Property consultancy JLL Philippines expects the hospitality real estate market to grow in 2025 due to the continued increase in tourist arrivals in the country.
Janlo delos Reyes, head of research at JLL, in a press briefing on February 4, said the hospitality market has a pipeline of 2,587 units or rooms between 2025 and 2029, majority of which will come from the economy and mid-scale segments.
Delos Reyes said around 74 percent of the incoming supply is coming from foreign operators: Marriott, Ascott, and Radisson Hotel. Meanwhile, 26 percent is coming from local operators such as Ayala Land.
“These will drive new supply in the upper, upscale, and luxury segments,” Delos Reyes said.
He added majority of the new supply will be concentrated in Makati City, with additional developments spread across Pasay City through Manila.
A JLL report presented during the same briefing showed Makati City has around 751 rooms in the pipeline.
These are the Seda One Ayala, we have Somerset Valero and Radisson ervice apartments.
“So there’s a couple of new developments in Makati, CBD, that will drive new supply up. The rest are distributed between across Pasay City up until Manila City.
No new hotel will rise in Bonifacio Global City (BGC),” Delos Reyes said.
Delos Reyes said despite falling short of the government’s 7.7 million target in tourist arrivals in 2024, room occupancy levels held steady at 4.72 percent in the fourth quarter from the previous quarter driven by holiday celebrations and leisure bookings, though remaining 3.95 percent below 2023 levels.
Tourist arrivals stood at 5.9 million last year, a growth of 9.2 percent year-on-year from 5.45 million in 2023.
“This is a positive trend. We anticipate tourist arrivals to continue recovering in 2025 which will benefit the hospitality sector as a whole,” Delos Reyes said.
The JLL report said average room rates in the fourth quarter of 2024 improved by 3.8 percent year-on-year at P8,097 per room per night, meeting JLL’s projection of a year-end average of P8,000 but still below pre-pandemic rates of P9,100.
Hotel occupancy rates stood at 83.2 percent owing to the steady demand from leisure and corporate guests, the report said.
JLL, however anticipates a slight dip in the first quarter of 2025 before picking up again the fourth quarter 2025, reflective of the seasonal demand.
Delos Reyes said occupancy rates increased across-the-board in the fourth quarter due to the high demand from group bookings for corporate events, including Christmas parties, weddings and staycation.
“A lot of leisure demand is driving occupancy across these segments, particularly for the luxury and upscale markets which are leisure oriented developments,” Delos Reyes said.
Occupancy rate rose across all cities quarter-on-quarter basis, with a decrease for some on a year-on-year basis.
“For select areas, we saw a lot of increase in occupancy, and again, this is due to the strong guest performance across all cities coming from the fourth quarter of last year.
The decrease in occupancy levels for select areas may be owed to higher rates coming from some of these hotels in those locations,” Delos Reyes said.
JLL projects room rates to continue to increase, to reach the levels of around P8,300 to P8,400 per room per night by end of 2025, as new stocks come in within the upscale segment.
“That will pull up the market average for end of the year,” Delos Reyes said.
The increase in hotel rates has been noted across segments from economy, mid scale, upscale, as well as the luxury segments reflective of the strong occupancy levels.
“We expect this to be maintained over the next couple of quarters, as we still see moderate demand for the first half of 2025 before picking up again in the third quarter and fourth quarter of last year,” Delos Reyes said.
The report said Makati City, Mandaluyong City, Pasay City and Tagaytay City are the main contributors to the higher rates for the luxury developments, which registered an increase of around 4 percent on a quarter-on-quarter basis.
Meanwhile, the report showed hotel room rates registered mixed performance: stagnant growth for Paranaque City, Taguig City, including Bonifacio Global City; a decrease in Makati CBD, Pasig City and Quezon City and the rest recording an increase in terms of rates.
“This is reflective of the mixed performance… the difference in occupancy, particularly on a year- on-year basis, wherein some districts registered lower (occupancy) reflective of the higher rates that has impacted the occupancy for these areas,” Delos Reyes said.
