The Philippine hotel industry is shifting its focus to domestic travelers as geopolitical tensions in the Middle East disrupt international arrivals and slow foreign bookings, prompting operators to brace for a gradual recovery only by the fourth quarter.
Hospitality groups said the conflict has triggered flight disruptions and weaker travel flows through major airline hubs, dragging down bookings that began softening as early as late February.
“The biggest challenge right now is really the Middle East crisis because hospitality and tourism have been affected by lower arrivals and flight cancellations,” said Loleth So, president of the Hotel Sales and Marketing Association (HSMA), during the group’s general membership meeting on June 22.
So said occupancy levels are improving but remain below pre-peak targets, while rising electricity, fuel, and other operating costs continue to squeeze margins across the sector.
“We have to work harder—not only to improve occupancy but also average room rates—so we can rebound in terms of profitability,” she said.
To stay competitive, many hotels have cut room rates by as much as 30 percent, particularly to capture domestic demand. Before the pandemic, local guests accounted for roughly 60 percent of hotel business versus 40 percent from inbound tourists. Following the recent disruption, inbound guests have dropped to just 20 to 25 percent, underscoring the sharp contraction in international demand.
Despite the headwinds, the industry remains cautiously optimistic. So said hotels are banking on a seasonal rebound in the fourth quarter, traditionally the strongest period for travel, as well as continued recovery in global tourism flows.
She added that developers are still expanding capacity, reflecting confidence that current disruptions are temporary rather than structural. “Tourism is very resilient,” she said. “We’ve been through crises before, and we’ve learned how to respond much faster.”
Hotels are also stepping up participation in the Department of Tourism’s “Discover More to Love the Philippines” campaign, which aligns public and private efforts to stimulate both domestic and international travel demand.
