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Philippine
Tourism Industry

The Philippines is getting more and more rave

reviews for having some of the worlds most
beautiful tourist destinations in the world. The
Boracay Island has been awarded the stature of
The Worlds Best Island for 2012 by the international travel magazine Travel + Leisure. This is
just one in a fast growing list of must go Philippine beaches which include Amanpulo in Palawan, Caramoan in Camarines Norte and Panglao

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in Bohol. Since the declaration of the Palawan

Underground River as one of the New 7 Wonders of Nature, hotel accommodations in the
island have become fully booked until next year.
This new image will hopefully start an unprecedented surge in foreign visitors flying in to see
and experience the Philippines unique fusion of
culture in the backdrop of a tropical paradise.

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Tourism falls under the service industry of the country
which has been slowly but steadily growing since 2004.
According to the Tourism Investment Portfolio of the
Department of Tourism, the tourism industry has been
recognized by the government as an important source
of foreign exchange earnings, investments, revenue,
employment, and to the growth of the countrys output.
The inclusion of tourism as a major pillar in the Medium
Term Philippine Development Plan (MTPDP) has given
priority to a sector that has huge investment, employment and revenue potential. If developed in a sustainable
manner, it can be a powerful economic growth engine for
the country.1 By harnessing the countrys natural wealth
and famous Filipino hospitality, the tourism sector has a
rich natural resource to create wealth both in direct and
indirect business activities that generates a chain reaction

of enterprises and jobs. Tourism is also the perfect vehicle

for promoting cultural identity and responsible
stewardship of the environment.
According to the Department of Tourism, a total of
1,497,851 visitors came to the country from January to
April 2012, an increase of 14.61% over the previous years
volume of 1,306,944 for the same period. The month
of April recorded 349,779 visitors, an increase of
10.19% against its 317,443 arrivals for the same
month a year ago. 2
Visitors from Korea continue to lead all other markets
as it recorded 330,343 arrivals with a share of 22.05% to
total visitor inflow. This figure was higher by 15.50% than
the volume of 286,018 arrivals in the first four months of

Figure 1: Top Ten Visitor Markets

Source: Department of Tourism Website

2011. The U.S. market ranked second as it accounted for

16.02% of the total traffic. This market had an increase of
4.70% with 239,978 arrivals compared to its contribution
of 229,200 arrivals last year.
Visitors from Japan accounted the third biggest arrival
count of 137,984 for a share of 9.21% to the visitor
volume. This market posted an increase of 6.78% vis-vis its output of 129,223 arrivals a year ago. The China
market supplied 123,262 as the fourth biggest inbound
visitors to the country. A double-digit increase of 73.33%
was registered by this market versus its last years comparative figure of 71,113 arrivals. Visitors from Taiwan
likewise posted a two-digit growth of 34.51% contributing
74,871 arrivals against its volume of 55,662 a year ago.

Figure 2: Visitor Arrivals to the Philippines

Source: Department of Tourism Website

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Other markets with high growth rates and consistently significant volume are
Germany which grew by 15.36% (26,382 arrivals), Malaysia with 13.82% (32,363
arrivals), Australia with 13.38% (64,266 arrivals), United Kingdom with 12.92%
(41,759 arrivals) and Singapore with 11.38% (47,536 arrivals).

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Figure 3: Foreign Tourist Arrivals in RP

by Origin, Mn, 1990-2009
Sources: DOT and NSCB

By regional grouping, the East Asian region topped with a 47.38% share to the
total or a volume of 709,728. Almost all of the countries from this region consistently ranked among the top five contributors of visitors with the biggest volume
coming from Korea while China recorded the highest growth. Following the East
Asian region was North America, producing a combined total of 288,839 arrivals
or 19.28% share to the total visitor volume. The ASEAN region took the third
spot in the regional ranking, capturing 7.83% of the total tourist inflow by producing 117,224 arrivals.
Domestic travel is the strong backbone of Philippine tourism, making it
resilient during times of external vulnerabilities to health scares, terrorism, and global financial crisis, among others. In 2009 a group of 12
tourism destinations in the Philippines recorded a volume of 7.2 million
arrivals with domestic travelers accounting for 79% of the total. Another
indicator of the robust domestic travel market is the volume of domestic air passenger traffic, increasing by 25.1% in 2009 (see Figure 4 and
Table 1).

Figure 4: Domestic Air Travel Philippines

Millions, Growth, 1990-2009
Source: CAB

Table 1: Domestic Air Travel Philippines

Millions, Growth, 1995-2009

Source: CAB

Domestic travel is the strong backbone of

Philippine tourism, making it resilient
during times of external vulnerabilities
to health scares, terrorism, and
global financial crisis...
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Comparative ASEAN Arrivals

The Philippines ranked only 6th in attracting foreign tourist vis-a-vis its
ASEAN neighbours. Malaysia visitor arrivals in 2010 reached to 22.4 million
while Thailand attained 15 million, Singapore with 11.6 million, Indonesia
with 7 million and Vietnam with 5 million. The market shares of competing destinations in ASEAN have rapidly grown while the Philippines share
modestly expanded.

1. Laoag Vigan Tourism Clusters main gateway is the Laoag International Airport. The themes for this cluster are beach resorts, historic
heritage, eco-tourism and events. LaoagPagudpud, Ilocos Norte and
Vigan, Ilocos Sur are the Tourism Development Areas for this cluster.
The development of the Tourism Enterprise Zones (TEZs) in Pagudpud
and Laoag, the improvement of the clusters 9 heritage sites that totals
to PhP141,000,000 and linking the local communities to tourism supply
chain will surely help the Ilocos Region to become a top tourist destination.
2. The Clark International Airport is the main
gateway for the Central Luzon Tourism Cluster.
The chosen themes for the cluster are entertainment, amusement, sports, beach resort, events,
MICE, ecotourism, wellness, medical and retirement tourism. There are seven (7) Tourism Development Areas for this cluster namely the Subic
Clark- Tarlac Corridor, Nueva Ecija, Pampanga,
Bulacan, Zambales, Bataan and Aurora. Product
development will focus on mixed used resorts in
Clark, Zambales, Subic.

Table 2: Visitor Arrivals in ASEAN Countries (*000)

Source: World Tourism Organization/ ASEAN Secretariat

THE PHILIPPINES TOP 10 PRIORITY CLUSTERS

National Tourism Development Plan3
Under the proposed National Tourism Development Plan 2010-2016, the
Philippines was divided into 21 strategic and thematic tourism destination clusters covering 77 Tourism Development Areas (TDAs): 7 strategic
clusters are in Northern Philippines (North Luzon, CAR, CALABARZON,
NCR) covering 27 tourism development areas; 7 strategic clusters in
Central Philippines (MIMAROPA, Bicol, The Visayas) covering 24 tourism
development areas; and 7 strategic clusters in the Southern Philippines
(Mindanao) covering 26 tourism development areas.
Of the 21 Inclusive Tourism Cluster Destinations, 10 have been designated
as Priority Cluster Destinations covering 39 Tourism Development Areas.

3. The Ninoy Aquino International Airport is the gateway to Metro Manila and other parts of the CALABARZON Tourism Cluster. The themes
for this cluster are MICE, business, resort, history, medical, and wellness,
events, sightseeing, entertainment and shopping. There are five (5) chosen tourism development areas for this cluster: Metro Manila and Environs, Nasugbu-Looc-Ternate-Cavite, Laguna de Bay, Batangas and Quezon. Product development projects include Tourism Enterprise Zones in
Manila Bay and Batangas, and improvement to 15 heritage sites (Php 396
Million). Note that there will be 8,100 additional rooms needed (20112016) and 7,700 are planned or under construction for this cluster
4. Bicol Tourism Clusters main gateway is the Bicol International Airport.
This clusters themes are resorts, marine life, ecotourism, water sports,
and MICE. Camarines-Catanduanes, and Albay-Sorsogon-Masbate are
the chosen Tourism Development Areas. The projects for market access

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and connectivity include the completion of the New Bicol International
Airport and the development of tourism roads.
5. Palawan Tourism Clusters main gateway is the Puerto Princesa International Airport. The three Tourism Development Areas for this cluster
are Puerto Princesa, San Vicente-El Nido-Taytay, Southern Palawan. Some
projects that will help market access and connectivity include building a
New Terminal and Taxiway at Puerto Princesa Airport, building tourism
infrastructure in Puerto Princesa, San Vicente and El Nido and improvement of their 6 heritage sites (Php 140 Million). The DPWH and DBM
included 7 road projects worth 1.38B in the national budget for 2012
develop tourism roads. The chosen themes of this cluster are coastal
Island resort, ecotourism, sightseeing, MICE, and adventure.
6. The Western Visayas Tourism Cluster has two gateways, the Iloilo
International Airport and Kalibo International Airport. The Clusters
themes are coastal and island resort, ecotourism, marine sports, events,
and MICE. Bacolod-Silay, Iloilo-Guimaras and Boracay-Northern Antique
are the three (3) chosen Tourism Development Areas. Proposed Projects to increase market access is the completion of the Kalibo Airport
upgrade and providing international terminal service at the Iloilo Airport.
Destination and product development initiatives focus on the towns of
Iloilo, Guimaras and Bacolod. DPWH and DBM have 11 road projects
for 2012 included in the national budget worth P1.27B. This cluster has a
shortage of 4,504 additional rooms that needs to be completes by year
2016.
7. Central Visayas Tourism Clusters main gateway is the Mactan-Cebu
International Airport. Themes for this cluster are MICE, Business Investments, Resorts, history, events, sightseeing, entertainment, shopping, and
ecotourism. The four (4) Tourism Development Areas of this cluster
are Northern Cebu-Bantayan-Malapascua, Metro Cebu-Mactan-Olango
Island, Southern Cebu, Negros Oriental-Dumaguete-Siquijor, and Tagbilaran-Panglao Island. Market access and connectivity projects include
Cebu terminal expansion and runway improvement, gateway marketing

program (e.g. World Routes), seamless connection from Mactan Airport

to tourism development areas, 24 tourism road projects of DPWH
and DBM worth P2.86 billion in the 2012 national budget, the Tagbiliran
terminal expansion and the need for a Bohol gateway.
Destination and product development includes Tourism Enterprise Zones
in Cebu and Panglao, improvement to 17 heritage sites (Php 500 Million)
and linking communities to tourism supply chain. Note that this cluster
needs to build 7,000 rooms by 2016 and only 5,000 rooms planned or
under construction to date.
8. Zamboanga Peninsula Tourism Cluster has four (4) Tourism Development Areas Zamboanga Sibugay, Zamboanga City-Sta. Cruz-Isabela,
Pagadian City-Zamboanga del Sur and Dapitan-Dipolog. Its Main gateway
is the Zamboanga International Airport. The Destination and product
development includes Tourism Enterprise Zones in Dipolog and Dapitan.
9. Camiguin Island, Cagayan de Oro-Misamis Oriental, Iligan City-Lanao
del Norte, Misamis Occidental, and Bukidnon are the five (5) Tourism
Destination Areas of the Northern Mindanao Tourism Cluster. One priority project that everyone is waiting for is the Laguindingan Airport PPP
Project. This project will help boost Laguindingan as a Tourism Enterprise
Zone and support the chosen themes of the tourism department which
are island resorts, marine sports, historical places, sightseeing, events,
ecotourism, adventure, business, MICE, and entertainment.
10. Davao International Airport is the main gateway for the Davao Gulf
and Coast Tourism Cluster. The Davao cluster was divided into three (3)
Tourism Destination Areas which are Davao City-Samal Island-Davao del
Norte, Davao del Sur, and Compostela Valley-Davao Oriental. Marketing
Davao International Airport as an International gateway of the south will
definitely develop market access and connectivity for this area. Destination and product development include Tourism Enterprise Zones in Sta.
Ana Wharf and Samal Island.

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Potentials of Philippine Tourism

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Medical Tourism
For decades, people have been traveling to the Philippines to
seek medical treatment, but only in recent years has the country been well-known as healthcare destination. This is because
of the phenomenal growth of foreigners visiting the country for
medical and health-related reasons. Medical tourists are generally residents of the industrialized nations of the world, the
countries they travel are typically the less developed ones with
favourable currency exchange ratios.

Currently, there are four hospitals in the Philippines that are

Joint Commission International (JCI) accredited.
These are: The Medical City in Pasig City, St.
Lukes Medical Center in Quezon City, Makati
Medical Center in Makati City and Chong Hua
Hospital in Cebu City.

However, there are clear differences between the private health

facilities as compared to the public health system, which usually
do not offer the same quality care that patients receive from
private institutions. For medical tourists, it is advisable to avail
themselves of the medical tourism packages offered by private
hospitals and health facilities if they want to get the best healthcare services available.

Cosmetic Surgery
The country has many skilled cosmetic surgeons who specialize in
face lifts, rhinoplastery, abdominal tucks, liposuction, and breast augmentation. These medical operations are more expensive in most
of the developed countries. With many of the surgeons considered
to be the best in their field, tourists are travelling from around the
globe to have their cosmetic operations performed here.

Medical Tourism Philippines (MTP) welcomes tourists from all

over the world to visit the Philippines for their medical needs.
Medical tour packages are now available which offer travel and
hospital services, which take care of everything from visas, airfares,
accommodation, hospital costs for treatment and all transport.
The most common procedures are cosmetic and plastic surgery,
dermatology, weight loss surgery, ophthalmology, and dentistry.4

Dental Tourism
There are many hospitals and clinics specializing in dentistry all
across the country with plentiful competent dentists who are experts in the field offer lower dental cost works. All standard procedures are available as well as more complex ones such as the fitting
of dental implants and bridges.
Health Spas
There are also many relaxation centers and health spas in the country that offer therapeutic healing for the mind, body and soul. The
natural healing resorts offer alternative treatments concentrating on
organic solutions. Packages that offer long stays with a detoxification process, a natural and organic diet, meditation and massages
are available. After having a major operation, visiting a natural healing center that offers these services can greatly help the recovery
process.
Medical tourism is an emerging industry, which is on track to becoming a multi-billion dollar industry in the years to come. Not only
confined to people who are sick who want to live more years but
also to people who want to look and feel better and more fit as
they age.
Philippine medical tourism target is US$ 3 billion revenues by 2015.

Table 3: Cost of Medical Tourism in the

Philippines and USA
Source: Department of Tourism

The following are cost comparisons between medical procedures in

the Philippines and equivalent procedures in the United States: (see
Table 3)
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There were approximately 250,000 non-resident patients (foreign nationals and Filipino
expats/immigrants) who travelled in the country for various medical services in 2006. At
least 100, 000 foreign patients visit the country each year for medical care. This has grown
extensively each year and in the first quarter of 2009, approximately 200,000 medical
tourists have been documented as visiting the Philippines for medical care, with figures
expected to reach 600,000 by the end of the year. The vast Filipino Diaspora who settled
overseas return to the Philippines not only for family visits or vacations but also to undergo minor medical, dental and other health procedures not covered by their medical
insurance in their countries of origin. In 2007 alone 180,000 Filipino expatriates visited the
country for such purposes and this is expected to increase in the coming years.

Services with a SMILE (SWS)5

SWS will be a multi-channel service center to take the requests and orders of retirees.
The orders will be passed on to the retirement facilities and merchant partners.

Hospitals for Medical Tourism in the Philippines

The Medical City (Pasig City)
St. Lukes Medical Center (Quezon City and Fort Bonifacio Global City)
Makati Medical Center (Makati City)
Asian Hospital and Medical Center (Muntinlupa City)

Retirement
There are plenty of reasons for foreigners to pick the Philippines as a retirement spot.
One of the factors that holds significant appeal for retirees is the lower cost of living in the
country compared to other more developed countries. Foreign retirees face the prospect
of living comfortably without having to spend as much as they would have in their own
countries. The favorable exchange rate of the peso as well as the ease of access to foreign
currency exchange shops also contribute to this appeal.
Aside from the economic reason is the natural attraction of the Philippine environment.
With over 7,000 islands, numerous world-class tourist destinations and a warm tropical
climate, foreigners can breeze through their retirement surrounded by breathtakingly stunning sights and landscapes.
The social atmosphere is also beneficial considering that the second language of the Philippines is English, allowing for easier communication between citizens and foreign retirees.
But more than language, the Philippine people are widely renowned for their Filipino
hospitality. It is in the Philippine culture to be warm and receptive of others, creating an
environment that is inviting for foreign citizens to reside here in retirement.

Services with a SMILE or SWS is an initiative by the Philippine Retirement Authority that
serves as a contact center using various channels of communication with retirees to
answer their needs and offer the whole range of products and services provided by Philippine Retirement Authoritys accredited facilities and merchant partners.
SWS streamlines the delivery of products and services of accredited retirement facilities
and accredited merchant partners, to the retirees. SWS stands for Services with a Smile.

The Philippine Retirement Authority (PRA) provides a range of services to help the retiree settle comfortably in the country:
1. Greet and Assist
Upon the arrival at the airport, a PRA representative will meet and will lead you
to your transportation vehicle to take you to your destination.
2. 24/7 Hotline
3. Assistance in Obtaining Basic Government Documents/Requirements
4. Assistance with Banking Matters
5. Merchant Discounts
6. List of Hospitals and Doctors

MICE (Meetings, Incentives, Conferences and Exhibition)

Tourism can also be categorized according to tourism resources, activities engaged in by
tourists and their purpose or motivation for travelling. One of the many types of tourism
is MICE. Activities of MICE are participating in meetings, conventions, attending and or
viewing exhibits, which eventually lead to dining, sightseeing, shopping and other leisure
activities.
The development of the Philippine convention industry became an official government
policy in 1976, a milestone year that marked the establishment of Southeast Asias first
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full-fledged convention center, the Philippine International Convention Center (PICC); and the creation
of the Philippine Convention Bureau (PCB) as a government corporation dedicated to the promotion of
Philippines as a meetings and convention destination. That same year, the Philippines successfully played host
to the International Monetary Fund-World Bank Joint Conference that signalled the entry of the Philippines
into the world conventions market.
Since then, the Philippines has hosted some of the biggest and most important international and regional
meetings, conferences, conventions, congresses, and events that have made its capital city, Manila, one of the
acknowledged Convention Cities of the world.
MICE venues in the Philippines
SMX CONVENTION CENTER
Location: Mall of Asia, Pasay City
Type of Events: Trade Events, MICE, Car Shows,
Concerts, Entertainment Shows-Fashion Shows

Location: Pasay City

Type of Events: Theater Shows, Exhibits
CEBU CONVENTION CENTER
Location: Cebu City
Type of Events: MICE

WORLD TRADE CENTER

Location: Pasay City
Type of Events: Trade Events and MICE
PHILIPPINE INTERNATIONAL CONVENTION
CENTER (PICC)
Location: Manila
Type of Events: Medical Conventions, Concerts,
Political Gatherings, Graduations and MICE
CULTURAL CENTER OF THE PHILIPPINES (CCP)

BAGUIO CONVENTION CENTER

Location: Baguio
Type of Events: MICE, Graduations, Programs
SUBIC BAY EXHIBITION AND CONVENTION
CENTER
Location: Clark, Pampanga
Type of Events: MICE

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Challenges Facing the Tourism Industry in the Philippines

The issues mostly affecting the growth of the tourism industry sector includes: 1) congestion in the international airport; 2) inability to develop and expand air accessibility to key
growth markets; 3) undeveloped infrastructure works in gateways and destinations; 4)
lack of investor friendly environment; 5) low safety and security measures; 6) unimproved
quality and consistent levels of facilities and services; 7) overlapping institutional functions
between the national government and local government units resulting in uncoordinated,
fragmented and inefficient outcomes; and 8) low budgets for marketing and promotions.6

DOT to coordinate closely with the infrastructure agencies of the government, establish
the Tourism Infrastructure Enterprise Zone Authority (TIEZA) to focus on destination
area infrastructure development and investment promotion, and to prepare an annual
tourism infrastructure development program.
It will also accelerate private sector investment in tourist facilities and services at the destination level, the TIEZA is mandated to declare Tourism Enterprise Zones in which investors will receive a range of fiscal and non-fiscal incentives similar to those provided under
the provisions of the Board of Investments law.

These constraints have made it difficult to implement plans and programs for the development of the sector at the public sector level and discouraged private sector investment in
improved connectivity services and in tourist facilities and service at the destination level.

Into the Future

To address these constraints in the past, in 1990, the Department of Tourism with technical assistance from the UNWTO prepared a 20-year tourism master plan (1991-2010),
and subsequently corresponding tourism plans for most of the regions. In 2002, McKinsey
& Co prepared a strategy and action plan to accelerate implementation of the master
plan. More recently, the government has:

Over recent decades, the travel and tourism sector has increasingly become an important
driver of economic prosperity and social progress. It stimulates growth through jobs and
enterprise creation, and provides significant foreign exchange revenues for many countries.
The sector generates opportunities for reducing poverty and inequality, preserving natural
and cultural heritage, and upgrading infrastructure (World Economic Forum Asean Travel
and Tourism Report Competitiveness Report 2012).7

developed the Nautical Highway initiative to improve connectivity between the

Central Philippine islands and the Northern and Southern parts of the country;
prepared a sustainable tourism development plan for Central Philippines to develop its outstanding potential for island, marine and resort-based tourism; and
promulgated a new tourism law (RA9593)

Tourism Act of 2009 (RA 9593)

The new tourism law of 2009 seeks to address key concerns in regard to transportation,
infrastructure, investment, quality standards, institutional arrangements and tourism planning.
The law mandates the representation of the tourism sector in the Civil Aeronautics Board
(CAB) that determines the nature of air services between the Philippines and foreign
points, as well to sit as an active member in all air service agreement negotiations.

The recent initiatives of the Philippine Government in the tourism sector will address
many of the issues and constraints that have prevented the sector from achieving its real
potential in the past. The tourism law provides a framework for putting in place the planning, institutional, coordination and resourcing network necessary to implement programs
and projects to accelerate the development of tourism to the highest levels.

Endnotes:
1

Department of Tourism, Tourism Invesment Portfolio

Department of Tourism, Visitor Arrivals

Department of Tourism, National Toruism Development Plan

Discover Medical Tourism.com, Medical Tourism in the Philippines.

Philippine Retirement Authority, Why retire in the Philippines?

Department of Tourism, NTDP

World Economic Forum, World Economic Forum ASEAN Travel and Tourism Competitiveness Report

Its objectives are to accelerate tourism infrastructure development by mandating the

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