OVERVIEW OF THE PHILIPPINE TOURISM INDUSTRY

Market Prioritization Framework High Core Markets Markets that deliver the “bread & butter” Bulk of new investment Best capabilities allocated Investment / Turnaround Markets Invest in these markets ahead of return i.e. invest for the future Tactical / Momentum Markets With focused spend can relatively quickly generate increased arrivals Maintenance Markets Markets that are on the radar Activity only to occur if there is spare capacity Ensure mix of countries creates balance across: Growth cycles Market development Short haul vs. long-haul Seasonality Investment required Ability to Win Competitive Position: How competitive is the Philippines vs. key competitors (SE Asia) ? Ability to Deliver: How adapted is the Philippines offer to consumer needs? Low High Size of Opportunity Current size and growth Potential size and growth Note: Competitive Position (market share, awareness (unaided, aided), positivity towards RP, consideration of RP, information seeking about RP, likelihood of visiting), Ability to Deliver (Ease of access, trade interest, product availability, importance of safety, Fit of assets vs. consumer preferences, seasonality of arrivals, presence of English speaking population), 2 2

Market Portfolio Implications High Continue to focus bulk of resources and best people on existing core markets (China, Japan, Korea, US Balikbayan) Increase investment and focus on Tactical/momentum markets (Australia, Russia, Germany, US/Canada) Maintain investment in turnaround markets (Hong Kong, Taiwan, Singapore) focusing efforts on addressing key barriers to growth Monitor maintenance markets (UK, Netherlands, Switzerland, and Denmark) on an annual basis to test for low-hanging fruit Cut focus on Italy, Spain, and India Ability to Win Competitive Position Ability to Deliver Low Low High Size of Opportunity Current Attractiveness Future Attractiveness Note: **US campaigns and activities can be extended to Canada; *Given limited resources and inherent barriers to activation, UK market has been de-prioritized. However, UK remains a good investment market in Europe Source: Monitor Analysis 3 3

Visitor Arrivals to the Philippines, 2000- 2007 The 2007 has been a breakthrough for Philippine tourism as healthy growth in visitor arrivals was recorded. Visitor Arrivals to the Philippines, 2000- 2007 (In Millions) Trend Line YoY Growth Rate (%) -8.2% -9.8% 7.6% -1.3% 20.1% 14.5% 8.4% 8.7% Source of Data: Arrival/Departure Cards and Sea Manifests Visitor Sample Survey at International gateways 4

Top Markets of the Philippines, 2007 One of the main achievements of the DOT is the consolidation of global market portfolio to sustain growth in core markets. Top Markets of the Philippines, 2007 YoY Growth Rate (%) 14.2 2.0 -6.4 18.0 11.0 -2.4 16.3 15.9 13.4 23.3 8.7 Source of Data: Arrival/Departure Cards and Sea Manifests in major international gateways and sea ports. 5

Percent Increase in Strategic Markets, 2007 The Philippines continued to shine in the highly competitive scuba diving arena in Europe and India strengthening its position as one of the best water sports destinations. Percent Increase in Strategic Markets, 2007 2007/2006 Growth Rate 20.4% 24.4% 8.7% 23.6% 18.7% 21.2% 16.3% 24.0% 28.8% 128.9% 6

Visitor Arrivals to the Philippines, January-June 2008 First semester tourist arrivals for 2008 posted 7.4 growth fueled by strong increases in North East Asian and European Markets Visitor Arrivals to the Philippines, January-June 2008

Top 10 Tourist Markets, January-June 2008 Korea continued to lead as key source market. However, China, Taiwan, Australia, Canada and United Kingdom showed strong double digit growth. Top 10 Tourist Markets, January-June 2008

Arrivals from European Markrts, January-June 2008 European Market lead by United Kingdom and Germany demonstrated robust growth. Scandinavian countries continued to increase as even faster rate. Arrivals from European Markrts, January-June 2008

Arrivals from Muslin Generating Markets, January-June 2008 Potential markets for halal services coming from Muslim dominated markets showed double digit growth in the last seven (7) years. Malaysia topped the list followed by Indonesia and Saudi Arabia. Arrivals from Muslin Generating Markets, January-June 2008 2000 2001 2002 2003 2004 2005 2006 2007 Brunei 1,827 1,786 2,136 2,070 2,151 2,579 2,947 3,040 Indonesia 16,272 16,307 15,352 17,051 19,801 20,055 22,646 25,535 Malaysia 42,067 30,498 31,735 31,161 34,170 43,059 53,279 65,695 Bahrain 911 1,068 1,358 1,379 1,774 2,067 2,246 2,699 Egypt 482 888 580 576 690 564 804 715 Israel 2,808 2,470 2,062 1,720 2,090 2,521 3,959 3,929 Jordan 299 404 292 185 310 351 431 5,052 Kuwait 1,007 1,164 1,469 1,449 2,084 2,339 2,632 2,995 Saudi Arabia 10,444 10,409 11,341 9,842 11,627 14,141 15,017 16,358 UAE 1,568 2,160 3,460 3,305 4,198 5,070 6,414 8,490 Total 77,685 67,154 69,785 68,738 78,895 92,746 110,375 134,508 Growth Rate -13.6% 3.9% -1.5% 14.8% 17.6% 19.0% 21.9%

Visitor Expenditure in the Philippines, 2000- 2007 For the first time ever, foreign expenditure posted a hefty growth of 40.99% to reach US$4.885 Billion. Visitor Expenditure in the Philippines, 2000- 2007 (In US$ Billion) Trend Line YoY Growth Rate -16.40% -19.27% 1.01% -12.49% 30.74% 12.32% 54.96% 40.99% Source of Data: Arrival/Departure Cards and Sea Manifests Visitor Sample Survey at International gateways 11

Selected Tourist Receipts from European Markets, January – June 2008 Expenditure of European markets went up by insurmountable levels. Russians spent surpassed other key markets. Selected Tourist Receipts from European Markets, January – June 2008 (In US$ Thousand)

The Department of Tourism’s ultimate goal is to attract not only more tourists, but also higher value visitors that stay longer and spend more generating more opportunities for the country. 13

The DOT will continue to lead, coordinate and nurture initiatives from the private and public sectors. 14

Tourism Sector Level Value Chain Awareness and Perception of the Philippines Tour Package Acquisition Transpor- tation/ Air Flight Accom- modation Delivery and Tourist Satisfaction Awareness and perception of the Philippines Sales channels Travel agents Air accessibility and airports Hotel capacity and utilization Tourist satisfaction levels Quality and value of tourist products and services All elements to be tracked and measured by the DOT 15

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