x Abu Dhabi, UAEWednesday 24 January 2018

Philippines' reputation takes a hit

The tragic hijacking of a bus is having a terrible effect on the tourism industry in the Philippines. But problems existed in the country's hospitality sector before.

MANILA // The Philippines, with its 7,100 islands, has some of the best beaches in Asia and some of the best diving spots in the world.

It has outstanding resorts, spas and eco-tourism spots - but it still fails to attract the same numbers of foreign tourists as many of its South East Asian neighbours. Last year, slightly more than 3 million tourists visited the Philippines while Malaysia had 23.6 million, Thailand 14 million, Indonesia 6.4 million, Singapore 9.6 million and Vietnam 4 million, according to statistics from the Association of South East Asian Nations (ASEAN).

Terrorist bombings on the Indonesian island resort of Bali and Jakarta this decade have not kept tourists away; nor has Thailand's internal political problems, nor the Boxing Day tsunami in 2004 in which more than 200,000 people died. So why is the Philippines different, even before the tragic events of the Manila bus hijacking at the end of last month? "Part of the problem is perception," says a foreign former Manila hotel manager who does not want to be identified.

"To many foreigners, the Philippines is seen as lacking infrastructure, perceived as being too expensive when compared to other regional destinations and, above all, not a safe place to spend a holiday. "The failed rescue of Hong Kong tourists in which eight died along with their hijacker - a disgruntled, sacked policeman - did not help the Philippines as millions watched it live around the world. The fact that it was bungled so badly did nothing for the image of the country."

On the same day a minibus carrying South Koreans who had just arrived in the country was shot at on a busy road and forced to stop just a few kilometres from Manila's international airport. When one tourist refused to hand over his money and valuables, he was shot dead. In June, a foreign senior manager at the five-star Shangri-la Hotel was shot dead in broad daylight while walking to work in the business district of Makati.

"I would expect many people who had considered the Philippines as a possible holiday destination are probably looking elsewhere now," says the former hotel manager. While its South East Asian neighbours pour billions of dollars into their tourism sectors, the Philippines, despite much discussion on the subject, does very little. "The reality is that the vast majority of tourism destinations [in the Philippines] are serviced by second and third-rate facilities with poor maintenance regimes and sub-standard service offerings, not to mention the time-consuming and cumbersome challenges of getting to and from any of the country's destinations," the Manila-based economic and political risk consultancy Pacific Strategies and Assessments (PSA) said in a July report.

"There is little hope, even with the best promotional campaigns in place, that the Philippines will improve its attractiveness to savvy tourists when all of its South East Asian neighbours offer far superior accommodation." PSA made the point that while the Philippine government allotted US$28 million (Dh102.8m) for its tourism agency last year, it spent only $2m promoting itself overseas. Thailand allotted $138m to its tourism authority and spent almost a third of that on promotion.

Alberto Lim, the Philippines tourism secretary, said last week the botched rescue of the Hong Kong tourists had probably cost the Philippines about $70m in tourism revenue. "The tension is still there and will probably take three months before it finally dissipates and enables the industry to recover," Mr Lim said. He estimated more than 100,000 tourists from Hong Kong and China have so far cancelled their bookings, hitting the revenues of the two main local carriers, Philippine Airlines (PAL) and Cebu Pacific.

Tourists from Hong Kong and China comprise about 9 per cent of all annual international arrivals and could pull down the number of foreign visitors to the country this year by between 5 and 10 per cent, some analysts have said. The hostage drama on August 23 lasted 11 hours and ended when a police special weapons and tactics team stormed a tourist bus in downtown Manila. Eight of the 15 tourists held captive by the former policeman were killed in the ensuing shootout. The policeman, who had been sacked this year for extortion, was also killed.

The day after the bus siege, local stocks and the country's peso were hit. The main Philippine Stock Exchange index ended a six-day winning streak by losing 2.3 per cent - its biggest one-day fall since June. On the foreign exchange market the news was not any better, with the peso retreating 47 centavos to close at 45.53 to the dollar. The markets recovered by the end of the week but the tourism sector, one of the weakest and least developed in South East Asia, continued to take a battering with Hong Kong placing a "black alert" on the Philippines.

The alert, the most severe of a three-stage system, suspends package tours and advises travellers not to go to areas where their safety may be at risk. Last Sunday in Hong Kong about 80,000 residents took to the streets to voice their anger at Manila and the administration. Last Wednesday, the Hong Kong tourism chief James Tien said he was in favour of continuing the black alert. "Even if the alert were to be lifted, I doubt you will find many people from here wanting to go to the Philippines," Mr Tien said.

PAL said this week there had been a number of cancellations of flight bookings for passengers coming from Hong Kong and other Chinese cities bound for the Philippines. The airline said more than 1,000 tourists from Hong Kong and China had cancelled their bookings. Despite the reduced passenger load Jaime Bautista, the president of PAL, says the airline will maintain its current flight frequency until the situation returns to normal.

"We're closely monitoring the situation and will decide soon whether we will maintain or reduce flights," Mr Bautista says. "We share the grief and understand the Hong Kong people's wrath. We are optimistic that fears of travelling to the Philippines will be temporary." The worst-case scenario for the company, he says, would be the reduction of flights to Hong Kong, from which about 6 per cent of PAL's revenues come. PAL flies to Hong Kong five times a day and also flies to Macau, Shanghai, Xiamen and Beijing.

Direct flights from Hong Kong to Laoag City in Ilocos Norte, northern Philippines, have been cancelled indefinitely, said Ronal Estabillo, the manager of Laoag International Airport. He told the Philippine Daily Inquirer newspaper last week he had received a letter from executives of Hong Kong Express Flights notifying the airport of the cancellation of the airline's direct flights. The Hong Kong airline flies in twice a week to the home province of the former president Ferdinand Marcos.

The city has become a popular destination for Hong Kong and Chinese tourists as it is only 45 minutes' flight from the former British colony and has some of the country's better golf courses, a resort that caters to the Chinese and a casino. Each month about 1,200 Hong Kong tourists visit the city for "rest and recreation", Milagros Gonzales, a provincial tourism officer, told the paper. "This will hurt the local industry."

The local budget carrier Cebu Pacific says several of its passengers from Hong Kong have also asked to have their flights rebooked or cancelled. Meanwhile, the Philippine Travel Agencies Association says eight hotels and seven resorts had reported cancellations by tourists from Hong Kong and other parts of China. That amounts to 300 rooms in popular tourist destinations such as Bohol, Palawan, Boracay, Cebu and Manila.