebu, Mia Singson-Leon, Hotel, Resort, and Restaurant Association of Cebu (HRRAC) president and general manager of Crimson Resort & Spa Mactan, said the industry entered 2026 on a strong footing but has since faced headwinds from the fuel crisis and geopolitical tensions, which have affected both international and domestic arrivals.

August has shown signs of improvement, she said, but the industry remains cautious about the months ahead.

Savoy Hotel Newtown Mactan general manager Josef Victor Chiongbian, his 547-room property is operating at about 50 percent occupancy, a level he described as “good enough” given current conditions but well below the industry’s aspirations.