OVERVIEW OF PHILIPPINE TOURISM USEC. OSCAR P. PALABYAB Department of Tourism Good afternoon to all of you. On behalf of our Secretary, Joseph H. Durano, it is indeed a great honor for me to present the Secretary’s thoughts on the deepening of Philippine-Spanish relations through tourism. We thank the organizers of the 2nd Tribuna España-Filipina for the invitation to speak before this gathering. From the previous presentations, we can see that there is a need to improve relations between our two countries in practically all fields of endeavour, from a political, economic and commercial standpoint, to social and cultural relations. It is now my turn to speak on the last topic for the day, which addresses the question: What can the Philippine tourism industry offer Spain? Let me begin by pointing out the fact which is known by almost every Filipino schoolchild – the Philippines was a colony of Spain for more than three hundred years. That long interlude in our history has given us a deep Hispanic heritage, and the Philippines today remains the only country in Asia with that particular distinction. Allow me to give you a profile of Spanish travellers to the Philippines.

The Growth of World Tourism Tourism growth over the past 50 years is dramatic- 25 Million in 1950 to 698 Million in 2000 One of the most remarkable economic and social phenomena of that period Forecasts indicate the trend will continue with 1.5 Billion in 2020!

The Unstoppable Expansion of International Tourism 763 million 25 million Average growth of 6.5% a year

Worldwide Visitor Arrivals and Receipts 1996 - 2006 Year Visitor Arrivals (In Millions) % Inc/Dec Visitor Receipts (In US$B) 1996 575 6.28 % 434.0 5.60 % 1997 599 4.17 443.0 2.07 1998 617 3.00 1999 640 3.73 455 2.71 2000 687 7.34 482 5.93 2001 464.0 -3.73 2002 707 2.91 474.0 2.16 2003 694 -1.84 535 12.87 2004 765 10.23 635 18.69 2005 806 5.36 683 7.56 2006 842 4.47

International Tourist Arrivals 2005 Country (In Millions) France 76 Spain 55.6 U.S. 49.4 China 46.8 Italy 36.5 United Kingdom 30.0 Mexico 21.9 Germany 21.5 Turkey 20.3 Austria 20.0

Factors in Tourism Growth Increase in real income Increase in life expectancy Retiring baby boomers Faster and cheaper air travel Easier access and more destinations Rapid developments in IT

Sampling of tourism expenditures International Visa Card holders spent P37.5 B in 2005 vs P29 B in 2004 Top 5 Visa spending countries in RP 1. U.S.A. 2. United Kingdom 3. Japan 4. South Korea 5. Australia

Visa Card users Korean card holders had highest average spending per transaction at US$175 Metro Manila got 60% of total availments or P22.9 B Luzon = P72B of which Mindoro got P272M and Palawan P238M Visayas= P6.1 B (Cebu= P4B), others Negros, Leyte and Boracay

Spending pattern Most popular are accommodation, retail goods, restaurants, transportation, sports and leisure Largest retail market= department stores and duty free shops In Metro Manila, hotels got P1.5 B, airlines P420 M, groceries, supermarkets P344 M

Trends in Asia Pacific Region Japan’s economy is registering an upward trend of 2.8% Hongkong, China and Korea are predicted to grow by 5.5% South East Asian countries are expected to grow from 6-7%, characterized by liberalization on outbound travel and increasing number of travel agencies In China alone, there are about 111 M internet users now

Visitor Arrivals to the Philippines Actual Projected Actual Arrivals (in Million) Year Volume Growth Rate 1996 2.05 16.4 % 1997 2.22 8.5 % 1998 2.15 (3.3)% 1999 2.17 1.0 % 2000 1.99 (8.2)% 2001 1.80 (9.8)% 2002 1.93 7.6 % 2003 1.90 (1.3)% 2.29 23.0% 2.60 14.5% 2006 2.84 8.4% Projected Arrivals (in Million) Year Volume Growth Rate 2007 3.20 12% 2008 3.65 14% 2009 4.24 16% 2010 5.00 18%

Philippine Visitor Receipts Actual Tourism Receipts (in US$ Billion) Year Volume Growth Rate 1996 2.70 10.1% 1997 2.83 4.8% 1998 2.41 (14.8)% 1999 2.55 5.8% 2000 2.13 (16.4)% 2001 1.72 (19.3)% 2002 1.74 1.0% 2003 1.52 (12.5)% 2004 1.99 30.7% 2.23 12.32% 3.46 54.96% Projected Actual Projected Tourism Receipts (in US$ Billion) Year Volume Growth Rate 2006 2.72 16.0% 2007 3.12 15.0% 2008 3.56 14.0% 2009 4.06 14.0% 2010 4.59 13.0%

Philippine Top 12 Markets, 2006 Country Volume % Share Growth Rate KOREA 572,133 20.1% 16.9% USA 567,355 20.0 7.4 JAPAN 421,808 14.8 1.5 CHINA 133,585 4.7 24.3 TAIWAN 114,955 4.0 -6.5 AUSTRALIA 101,313 3.6 5.02 HONGKONG 96,296 3.4 -10.2 SINGAPORE 81,114 2.9 16.8 CANADA 80,507 2.8 10.5 UNITED KINGDOM 68,490 2.4 8.7 MALAYSIA 53,279 1.9 23.7 GERMANY 51,402 1.8 2.0 Korea is the number 1 tourist market in 2006 with a share of 20 percent and growth rate of 17 percent China continues to demonstrate robust growth at 24 percent in 2006 after experiencing 171 percent increase in 2005. Singapore and Malaysia visitors continued to increase with the proliferation of low cost carriers

Philippine Top 12 Markets, Jan –Sept 2007 Country Volume JAN-SEPT 2007 % Share JAN-SEPT 2006 % Growth Rate KOREA 472,711 20.9% 406,480 16.3% USA 433,425 19.1 424,494 2.1 JAPAN 303,420 13.4 326,219 -7.0 CHINA 113,593 5.0 98,136 15.8 TAIWAN 85,551 3.8 87,471 -2.2 HONGKONG 84,910 3.7 70,804 19.9 AUSTRALIA 76,048 3.4 69,341 9.7 SINGAPORE 70,054 3.1 57,827 21.1 CANADA 60,751 2.7 54,511 11.4 UNITED KINGDOM 55,564 2.5 48,824 13.8 MALAYSIA 48,735 2.2 38,060 28.0 GERMANY 40,211 1.8 37,165 8.2

How Did Our Neighbors Do in 2006/2005? COUNTRY 2006 2005 Percentage Growth Malaysia 17,500,000 16,431,055 6.51% Thailand 13,650,000 11,516,936 18.52 Singapore 9,673,362 8,875,980 8.98 Indonesia 4,871,351 5,002,101 (2.61) Vietnam 3,583,486 3,430,000 4.47 Philippines 2,843,345 2,623,084 8.40 Cambodia 1,700,041 1,421,615 19.59 Lao PDR 1,200.000 1,081,606 10.95 Brunei 836,435 815,054 2.62 Myanmar 630,061 660,206 (4.57)

The Birth of the Super Regions North Luzon Agribusiness Quadrangle (NLAQ) Luzon Urban Beltway Central Philippines Mindanao Cyberservices Corridor

THE CENTRAL PHILIPPINES SUPER REGION And so with these initial intentions received, the government is doing its bit to lay down the groundwork to see these investments through to fruition. The President has identified the Central Philippines Super Region as the development area of the country for tourism. This region spans the provinces of Palawan, Romblon, Camarines, Albay, Catanduanes, Masbate, Sorsogon, Guimaras, Aklan, Antique, Capiz, Iloilo, Negros, Bohol, Cebu, Siquijor, Biliran, Samar, Leyte, Camiguin and the islands of Siargao in Surigao and Dapitan in Zamboanga. The Central Philippines Super Region is composed of Regions 5, 6, 7, and 8 and the provinces of Palawan, Romblon and Camiguin as well as the island of Siargao and the City of Dapitan.

5 Flights/week from Japan This Super region has 51 weekly flights with average seat capacity of 11,045 from major tourist markets … International Flights to Central Philippines 5 Flights/week from Japan 16 Flights/Week From S. Korea 2 Flights/week From Taiwan 14 Flights/week From Hong Kong Having 51 weekly flights with an average seat capacity of 11,045, it is the hub of all our tourism activities. 2 Flights/week From Malaysia 12 Flights/week From Singapore

Central Philippines Super Region POWDER FINE WHITE SAND BEACHES OF BORACAY Seven of the ten most visited beaches in the country are located in provinces in the Central Philippines Super Region namely: Cebu, Aklan, Negros Occidental, Bicol, Samar, Palawan and Romblon Tourism revenues from Central Philippines reached P83.82 Billion in 2005, with Western and Central Visayas getting the lion’s share, raking in 38% and 35%, respectively

Visitors to Central Philippines reached 4 Visitors to Central Philippines reached 4.64 million or 29 percent of total regional travelers in 2006 Bicol Region 637,127 Eastern Visayas 203,569 CENTRAL VISAYAS 1,631,445 Romblon 23,780 Palawan 189,911 Western Visayas 1,610,677 Surigao City 58,341 Camiguin 220,062 Dapitan 47,769

in Central Philippines Endorsed Tourism Development Projects in Central Philippines Year 2006 – September 2007 THE SUPERREGIONS North Luzon Metro Luzon Urban Beltway MACAGANG BUSINESS CENTER MPh 67.917 – PEZA AVENUE PLAZA HOTEL (2007) Mph 324.205 –BOI CAMARINES SUR TOURISM PARK (2007) MPh 1,002.93 - PEZA Central Philippines Super Region Tourism CLUB MISIBIS MPh 122.817 - PEZA Camarines Mindanao Albay Masbate Sorsogon Romblon Samar BORACAY SHANGRI-LA HOTELS & RESORTS, INC. MPh 4,030 – PEZA Locator MICROTEL INNS & SUITES BORACAY MPh 128.300 - BOI BORACAY SANDS HOTEL (2007) MPh 174.60 - BOI Boracay Panay Leyte Negros Siargao Palawan Cebu Bohol Camiguin Siquijor THE BELLEVUE BOHOL MPh 334.1360 – BOI ESKAYA BEACH RESORT MPh 815.000 – BOI BLAUES MEER RESORT MPh 69.700 - BOI SHANGRI-LA MACTAN IS. RESORT MPh 310.400 – BOI (Modernization) IMPERIAL PALACE WATER PARK MPh 3,180.00 – BOI WATERFRONT CEBU TOURISM ESTATE MPh 350.00 - BOI Note: Total amount of ETDP in Central Philippines as of January 2006 – September 2007 MPh 10,910.005

SUMMARY OF MEDIUM TERM PUBLIC INVESTMENT PROGRAM FOR CENTRAL PHILIPPINES TYPE OF PROJECT AMOUNT (IN BILLIONS) PERCENT SHARE AIRPORTS 30.577 16.02 SEAPORTS 0.867 0.45 ROADS 92.973 48.70 RAILWAY 40.000 20.95 FLOOD CONTROL 21.978 11.52 ENERGY 4.500 2.36 TOTAL 190.895 100.00 With the government prioritizing its development under the medium term public investment program, we can expect new and improved airports, seaports, roads, railways, flood control structures and energy systems to materialize within the coming months. Public investment is estimated to total 190 Billion pesos. As a matter of fact, a number of airport projects are already in the offing. Many of the seaport projects will be implemented starting 2007.

Key Tourist Markets Priority 1: China, Japan, Korea Priority 2: Taiwan, Hong Kong, Australia Priority 3: ASEAN, Europe, North America

Philippine Global Strategy Accelerate demand in existing core markets such as China, Japan, Korea and Filipino Americans Increase investment and focus promotion programs in strategic markets such as Australia, Russia, Germany and US/ Canada Reinvigorate marketing efforts in traditional sources such as, UK, Italy, Spain and France

Building Sustainable Demand for the Future Liberalize air access to and from major tourist markets either through direct flights or chartered services Upgrade and modernize infrastructure and transport facilities to facilitate access in tourist destinations especially in the Central Philippines Expand tourist accommodation and recreation facilities Diversify tourist products and services such as medical and wellness tourism for an enhanced tourism experience

Hotel and Resorts – Investment Needs Additional 20,000 to 30,000 rooms are needed to meet the increased demand by 2010 Current supply Vs 2010 demand in accommodated tourist number 18.5 22.8 4.3 # MM PAX At least additional 20,152 rooms to reach 85% occupancy rate** Or 38,489 rooms to reach 70% occupancy rate** Domestic tourist Though government is taking the lead for the development of the necessary support infrastructure, we need the partnership of private investors in the building of tourism infrastructure. Our limited supply of accommodation facilities is about to reach its full capacity in a few years. Additional 20,000 to 30,000 rooms are needed to meet the increased demand by 2010. Foreign tourist Note: *Accommodated tourist number does not equals to total tourist number as some tourists may not choose to stay in hotels and resorts ** Assuming demand growth rate for non-accredited establishment rooms is 50% of that for accredited establishment rooms Source: DOT Hotel Census, August 2005, n=881; DOT Accreditation database as June 2005; Monitor estimation; Monitor analysis

RESULTS FROM 2005 HOUSEHOLD SURVEY ON DOMESTIC VISITORS, April – Sept 2005 43.5% (23 Million) Filipinos, 15 years old and up traveled within this period EACH INDIVIDUAL MADE 2 TRIPS AND VISITED TWO PLACES IN THE COUNTRY FOR THE SIX MONTH PERIOD

RESULTS FROM 2005 HOUSEHOLD SURVEY ON DOMESTIC VISITORS, April – Sept 2005 ALMOST 99% OR 23.5 Million domestic travelers had independent domestic trips 17.5 Million spend an average of: 1. Accommodation P1,200.00 2. Food and beverage P 400.00 3. Sight seeing and guided tour P 600.00 4. Entertainment & Recreation P 300.00 5. Local transport (sea,air or land) P 400.00 6. Shopping P1,100.00 7. Others P3,200.00

RESULTS FROM 2005 HOUSEHOLD SURVEY ON DOMESTIC VISITORS, April – Sept 2005 MOST FREQUENTLY VISITED PLACES: NCR CAVITE BATANGAS LAGUNA ILOILO BULACAN NUEVA ECIJA PAMPANGA CEBU PANGASINAN ALBAY

Visitor Profile And Travel Characteristics, 2006 Mode of Travel Air (98.73%) Sea (1.27%) Sex Male (61.22%) Female (37.40%) Average Age 38.26 years old Purpose of Visit Holiday 46.99% VFR (Visit Friends / Relatives) 26.66% Business 13.18% Convention 1.28% Official Mission 0.11%

Visitor Profile And Travel Characteristics, 2006 Frequency Visit (%) - First Visit 31.27 - Repeat Visit 51.30 Travel Arrangement - Independent 61.67 - Package Tour 18.56 - Not Stated 19.77 Overall Average Length of Stay ( Nights) 12.06 - Foreign Visitors 10.98 - Overseas Filipino 48.02 Average Daily Expenditure (US$) 83.91 Foreign Visitors 84.70 Overseas Filipino 55.78

Foreign Visitors Expenditure 2006 Average Daily Expenditure US$ 83.91 Major Items of Expenditure Accommodation US$ 25.72 Shopping 22.01 Food and Bev. 20.39 Entertainment 7.02 Local Transport 4.71 Miscellaneous 2.81 Guided Tour 0.36

Regional Statistics Good afternoon to all of you. On behalf of our Secretary, Joseph H. Durano, it is indeed a great honor for me to present the Secretary’s thoughts on the deepening of Philippine-Spanish relations through tourism. We thank the organizers of the 2nd Tribuna España-Filipina for the invitation to speak before this gathering. From the previous presentations, we can see that there is a need to improve relations between our two countries in practically all fields of endeavour, from a political, economic and commercial standpoint, to social and cultural relations. It is now my turn to speak on the last topic for the day, which addresses the question: What can the Philippine tourism industry offer Spain? Let me begin by pointing out the fact which is known by almost every Filipino schoolchild – the Philippines was a colony of Spain for more than three hundred years. That long interlude in our history has given us a deep Hispanic heritage, and the Philippines today remains the only country in Asia with that particular distinction. Allow me to give you a profile of Spanish travellers to the Philippines.

Regional Destinations of Foreign Tourists Jan-Dec 2006* REGION VII - 542,159 REGION IV - 434,530 REGION VI - 266,891 NCR - 262,364 REGION III - 155,394 CAR - 76,812 REGION I - 52,786 REGION XI - 52,756 REGION X - 46,284 REGION V - 31,153 REGION II - 24,453 REGION XIII - 16,200 REGION IX - 13,647 REGION VIII - 13,329 REGION XII - 4,606 * Preliminary

Regional Destinations of Domestic Tourists Jan-Dec 2006* Region IV - 5,852,860 Region VI - 1,259,332 Region VII - 1,081,903 CAR - 902,917 Region X - 837,851 Region XI - 699,552 Region XII - 618,077 Region II - 610,715 Region V - 587,823 Region IX - 480,297 Region XIII - 341,844 Region I - 281,582 Region III - 251,634 Region VIII - 189,643 NCR - 68,694 * Preliminary

CLARK INT’L AIRPORT VISITOR ARRIVALS, JAN – DEC 2006 REGION VOLUME EAST ASIA 37,481 ASEAN 27,093 AMERICA 8,209 EUROPE 7,046 AUSTRALASIA/PACIFIC 3,057 AFRICA 238 MIDDLE EAST 128 UNSPECIFIED 8 FILIPINOS 151,052 GRAND TOTAL FOR 2006 235,004 GRAND TOTAL FOR 2005 114,902 GROWTH RATE 104.5%

CLARK INT’L AIRPORT International No of Flights, JAN - DEC 2006 AIRLINES NO. OF FLIGHTS TIGER AIRWAYS 954 AIR ASIA 725 ASIANA 278 CR AIRWAYS/HONGKONG AIRLINES 100 SHANGHAI AIRLINES 5 CHINA SOUTHERN 3 GRAND TOTAL 2,065

Thank You!