Domestic travel leads tourism surge

The local tourism industry is expected to maintain the growth observed in the first half of 2025, mainly driven by strong domestic travel and gradual recovery in international arrivals, according to a report by Manila Bulletin.

“With the anticipated growth of domestic tourism, our industry is set for a significant boost,” said Leechiu Property Consultants Director of Hotels, Tourism, and Leisure Alfred Lay.

He added that, “To fully tap its potential as a major driver for the Philippine economy, it's crucial that we realign our strategies and goals to overcome existing challenges and fully capitalize on this opportunity.”

He said post-pandemic domestic travel has reached record-high expenditure levels, reflecting strong local demand and the industry’s resilience amid ongoing global headwinds.

Supported by a growing population, rising consumer spending, and a more travel-savvy middle class, domestic tourism receipts are expected to continue their steady climb.

While inbound arrivals have not yet returned to pre-pandemic levels, international receipts are growing due to longer stays and increased spending by high-value tourists, marking a shift toward a more quality-focused recovery.

“The tourism sector is now outpacing overall economic growth, driven primarily by domestic activity. This performance highlights the industry’s resilience and its growing importance as a regional competitor,” Lay said.

With tourism contributing 15 percent to 20 percent of gross domestic product in neighboring Southeast Asian economies, the Philippines is positioning itself along a similar trajectory.

“International arrivals from long-haul markets are rising, buoyed by improved global interest and the launch of additional flight routes. These trends support a more diversified visitor base and reinforce the need for continued improvements in air connectivity,” Lay noted.

However, he pointed out that, recent security-related incidents have impacted perceptions, particularly among South Korean travelers—a key market.

Similar trends have been observed across the region, underscoring the importance of sustained confidence-building measures and market diversification strategies.

Meanwhile, recovery in the hotel sector has been strongest in higher-end segments, fueled by demand from affluent travelers and corporate clients.

On the other hand, mid-tier and budget hotels continue to face pressures from inflation and growing competition from short-term rental platforms such as Airbnb.

These alternatives, often operating outside traditional regulatory frameworks, offer flexible pricing that appeals to budget-conscious travelers.

While Philippine hotel rates remain competitive within ASEAN, Lay said the perception of higher overall travel costs persists due to elevated transportation expenses, especially domestic airfare.

As an archipelagic nation, air travel is often essential between destinations, but limited route networks and flight frequencies contribute to higher fares.

“Addressing these challenges is key to improving accessibility and reinforcing the Philippines’ value-for-money positioning,” he said.