Part 1 of 2
The Philippine hospitality sector remains on a growth trajectory, supported by rebounding international visitor arrivals, improving investment conditions, and expanding opportunities in the REIT market. As we see substantial new hotel supply entering Metro Manila between 2026 and 2028, Colliers recommends that developers adopt a selective and differentiated approach by focusing on niche segments such as lifestyle hotels, MICE-oriented developments, and serviced residences catering to expatriates. Thorough assessment of location, positioning, demand drivers, and competitive supply will be critical in maintaining healthy occupancy and room rates while mitigating oversupply risks.
The rise in arrivals in H1 2026, led by the growing number of tourists from China and India, indicates the important role the government plays in enticing more foreigners to visit the Philippines and spend here. In our view, the government should be proactive in targeting other source markets, especially the long-haul and high-spending ones. Colliers Philippines believes that the government’s programs to promote the country’s medical tourism segment and lure more foreign retirees to visit the Philippines are crucial in reviving the country’s tourism sector, which is among the major job-generating sectors of the economy. In our view, a greater public-private sector approach is necessary in sustaining the tourism sector’s gains and in ensuring a more inclusive growth for the segment.
Differentiation amid rising hotel supply
Given the sizable new hotel supply expected to come online in the capital region from 2026 to 2028, Colliers recommends that developers remain selective and focus on differentiated concepts that cater to specific segments, such as lifestyle hotels and MICE-anchored developments, and serviced residences for expatriates. Before launching new projects, developers should carefully evaluate location, market positioning, demand drivers, and existing supply. This approach can help mitigate potential oversupply risks while supporting sustainable occupancy levels and room rates.
Explore the viability of hotel REITs
Colliers believes that the extension of the land lease term to 99 years for foreign investors will enhance the attractiveness and stability of Real Estate Investment Trusts (REITs), particularly those with hospitality joint venture (JV) arrangements. The extension of foreign lease arrangements provides REITs and their JV partners with more predictable and long-term control over land and operations. We also see this supporting higher asset valuations and strengthening the Philippines’ enduring appeal to foreign investors seeking long-term, stable, and secure investment opportunities.
In our view, hospitality assets hold significant potential for the Philippine property market and the REIT segment. We forecast substantial room for growth in this sector, and we are optimistic that hospitality will be among the key REIT asset classes to watch beyond 2026.
Constant public-private sector dialogue to enhance ease of doing business
Colliers encourages private tourism stakeholders to constantly be in touch with government regulators to streamline the process of doing business in the country. In our view, constant dialogues are important in aligning investment priorities, addressing regulatory challenges, and identifying tourism sub-segments feasible for more foreign investments. Private players should be on the lookout for these low-hanging opportunities.
We believe that public and private sector players should ramp up marketing efforts on various platforms and rally behind the improvement of doing business in the Philippines to signal that Philippine tourism is open to more foreign investors.
There’s a need for hotel projects to stand out rather than simply ramp up supply. In the Philippine hospitality sector, growth is not just about more rooms. Growth will ultimately hinge on factors that will entice visitors to stay longer and spend more.
To be continued.
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