Philippine billionaire Andrew Tan plans to spend $1.5 billion to triple his Alliance Global Group Inc. (AGI)’s hotel rooms and become the nation’s largest hotel owner as the country lures more tourists.
The investments will be made in the next five to seven years as Manila-based Alliance (AGI)’s units target to have more than 5,000 hotel rooms as early as 2017, President Kingson Sian said. The group is also developing tourism-related projects including two casino resorts, he said, adding that Alliance now has five hotels with 1,570 rooms.
“We aren’t slowing down nor putting on hold any of our tourism ventures,” Sian said in a Nov. 23 interview in Manila. “Tourism is just picking up and it’s not inconceivable that we will more than double our hotel rooms and become the country’s largest hotel operator in terms of rooms in five to seven years. We will certainly be among the biggest, if not the largest.”
Alliance joins developers including Ayala Land Inc. (ALI) in building hotels and resorts as the government upgrades airports and roads in a bid to bring in more tourists and boost economic growth. The Philippine government predicts tourist arrivals to rise to 10 million by 2016, from a 4.5 million target this year.
The Philippines lags neighbors Singapore, Thailand and Indonesia in attracting tourists as poor infrastructure, lack of hotel rooms and political instability in the past have turned away prospective visitors, Sian said. The country drew 2.14 million tourists in the first half, trailing Malaysia’s 11.6 million of which 5.83 million were visitors from Singapore, Thailand’s 10.5 million, and Indonesia’s 3.87 million, according to government data.
Arrivals are expected to climb as Alliance and three other groups, including Hong Kong-based Melco Crown Entertainment Ltd. (MPEL) and Japanese billionaire Kazuo Okada, are scheduled to open four casino resort hubs in Manila in the next four years, as the government pushes to attract gambling revenues from regional gaming centers, including Singapore and Macau.
The Philippines can surpass Las Vegas and “challenge” Macau and Singapore in gaming revenues in the next five years with the opening of casinos, said Rick Santos, chairman at the Manila-unit of property consultant CBRE Group Inc.
Still, government support would be crucial in making the projects profitable, said Jonathan Ravelas, chief market strategist at BDO Unibank Inc.
“These hotels would have a longer payback period if the construction of new and expansion of airports are delayed,” he said. “There must also be an integrated marketing between government and the private sector to sell Philippine tourism like what is done in other markets like Singapore.”
Tan and his partners will spend $1.2 billion for the 30- hectare Resorts World Bayshore, Alliance’s second Manila casino venture with Genting Hong Kong Ltd. (678), Sian said. A separate $350 million will be spent to expand and build more hotels in Resorts World Manila, Alliance and Genting’s first casino venture that opened three years ago and where $650 million has already been invested, he said.
Marriott International Inc. (MAR) will build another 200 rooms in the next two to three years and expand its 342-room hotel in the 25-hectare Resorts World Manila, while Starwood Hotels & Resorts Worldwide Inc. (HOT) will open a 350 to 400-room Sheraton hotel in the complex, Sian said. Two condominium hotels, which are owned by investors and rented out to travelers, with a combined 1,090 rooms will also be constructed, he said.
Resorts World Manila, home to the nation’s biggest casino, attracted 4.5 million visits last year and its traffic is forecast to reach 7 million this year, Sian said. Occupancy rate at the complex’s hotels is in “the high 80 percent,” the highest in the country, he said.
“Where it is possible, we will link the casino with the group’s other projects and cross-market these products,” Sian said.
The $1.5 billion investment estimate doesn’t include the budget of Global-Estate Resorts Inc., a unit of Alliance that builds tourism estates outside of Manila, Sian said.
Global-Estate along with Alliance’s other units plan to spend 20 billion pesos ($489 million) for hotel and resort projects in Boracay and Tagaytay, two of the country’s popular tourist destinations, according to Alliance’s website.
To contact the reporter on this story: Ian C. Sayson in Manila at firstname.lastname@example.org