Tourism from China “may augur a period of sustained growth” for the sector in the Philippines, the Oxford Business Group (OBG) said in an upbeat analysis earlier this week.
By the numbers, the Department of Tourism (DoT) is hopeful tourist arrivals will break the 1 million mark this year, which would be a 49 percent increase over the 670,000 Chinese visitors recorded in 2016.
The DoT has set a total target of 7 million tourist arrivals for this year, after falling just short of 6 million last year.
OBG pointed out that the obvious trigger for an increase in tourist traffic from China was the government’s lifting last October of a travel advisory it issued in 2014; removing the advisory was a goodwill gesture following the visit to Beijing of President Rodrigo Duterte.
The reason OBG expects Chinese tourism to increase dramatically is that the travel advisory did not noticeably slow the flow of tourists from China. Under the advisory, people wanting to travel to the Philippines were subjected to some additional security steps to be permitted to leave China, which a great many of them were evidently willing to undergo. There was some reduction in the number of group and package tours, but China still was the third largest source of foreign visitors to the Philippines last year – about 11.3 percent of the total, following the US, with 870,000 arrivals or 14.6 percent, and South Korea, with 1.48 million, or about 25 percent of the total.
The local hospitality sector is already preparing for what it hopes will be a surge in arrivals; OBG took particular note of DoubleDragon Properties, which is building an entire mixed-used complex near the Mall of Asia and recently announced a goal of doubling its room capacity from 1,000 to 2,000 rooms in the next three years, earmarking P6.6 billion for the initiative. Just about every other real estate developer with an interest in the hotel and resort business is eyeing expansion as well, with a considerable amount of the new capacity being developed in areas outside Metro Manila.
While all of this is good news, doubling tourism’s contribution to GDP—a goal that is often mentioned, although not exactly an official target—relies on a couple of risky propositions.
First, the grand plans of the Duterte administration for infrastructure development have to evolve from words to actual productive work. Granted, the aspirations were given a tangible form with the administration’s earmark of P860 billion for infrastructure in this year’s budget, but none of that money has been spent yet. Whether it is effectively spent or not will determine the likely success of the administration’s longer-range plan to spend about $23 billion on tourism infrastructure specifically between now and 2022.
The second risk is the potential for short-term impacts on tourism from the political relationship with China. Duterte has not been subtle in his efforts to curry favor with China, and while that is both practical and prudent in many ways, it may handcuff the country in others. For instance, the Duterte administration has pitched a list of 12 major infrastructure projects to Beijing in an effort to secure Chinese investment, but in doing so, is potentially setting the country up to accept a number of quid pro quos, the biggest one being acceptance of Chinese hegemony in the South China Sea.
There are a number of smaller issues that are currently under dispute to some degree, including concerns about intellectual property protection and product safety and certification. In a report in January, the Hong Kong-based research firm CLSA cautioned that the Philippines might be putting too many of its eggs in one basket in relying heavily on the Chinese market, for the very reason that geopolitical or trade disagreements could have an effect.
The third risk is a bit more forward-looking, but in some ways could be more harmful to the country. One thing that successive administrations in the Philippines have completely failed to grasp is the unavoidable life cycle of tourism. Tourism is naturally unsustainable: Success of a particular destination leads to more development, which leads to overcrowding, which leads to a decline; one very good large scale example is Spain’s Costa Brava, which is a shadow of its former self. We are already see ing the tourism life cycle in action here in the Philippines in Boracay, which is being increasingly avoided by visitors due to its oversaturated development.
No administration has ever considered the question, “What comes after tourism?” and the current one is apparently not thinking that far ahead either. A Boracay that becomes a depressed has-been among tourist destinations probably won’t bring down the entire national-scale tourism industry, but to the people in Boracay, that will be of no comfort whatsoever. To avoid that, the government has to make the post-tourism period of areas being developed as part of the planning at the outset.