Domestic travel fuels tourism recovery, analyst says

Domestic travel is emerging as the key driver of the Philippine tourism sector’s recovery, with local tourism receipts compensating for lower-than-expected foreign arrivals, according to a report by real estate advisory firm Leechiu Property Consultants (LPC).

“Domestic travel is so big and strong that it can make up, in the short term, for the shortfall of international arrivals,” said Alfred Lay, LPC Director for Hotels, Tourism, and Leisure, during the launch of the company’s second-quarter property market report held Thursday in Makati.

Data from the Department of Tourism showed that local tourism expenditure in 2024 reached PHP3.16 trillion, surpassing the pre-pandemic level of PHP3.14 trillion in 2019. Tourism’s contribution to the country’s gross domestic product (GDP) stood at 8.9 percent last year.

In contrast, international visitor spending reached PHP699 billion, up from PHP600 billion in 2019, but still fell short of targets.

Lay said the domestic segment could likely double its size in the next five to ten years, positioning itself as a critical pillar of long-term tourism growth.

Despite a drop in visitors from South Korea—the country’s top international market—Lay said arrivals from long-haul destinations such as the United States, Japan, Australia, and Canada were rising and helping to offset the decline.

South Korean tourist arrivals from January to May this year fell 19 percent to 552,000 from 682,000 in the same period in 2024. Lay attributed the decline to “negative media coverage” in South Korea, particularly around safety concerns.

Meanwhile, inbound arrivals from the US, Japan, Australia, and Canada rose by 9 to 19.4 percent during the same period, according to LPC’s market report. Lay expects inbound tourism to hit at least six million for the year, especially with additional routes and increased flight frequencies in place.

Addressing concerns about affordability, Lay said hotel rates in the Philippines remain competitive across Southeast Asia. According to LPC, the average daily rate (ADR) in the country stood at PHP6,048, placing it fourth after Thailand (PHP8,171), Cambodia (PHP6,591), and Vietnam (PHP6,359).

“We’re still very price competitive,” Lay said. “And as we scale, improve our infrastructure, and lower transportation costs, we expect to stay relevant and grow even further over the medium and long term.”