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Hotels balancing value, affordability as inflation weighs on travel plans

THE Philippine Hotel Owners Association (PHOA) said on Monday that inflation will be a challenge for the industry, which hopes to keep rates affordable and raise the value proposition of its offerings to retain customers.

“Inflation will be a major factor in travel decisions in 2023. The challenge for the hotel industry is to make sure we offer value and come up with price point that will still be within reach of domestic travelers,” PHOA Executive Director Benito C. Bengzon, Jr. told BusinessWorld Live on One News channel.

“Apart from inflation, we’re also monitoring developments around the globe. The Ukraine-Russia war certainly will affect long-haul travel. Another thing that has to be factored in is that airfares have to be kept at reasonable levels,” he added.

Inflation was 7.7% in October, driven by higher food costs.

According to Mr. Bengzon, the PHOA is “cautiously optimistic” for 2023.

 “We are happy with the performance of our hotels in the past 11 months this year. Certainly, occupancy rate and revenue for 2022 are much better than what we registered for 2021. This has been driven largely by travelers from the US, Canada, and the UK. We’re also cautiously optimistic about 2023. (There are) a lot of challenges but we remain hopeful that it will be better than 2022,” Mr. Bengzon said.

Mr. Bengzon said an occupancy rate of 80%-90% will be a “comfortable level” for hotels to achieve in 2023.

“If we can sustain occupancy at 80% to 90%, that would be a comfortable level for many hotels. We have to consider that the performance indicator is not limited to just hotel occupancy but the more important indicator is average daily room rate. That’s where we have to strike a balance to make sure we’re able to operate viably while making sure we remain within reach of consumers,” Mr. Bengzon said.

Mr. Bengzon added that hotels are “looking at a daily rate that is affordable for travelers but at the same time, will allow hotels and resorts to operate. To make it more compelling… many of our hotels are coming up with new products like more al fresco options (or) pet-friendly rooms.”

The Tourism department has said that as of Nov. 14, 2.025 million visitors have arrived in the Philippines since the easing of entry requirements earlier in the year, exceeding its 1.7 million arrivals projection for 2022. — Revin Mikhael D. Ochave

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