Developers urged to invest in Davao City

Roderick L. Abad • April 03, 2018

DUE to lack of hospitality facilities, amid a strong tourist arrival in Davao City over the past recent years, the local government’s investment arm bared the need to build more accommodation spaces and function areas to meet the demand of both leisure and business travelers.

“With this, the city is encouraging more investments in convention and exhibition centers and hotels,” Davao City Investment Promotion Center (DCIPC) Officer in Charge Lemuel Ortonio said during the Mindanao Investments Forum held recently at the Marco Polo Hotel in Ortigas.

According to him, the local tourism sector has seen a big leap from the visitors received by Davaoeños over the years.

In fact, a total of 2.01 million tourists went to the city province in 2017, or 7 percent higher than the figure posted in 2016.

Of this, domestic travelers account for more than 90 percent of arrivals, followed by their foreign counterparts and balikbayans.

Such locality where President Duterte hails from and governed for 23 years as a mayor, he added, has since become the top-of-mind destination for meetings, incentives, conferences and exhibitions  industry.

“[But] we only have one five-star hotel in the city, and the other hotels are mostly four stars and three stars,” Ortonio revealed.

Since most of the activities are really happening and being tracked in the latter categories, real-estate consultancy firm PRIME Philippines surveyed seven players from these segments and found out that their average occupancy rates range between 94 percent and 95 percent annually.

This is greater than 80 percent to 85 percent yearly hotel room take-up mean in Asia, the study showed.

Price-wise, the company noted that an overnight stay in Davao City hotels like Seda or Marco Polo could cost around P4,000 to P6,000.

“[If] you go to Guangzhou, China, and other parts of the world, with P4,000 to P6,000, you can get six stars [or] seven stars accommodation,” PRIME Philippines Managing Director Jet Yu told the BusinessMirror in a special interview.

“So that means that the prices have increased significantly in the Philippines because of the lack of supply. And if you don’t book your hotel going to Davao City within three weeks before your actual landing, most likely you will run out of quality rooms to stay in,” he added.

Even if bed and breakfast inn and other smaller scale hotels were included in the research, the executive maintained that there’s still a huge gap between the supply and demand for hospitality space.

As the first property consultant who ventured in Davao City last year, PRIME Philippines currently does the feasibility studies of five international hospitality brands that are looking to build their hotels with inventories ranging from 200 to 300 rooms.

“That would be about 1,000 to 1,500 hotel rooms to be added to the supply within the span of three years,” Yu said. Given the fast growth rate of tourist arrivals in this part of Mindanao, which last year increased by about 49,000, he said the estimated number of accommodations in the pipeline is still not enough to meet the tourism sector requirement had these projects push through by 2021.

“There’s currently a huge demand for tourist arrival in Davao City. Therefore, we invite you to explore hotel development and convention developments [here],” he appealed to potential investors.

“Per some of our foreign hotel operators who are currently situated here, they said that the most profitable hotel business in the whole Asia is currently the Philippines. So take advantage of the robust and booming demand for hotel rooms, especially in Davao City,” Yu added.

Based on data from DCIPC, the highly urbanized city province accounts for more than 70 percent of the gross regional domestic product of the Davao region. Since 2014, its economy continues to indicate a strong performance in both trading and investments.

Last year the number of registered business establishments in Davao City reached more than 40,000. Their combined capitalization aggregated to over P270 billion.

“We expect that in 2018, this positive trend will continue and we are expecting that we will have at least a 6-percent growth rate in terms of the number of businesses that will come in to the city,” Ortonio said.



Photo by Bernardo Agulo


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Manager - Corporate Communications, Commercial Property Investments
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