The Philippines’ tourism and hospitality sector continues to face a sluggish recovery in early 2025, with fresh data showing that international arrivals dipped slightly in the first quarter and hotel performance remains below pre-pandemic benchmarks. Industry leaders say a stronger and more coordinated push is needed to jumpstart growth and keep investors engaged in the country’s travel and hotel industries.

According to the Department of Tourism (DoT), the Philippines welcomed 1.65 million international travelers between January and March 2025 — a 0.6 percent decline compared to the same period last year. Of these, 1.53 million were foreign nationals, while 123,760 were overseas Filipinos. While arrivals from Japan, Canada and Australia posted double-digit growth, sharp declines from South Korea, China and the United Kingdom weighed on the overall total.

South Korea remained the top source market with 395,059 visitors, though this figure was down 13.9 percent from 2024. The United States followed with 285,597 visitors (up 7.9 percent), while Japan (125,083), Australia (79,779) and Canada (77,390) also saw notable increases.

Meanwhile, arrivals from China dropped by 33.7 percent to 72,665 — the lowest in nearly two decades — amid ongoing travel hesitations and a recent advisory issued by the Chinese Embassy citing security risks.

Despite the mixed numbers, Leechiu Property Consultants (LPC) projects that the country will end the year with six million foreign arrivals — the same as in 2024. That stagnation worries tourism experts, who say the sector risks losing momentum without decisive interventions.

“Over the course of the last year, from 2023 to 2024, the metrics have stabilized and we need some sort of a catalyst for that to pick up again,” said LPC Hotels, Tourism and Leisure director Alfred Lay.

Hotels see uneven recovery, call for stronger foreign demand

The hotel industry has seen some improvement in pricing, with average daily rates (ADR) now above 2019 levels. However, occupancy remains subdued — hitting only 60 percent in 2024, still below the pre-pandemic rate of 68 percent. Revenue per available room (RevPAR) stood at P3,368 last year, short of the P3,690 recorded in 2019.

Lay noted that the hotel sector tells “two stories,” while high-end hotels are faring better, economy and mid-range hotels are still struggling. Inflationary pressures and weakened spending power among mass-market travelers may be to blame.

“Essentially, the economy to the mid-market is still struggling to recover after Covid,” Lay said. “That may be a reflection of inflation pressures on the more mass markets and their ability to travel.”

In contrast, other Southeast Asian countries such as Singapore and Malaysia are recovering faster thanks to streamlined visa policies and strategic tourism campaigns.

With the DoT setting a target of 8.4 million foreign tourists in 2025 — up from the 5.95 million recorded last year — there is growing pressure to recalibrate plans. Tourism Secretary Christina Garcia Frasco has signaled that targets under the 2023-2028 National Tourism Development Plan may need adjustment.

A sector in need of a catalyst

Stakeholders agree that local tourism alone cannot sustain the industry. Experts argue that the Philippines must better attract high-spending foreign travelers by easing travel requirements — offering longer visa-free stays, more visa-on-arrival options and reducing entry barriers.

“Significant growth in occupancy rates and revenue will require strategic initiatives aimed at attracting higher-yield foreign tourists, better integration of business travel, and enhanced destination marketing efforts,” Lay noted.

The recent drop in Chinese arrivals, once a top source market, is emblematic of broader challenges. While stakeholders say a recent travel advisory from the Chinese Embassy may not immediately affect numbers — since Chinese arrivals are already limited — it underscores the importance of managing international relations and visitor perceptions.

“With hotel performance showing limited progress and recovery in foreign arrivals facing difficulties, it’s clear that a more coordinated effort between the public and private sectors is needed,” Lay added.

“A decisive catalyst is essential to spark substantial growth in tourism — one that is resilient enough to withstand economic challenges and elevate the industry beyond its current plateau.”

With hotel development cautiously resuming and investor interest returning, how the country responds in the coming months could determine whether tourism finally moves beyond recovery and into real growth.