In a move to become the Philippines’ largest hotel owner and operator, Megaworld chairman and billionaire Andrew Tan plans to spend US$1.5 billion to triple the hotel rooms of his Alliance Global Group Inc.
The investments will be made over the next five to seven years and targets to build more than 5,000 hotel rooms by as early as 2017, said company president Kingson Sian. According to its website, Alliance Global currently owns five hotels with 1,570 rooms.
‘We aren’t slowing down nor putting on hold any of our tourism ventures,’ Sian said in an interview. ‘Tourism is just picking up and it’s not inconceivable that we will more than double our hotel rooms and become the country’s largest hotel operator in terms of rooms in five to seven years. We will certainly be among the biggest, if not the largest.’
Due to political instability, poor infrastructure and lack for hotel rooms, the Philippines has for years lagged behind its neighbours in attracting tourists. Data from the country’s tourism department show that the Philippines attracted 2.14 million tourists in the first half of 2012, compared with Malaysia’s 11.6 million, Thailand’s 10.5 million and Indonesia’s 3.87 million.
The country’s tourism sector is expected to get a boost with the opening of four casino resorts in Manila in the next four years. According to CBRE, the Philippines could ‘challenge’ Macau and Singapore in gaming revenues over the next five years with the opening of the casinos.
Sian said Tan and his business partners plan to spend US$1.2 billion for the 30-hectare Resorts World Bayshore, Alliance’s second Manila casino venture with Genting Hong Kong Ltd. A separate US$350 million will be spent to expand and build more hotels in Resorts World Manila, the first casino venture between Alliance and Genting, which opened three years ago.
Resorts World Manila, home to the nation’s biggest casino, attracted 4.5 million visits last year and its traffic is forecast to reach 7 million this year, Sian said. Occupancy rate at the complex’s hotels is in ‘the high 80 percent,’ the highest in the country, he said.
But according to Jonathan Ravelas, chief market strategist at BDO Unibank, one of the country’s largest banks, government support is crucial to make these projects profitable. According to him, if the construction of new and expansion of airports are delayed, these hotels would have longer payback periods. There also must be integrated marketing between the government and the private sector to sell the Philippine tourism, he added.