Global-Estate Resorts Inc. is building more hotels in the next three years to take advantage of a growing tourism industry.
The tourism and leisure subsidiary of Megaworld Corp. is spending P5 billion for the development of more hotels in the next two to three years, banking on the tourism growth with the expected improvement in infrastructure.
In a media briefing after the firm’s annual stockholders’ meeting on Thursday, Megaworld Senior Vice President Jericho Go told reporters that the firm is spending another P5 billion for the development of hotels until 2019, which is part of the P10- billion, five-year capex for hotels which began in 2014.
“What we said is that of the P10 billion that we committed for five hotels, P5 billion has already been spent,” Go said “So the [remaining]P5 billion will be spent over the next two to three years until such time that the rest of the hotel projects are fully completed.”
The allotment will cover the construction of hotels in GERI’s townships in Boracay and in Alfonso, Batangas near Tagaytay. Of these, four will be located in the 150-hectare Boracay Newcoast and the other will in the 1,200-hectare Twin Lakes.
GERI has completed a hotel in Boracay, the Fairways and Bluewater, which is now open for business.
The hotels to be completed in the next three years are Savoy Hotel in Boracay, Belmont Hotel Boracay, Chancellor Hotel Boracay, and Twin Lakes Hotel.
GERI’s hotel is driven by the potential growth of tourism as the administration of President Rodrigo Duterte vowed to spend more on infrastructure across the country.
“The angle that we wanted to emphasize here is that we’ve heard in the past several weeks about the 10-point agenda by Secretary Dominguez. And I think two of the key considerations there will be infrastructure spending and the second basically is decentralization or going out into the provinces,” Go said.
GERI is well-positioned to take advantage of veering away from Metro Manila, since its properties are all over the country, especially in the provinces.
The Duterte Administration is looking to raise infrastructure spending to 7 percent of the gross domestic product (GDP), compared with the 5-percent target of the Aquino administration.
“Now when you talk about infrastructure spending, obviously one of the key considerations there would be the vast improvement of our international airports and we’ve already seen this in the past. Boracay has gotten a boost or will soon get a boost with the completion of the Caticlan airport,” Go noted.
GERI president Monica Salomon said the company expects to accommodate 700,000 tourists annually with its new hotels in Boracay and Batangas.
Based on a report from World Travel and Tourism Council (WTTC), foreign tourist arrivals are expected to hit 5.5 million this year. At an annual growth of 6.6 percent, tourist arrivals will reach 9.19 million by 2026. This is on top of the 40 million domestic tourists.
“In Boracay alone, we hope to capture around 20-30 percent of the tourism market when our hotels become fully operational. Our vast Boracay Newcoast township will set the bar of a world-class island destination that Filipinos will be proud of, as far as facilities and infrastructure are concerned,” Salomon said.
Hotels presently account for 6 percent of GERI’s consolidated revenues, said Go.
With the addition of the new hotels, GERI expects to maintain its target annual growth of 30 percent in net income this year. In 2015, GERI’s net income grew by 39 percent to P667 million from P479 million a year earlier.
The P10 billion capex for hotels will be internally-funded, primarily from the sales of residential lots and vertical developments.