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THE CHALLENGES OF TRAVEL AND TOURISM INDUSTRY IN RP

Richard K. Lazaro

The tourism industry is recognized by the government as an important contributor to


the generation of foreign exchange earnings, investments, revenue, employment and
to the growth of the countrys output.

Developing the tourism industry is integral to the President Rodrigo Duterte


administrations 10-point socioeconomic agenda as this sector is the third biggest
contributor to the countrys gross domestic product (GDP).

It accounted for five million jobs in 2015, mostly in the areas of transport and
hospitality services, representing 12.7 percent of the countrys total employment.
(Lucas, 2016)

Travel and Tourism Industry in the Global Arena

Earlier this year, January 2017, The United Nations has designated 2017 as
the International Year of Sustainable Tourism for Development.

This is an opportunity to look at how tourism is affected by climate change and how
emissions from the sector can be curbed, along with finding ways for the industry to
better adapt to the inevitable impacts of rising global average temperatures.

More than many other industries, tourism relies on a stable climate, and is already
being impacted by increased incidents of storms and heatwaves, desertification,
fresh water loss, rising sea levels that threaten coastal resorts, and diminished
snowfall in alpine skiing areas (UNFCC, 2017).

According to World Travel & Tourism Councils (WTTC) 2017 report, despite the ever-
increasing and unpredictable shocks from terrorist attacks and political instability, to
health pandemics and natural disasters, Travel & Tourism continued to show its
resilience in 2016, contributing direct GDP growth of 3.1% and supporting 6 million
net additional jobs in the sector. In total, Travel & Tourism generated US$7.6 trillion
(10.2% of global GDP) and 292 million jobs in 2016, equivalent to 1 in 10 jobs in the
global economy. The sector accounted for 6.6% of total global exports and almost
30% of total global service exports.

For the sixth successive year, growth in Travel & Tourism outpaced that of the global
economy (2.5%). Additionally in 2016, direct Travel & Tourism GDP growth not only
outperformed the economy-wide growth recorded in 116 of the 185 countries
covered by the annual economic impact research (including in major Travel &
Tourism economies such as Australia, Canada, China, India, Mexico and South Africa),
but it also was stronger than the growth recorded in the financial and business
services, manufacturing, public services, retail and distribution, and transport
sectors.

The outlook for the Travel & Tourism sector in 2017 remains robust and will continue
to be at the forefront of wealth and employment creation in the global economy,
despite the emergence of a number of challenging headwinds. Direct Travel &
Tourism GDP growth is expected to accelerate to 3.8%, up from 3.1% in 2016. As
nations seem to be looking increasingly inward, putting in place barriers to trade and
movement of people, the role of Travel & Tourism becomes even more significant, as
an engine of economic development and as a vehicle for sharing cultures, creating
peace, and building mutual understanding.

RPs Travel and Tourism Industry Status

Under the National Tourism Development Plan (NTDP) of President Rodrigo Dutertes
administration, the Philippines would invest $23 billion in tourism infrastructure until
the Presidents term ends in 2022 (Lucas, 2016).
The proposed NTDP investments cover road networks, airports, ports for cruise ships,
railways, site infrastructure, tourism enterprise zones, transport units,
accommodation facilities and aircraft acquisition.

Under the NTDP, the government aims to build up to 2,620 kilometers of tourism
roads over the next six years, from a baseline of 900 kilometers, which will require an
investment of $2 billion.

Earlier last year, while the Philippines is on track for its target of 6 million visitors for
2016, the Department of Tourism (DOT) racked up its arrival goals for the next six
years. DOT plans to reach 12 million tourism arrivals annually by 2022 (Vibar, 2016).

In another development, after President Duterte's visit in October 2016, Chinese


tourists have found the Philippines an amiable tourist destination. The Philippine
Embassy in China reported that visa applications tripled from 400 a day, now it's
about 1,400 a day. (Remitio, 2017)

These positive changes complement the development of the industry in the global
arena.

In the above cited report of WTTC, the Philippines Travel and Industry is growing and
with a forecast to increase further in the near future. Below are the highlights of the
report:

GDP: Direct Contribution. The direct contribution of Travel & Tourism to GDP was
PHP1,185.4bn (USD25.0bn), 8.2% of total GDP in 2016 and is forecast to rise by 7.6%
in 2017, and to rise by 5.2% pa, from 2017-2027, to PHP2,110.4bn (USD44.5bn), 8.5%
of total GDP in 2027.

GDP: Total Contribution. The total contribution of Travel & Tourism to GDP was
PHP2,852.9bn (USD60.1bn), 19.7% of GDP in 2016, and is forecast to rise by 7.8% in
2017, and to rise by 5.3% pa to PHP5,134.2bn (USD108.2bn), 20.7% of GDP in 2027.
Employment: Direct Contribution. In 2016 Travel & Tourism directly supported
2,219,000 jobs (5.5% of total employment). This is expected to rise by 5.3% in 2017
and rise by 2.4% pa to 2,963,000 jobs (5.7% of total employment) in 2027.

Employment: Total Contribution. In 2016, the total contribution of Travel & Tourism
to employment, including jobs indirectly supported by the industry was 18.1% of
total employment (7,357,000 jobs). This is expected to rise by 4.4% in 2017 to
7,679,000 jobs and rise by 2.3% pa to 9,633,000 jobs in 2027 (18.5% of total).

Visitor Exports. Visitor exports generated PHP316.0bn (USD6.7bn), 7.8% of total


exports in 2016. This is forecast to grow by 11.1% in 2017, and grow by 6.8% pa, from
2017-2027, to PHP676.1bn (USD14.2bn) in 2027, 11.4% of total.

Investments. Travel & Tourism investment in 2016 was PHP89.6bn, 2.6% of total
investment (USD1.9bn). It should rise by 9.5% in 2017, and rise by 4.4% pa over the
next ten years to PHP150.2bn (USD3.2bn) in 2027, 2.5% of total.

Challenges for RP and Recommendations

Political situation. Despite the general positive outlook, the issue on extrajudicial
killings under the current government administration may impact the industry. Last
March 2017, Tourism Secretary Wanda Teo urged the media to tone down their
coverage of the Duterte administrations war on drugs, saying it was making it hard
to sell the Philippines as a tourist destination.

A closer look at tourist arrivals in recent months, however, seems to show while
tourism numbers slipped slightly below target last year, the trend did not continue
into the year and may well improve over time.

In fact, Tourism Department statistics say inbound arrivals surged to 631,639 in


January, the highest ever recorded by the Philippines in a single month. The volume
represented an impressive 16.48 percent growth from the 542,258 recorded in the
corresponding period last year, before Dutertes takeover.

Asians formed the largest bulk of the arrivals, taking up 59.13 percent of the total
volume or the equivalent of 373,476 visitors. The spike was largely thanks to arrivals
from China, which experienced a sharp growth of 76.46 percent to hit 85,948 from
the 48,708 arrivals in January 2016.

The above figures may be positive but no one can say how long. The stand of the
government on its war on drugs has put the country in the hot seat. Unless this is
controlled, this may cause a backlash to the industry.

The need to develop or update tourism infrastructure. These infrastructure


challenges range from substandard docks and ports of entry to modes of transport to
urban infrastructure such as access roads, electricity, water supply, sewerage and
telecommunication. As airplanes begin to carry more people airports will face not
only the problems of handling large numbers of arriving passengers but also will
need to find ways to unload luggage faster, and transit people through immigration
and customs lines. The lack of infrastructure will also impact issues of security as
governments attempt to ferret out potential terrorists while creating a warm and
welcoming arrival experience.

The investment of the current administration in tourism infrastructure would truly


solve this problem. But as we all know, political will in this country is much needed as
well. Even as there are improvements in terms of new roads and airports being built
and new hotel brands being developed, there are concerns on whether the growth of
supporting infrastructure could keep up with the tourism boom.

Terrorism. The spread of terrorist groups throughout the world are major threats to
tourism. Tourism must learn to create not merely security and safety but surety
the interaction between the two.
Private security and public security will need to learn to interact and work well not
only with each other but with the media and marketers. The old and outdated adage
that security scares visitors is more and more being replaced with the adage that the
lack of security provokes fear among visitors.

Conclusion

Tourism must be looked at and developed as a cohesive whole, from the manner in
which the country is positioned right down to the manner in which local
environments are being developed and sustained for the benefit of future
generations.

Over the longer term, growth of the Travel and Tourism sector will continue to be
strong so long as the investment and development takes place in an open and
sustainable manner. Enacting pro-growth travel policies that share benefits more
equitably can foster a talent and business environment necessary to enable Travel
and Tourism to realize its potential.
REFERENCES

Lucas, D. L. (2016, November 29). Duterte govt to invest $23B in tourism


infra. Philippine Daily Inquirer. Retrieved May 18, 2017, from
http://business.inquirer.net/220385/duterte-govt-invest-23b-tourism-infra

Remitio, R. (2017, January 28). Chinese tourists surge in PH after Duterte state visit.
Retrieved May 18, 2017, from http://cnnphilippines.com/news/2017/01/28/Chinese-
tourists-surge-in-PH-after-Duterte-state-visit.html

UN Works to Make Tourism More Sustainable International Year of Sustainable


Tourism Kicks Off. (2017, January 19). Retrieved May 18, 2017, from
http://newsroom.unfccc.int/unfccc-newsroom/2017-is-international-year-of-
sustainable-tourism-for-development/

Vibar, I. (2016, December 28). DOT seeks 12M tourist arrivals by end of Duterte term.
Retrieved May 18, 2017, from http://news.abs-cbn.com/news/12/28/16/dot-seeks-
12m-tourist-arrivals-by-end-of-duterte-term

World Travel & Tourism Council. (n.d.). Retrieved May 18, 2017, from
https://www.wttc.org/-/media/files/reports/economic-impact-research/countries-
2017/philippines2017.pdf