In recent years, branded boutique hotels have emerged, giving customers affordable, no-frills accommodation in city centers.
The likes of RedDoorz, Oyo and Zen — all strong Southeast Asian brands — have grown exponentially in the Philippines, without having to own any property. Beyond rebranding, they all have put standards to existing properties and made them at par with those found all over the region. They equip these properties with technology and marketing and put them in their network.
Property consultancy Colliers said the rising number of local entrepreneurs and domestic tourists have boosted demand for budget hotels. Staycationers who now account for more than half of local travellers and primarily composed of millennials have also become a steady market for this right-sized, right-priced accommodation facilities.
Colliers sees local developers expanding their hotel portfolio to cater to this market; while smaller and boutique developers firm up partnerships with operators of budget hotels.
Colliers said the expansion of a mobile workforce — freelancers and owners of startup companies — especially those working in Metro Manila should sustain occupancies in budget hotels.
Foreign travellers who visit the Philippines as backpackers also contribute to higher occupancy of this segment, it added.
Colliers sees the development of more affordable hotels expanding in the provinces given the continued rise in domestic tourists.
Among the most viable provincial locations for hotel development are Negros Occidental, Cavite, Bohol, Cebu, Camarines Sur, Cagayan de Oro, Davao, Iloilo, and Clark in Pampanga. The development of regional airports in Negros Occidental, Bohol, Cagayan de Oro, Davao, and Iloilo, should entice more airlines to mount direct flights to these areas and hence buoy the demand for accommodation facilities.
Liviu Nedef, RedDoorz senior vice president for Marketing and Communications in a recent media engagement in Makati said 90 percent of RedDoorz customers are domestic travelers. Most of them travel to and from Manila or Davao or any other cities in the Philippines for business as well as travelers who wants access to nearby tourist areas.
“We also observed that our customers who are usually booking rooms in the city wants to lessen stress especially because of traffic… or even booking our hotels to be able to do more lifestyle activities and spend more time for important moments with family and friends,” Nedef said.
He added more and more commuters and city workers are booking rooms in conveniently located, affordable hotels because of the traffic.
RedDoorz, now has more than 200 hotels in more than 20 different cities nationwide, providing standardized services. When it started Philippine operations in October 2018, the hotel chain was operating with less than a hundred properties. A year later it has experienced 300 percent growth, with total number of employees increasing from just around 50 employees in 2018 to 200 at present. It is targeting 300-plus properties, 30 plus cities, 300 direct employees and 3,000 indirect hotel staff by the end of 2019.
With RedDoorz’s presence in major cities in the country including Manila, Cebu, Davao, and Tagaytay, the company focuses on opening new properties in tourist-heavy destinations especially for the upcoming holidays in areas like Boracay, Bohol, Antique, Capiz, Dumaguete, Palawan, Tacloban, and other key cities in Visayas and Mindanao before the year ends.
OYO Hotels and Homes said it has revolutionized the fragmented and legacy-driven budget hospitality space by empowering small and independent asset owners with the operational capabilities and technology that enables them to compete with big hotel chains and achieve high occupancies and, therefore, yields.
OYO Hotels continues to bring its successful model of combining design, hospitality, and technological expertise, financial acumen and operational capabilities to real estate owners around the world, giving them the ability to get a higher return on investments, access easy financing opportunities, transform their hotels, and offer good quality customer service, thereby significantly increasing occupancy and profitability – in every OYO building.
Mandar Vaidya, chief executive officer for Southeast Asia & Middle East of OYO Hotels and Homes, recently announced plans to invest $50 million in the Philippines as part of its commitment to Asean where it plans to add 2 million rooms in the region by 2025.
That would create over a thousand job opportunities in the country, Vaidya said.
ZEN Rooms meanwhile recently obtained additional funding from Yanolja, the leading travel group in South Korea, backed by Booking Holdings and GIC, among others, creating the leading economy and mid-range hospitality group in Southeast Asia. ZEN Rooms is today one of the largest hotel franchises in Southeast Asia, with 13,000 rooms under franchise.
Since Yanolja’s investment in mid 2018, ZEN has grown revenues 400 percent and has become in the second quarter of 2019 the largest hotel chain in fast-emerging Philippines, with 5,500 rooms under franchise.
ZEN was founded in 2015 to improve the state of budget hospitality and bring much needed operational and technological efficiency to the estimated 2 million independent economy rooms in the region. Thousands of hotel owners have since joined ZEN’s franchises to improve their revenue, optimize their cost base and increase the long-term value of their property. These efficiency gains ultimately benefit travelers who can enjoy safer and better value-for-money stays.