Gov't readies 'stimulus package' to spur tourist arrivals

By JUDITH BALEA, abs-cbnNEWS.com

Posted at Feb 01 2009 11:26 PM | Updated as of Feb 02 2009 08:35 PM

The government is readying a "stimulus package" for the tourism industry that would help spur foreign visitor arrivals to the country from the weakening markets of US and Japan.

At the sidelines of the unveiling of the new tourism economic zone in Cebu, Tourism Department Secretary Ace Durano announced they have partnered with airline companies and property developers for a stimulus package that they would launch in the US and Japan next month.

The program, which involves up to a 50-percent fare cut for flights going to the Philippines and discounts on hotel accommodation rates, would run for a trial period of three months.

"We are just choosing the markets where we will be introducing our own stimulus package. We're launching it in Japan and the US because these markets are depressed. They have been contracting and everybody will be fighting over a smaller pie," said Durano.

Voluntarily, he said, some airline players and selected hotel developers have offered discounts on their services while the government have agreed to shell out around P100 million to market the new promos.

"In a way that is our support to the tourism industry," Durano noted.

According to him, arrivals to Asia-Pacific destinations could post a flat growth or a decline of about 2 percent this year, and the stimulus package they have created would prepare the Philippines for this.

He said the Philippines' key markets have already contracted.

Last year, the total outbound market of Japan declined by 7 percent, Korea by 9 percent and the US by a percent, and Durano said these figures would likely worsen in 2009.

These three markets alone already compose close to 50 percent of total arrivals in the Philippines, he said.

He noted, however, that while the number of visitors from the major markets went down, that from smaller ones has grown. He said in 2008, arrivals from Russia grew by 34 percent, France by 18 percent, United Kingdom by 10 percent, Australia by 8 percent and Taiwan and Hong Kong by 6-10 percent.

For the full year, total tourist arrivals in the Philippines grew close to 2 percent to 3.2 million, slightly lower than the government's target of 3.5 million.

"The reality is we can only perform as well as the markets would allow us. If we don't base our projections on market realities, it's really daydreaming. We have to be dictated by the markets," said Durano.

"But we are happy to say that we are one of the remaining destinations in the world that still achieved a positive growth despite the deep downturn in global tourism," he added, noting that arrivals in neigboring countries like Singapore and Hong Kong have fallen by as much as 4 percent.

With the buildup in hotel room capacity and new flights going to local tourist destinations, the Philippines is in a very strategic position to take advantage of the expected rebound in markets in the next two years, Durano said.

"We would achieve growth because of these new capacities. The moment the markets bounce back, automatically, we will experience our next growth spurt."

"The new capacities are here already, that's what's important."

Looking forward, by 2012, Durano said foreign tourist arrivals could hit five million.

No excess capacity

Durano said that based on the results of a study they commissioned recently, even with the slowdown in foreign arrivals, there has been no excess capacity in the tourism sector.

"In fact, all additional capacity that will come in the next three years, it would just be enough to accommodate the market," he noted.

"We have no excess capacity. One indication is the hotel rates, which haven't gone down because demand is still there," he added.