The rise of low cost carriers fuels growth in inbound and domestic tourism
The Philippine travel and tourism industry continues to benefit from the expansion of international and domestic routes by low cost carriers and increased flight frequency to popular destinations. A handful of low cost carriers went as far as offering new flights from Manila, although many focused on secondary airports such as Cebu, Iloilo and Clark. The constant availability of affordable airfares enabled more local residents and foreign tourists to explore the country’s 7,107 islands, and allowed more travellers to fly in and out of the Philippines. As a result, inbound and domestic tourism flows saw double-digit growth during 2012.
New tourism campaign informs people that “It’s More Fun in the Philippines”
During January 2012, the Department of Tourism launched a global campaign under the simple yet memorable slogan “It’s More Fun in the Philippines”. Raising awareness of the country as a tourism destination and establishing favourable perceptions of the Philippines were the main objectives of the campaign as many foreigners remain unaware of the Philippines. With limited financial resources, the Department of Tourism relied heavily on social media, inviting internet users to upload photographs of both popular and less well-known Philippine holiday destinations and adding words to the now popular slogan. The campaign has so far been successful as much of the user-created content went viral within hours, catching the attention of the international media as well as high numbers potential of potential inbound arrivals.
San Miguel Corp invests in Philippine Airlines
San Miguel Corp (SMC), one of the largest and most diversified commercial conglomerates in the Philippines, completed its acquisition of a 49% stake in PAL Holdings Inc, Philippine Airlines Inc’s parent company, and affiliated low cost carrier Air Philippines Corp in April 2012, with the transaction worth US$500 million in total. SMC’s investment in PAL Holdings hastened the replacement of much of Philippine Airlines’ aircraft fleet, which was considered necessary to revitalise the Philippines national flag carrier and prepare it for the heavy influx of inbound foreign tourists which is expected during the forecast period. In August 2012, PAL signed a US$7 billion deal with aircraft manufacturer Airbus to purchase 54 new aircraft. A month later, an additional ten aircraft were ordered at a total cost of US$2.5 billion.
Polarisation leads to rising demand for budget travel and luxury tourism
Polarisation in consumer trends became more apparent in the Philippines during 2012. Despite the growing demand for luxury travel among Asia’s burgeoning middle classes, many travellers in the Philippines still opted for cheap no-frills options. This resulted in new travel accommodation outlets, tourism services and promotions positioned towards each of the two ascendant consumer segments. For instance, luxury hotels operators Raffles and Fairmont each opened their first outlets in Makati City, while budget hotels chain Tune Hotels launched three branches in the Philippines during 2012. In air transportation, low cost carrier Cebu Pacific Air expanded its international route network, making affordable airfares more widely available, while Philippine Airlines released a ‘buy one get one free’ promotion on its business class tickets.
Heavy influx of inbound tourists is expected over the forecast period
The Philippines Department of Tourism is expected to become more aggressive in its marketing of the Philippines as a travel and tourism destination during the forecast period, with the aim of attracting ten million visitors per year by the end of 2017.The focus is set to be on promoting the Philippines as one of the world’s must-see holiday destinations. A heavy influx of inbound foreign tourists is anticipated during the forecast period due to the rising awareness of the Philippines and the various tourist attractions which can be explored in the country. The greater availability of direct flights to popular points of interest and ongoing improvements in infrastructure and tourism-related facilities are also set to stimulate visitor arrivals during the forecast period.
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