How have changing economic conditions in the Philippines impacted the tourism industry?
COLE: Over the past few years, the general economy of the Philippines has been growing quite rapidly. I believe weâ€™re either close to Chinaâ€™s growth rate or above it up to last year. So the economy is ticking along very well. I mean, this has a lot to do with economic conditions in the area, but it also has a lot to do with cash flows from the west to the emerging economies and things like that. But right now, thereâ€™s definitely a growth spurt in the Philippine economy thatâ€™s adding a great deal to the visitor market.
Thereâ€™s two levels of tourism in the Philippines. The first is domestic travel. Thereâ€™s been an upsurge in inexpensive local carriers, which has basically increased domestic travel exponentially over the past 6-8 years. So the domestic sector really took off; we get a lot of travel between the islands and so thatâ€™s really been very helpful for us and for all hotel operators. Of course, we have the international segment thatâ€™s been picking up steadily, but not as quickly as the domestic sector recently.
What are the biggest challenges in operating a hotel in Manila today?
COLE: Infrastructure has always been a problem in the Philippines. Getting people in and out for foreign travelers and of course the road situation is not as well developed as other Asian cities. So that creates a problem, and I think that also slows down the number of international arrivals. Thereâ€™s also an interesting thing in that security always pops up as an important issue when traveling to the Philippines, when in fact, I think anyone whoâ€™s lived here such as myself or has traveled around the region, to me, within the major city area, thereâ€™s really no more security issues here in the Philippines than I have found in other Asian countries.
In what ways is the government of the Philippines supporting both leisure and MICE tourism?
COLE: I think the Department of Tourism has increased its marketing campaign; the numbers are going up year on year. We hit a record last year over any previous year, and they have goals to increase the number of arrivals by another 5 million a year in the next few years. So I think theyâ€™re doing a good job in promoting the Philippines. So we just hope that that trend continues.
How competitive are the hotel and serviced apartment sectors in the Makati area of Metro Manila?
COLE: Makatiâ€™s market is very strong. It has been historically and continues to be so. Makati gets a higher room rate and higher occupancies than the surrounding areas, such as the Bay area near Manila Bay, or Ortigas area, or Fort Bonifacio, which are also other business areas of the city. Our average occupancy here last year I believe was 84% for the entire year. So weâ€™re doing quite well. Thereâ€™s a few troughs, but an annualized occupancy of 84% is quite good I think.
Thereâ€™s been a large increase in inventory, the room counts are going up quite dramatically year on year and are projected to continue to do so for the next few years coming up. So really, that of course makes it difficult for all hotels, no matter what category theyâ€™re in, whether itâ€™s the high-end or mid-range such as ours. It makes it difficult to maintain rates. So to counter that, we've found that we have to constantly improve our services, constantly work on our amenities, to maintain our average rate so that it doesn't begin to drop because of the increased overall rooms inventory in Makati and of course in metro Manila.
Thereâ€™s been an upsurge in inexpensive local carriers, which has basically increased domestic travel exponentially over the past 6-8 years.
I just think that we really are going through a good period for the hotel industry right now. Iâ€™m very bullish on the future in spite of the significant increase in competition. I think our product here is right in a nice, safe zone, because it hits the mass market, the midrange market. But it is challenging to operate under these conditions. Youâ€™re constantly looking at the property, youâ€™re constantly redoing marketing materials, expanding your market reach, so itâ€™s a very challenging but also a very interesting time.
What is the value proposition for One Pacific Place?
COLE: I think One Pacific Place offers value for money. I mean, thatâ€™s the real starting point for the whole project, really, is offering in many cases a one bedroom or a two bedroom or a studio apartment at a very reasonable rate for corporate clients and for all clients. They have the option of having a meal in the room, heating up their own coffee in the morning, et cetera. So by having reasonably priced room rates, having all the services condensed, having full hotel services along with meeting facilities, itâ€™s a real good value for money, which is how we wanted to position it. A mid-range, solid, well-serviced property, good value for the userâ€™s money.