Bloomberg News

Paradise Demolished Drains Vital Tourist Dollars: Southeast Asia

November 13, 2013

Coastline of Cebu

Palm trees stand along the coastline of Cebu, the Philippines on June 20, 2012. Tourism is the country’s fourth-biggest dollar earner, after exports, overseas remittances and outsourcing. Photographer: Veejay Villafranca/Bloomberg

The Philippines, ravaged by the deadly Super Typhoon Haiyan and a 7.2-magnitude earthquake in the past month, needs to race to rebuild beach resorts and infrastructure to bring back much-needed tourism spending.

At least 2,357 people were killed and hundreds of thousands displaced after the Southeast Asian nation was hit by one of the most powerful storms on record Nov. 8. An earthquake on Oct. 15 killed at least 222 in Bohol and Cebu. Both hit in an area dotted with resorts that depends on revenue from divers and beachgoers.

The devastation caused as Haiyan swept across the center of the country adds another test for a nation that has increased efforts to catch up with neighbors in attracting visitors. Tourism is the country’s fourth-biggest dollar earner, after exports, overseas remittances and outsourcing. President Benigno Aquino is counting on a record 5 million overseas tourists this year to provide jobs and boost rural economies.

“Tourism growth will continue but probably at a slower pace because Bohol and Cebu provinces are two major tourism spots that were affected,” said Emilio Neri, an economist at Bank of the Philippine Islands in Manila. “Tourism’s contribution to the economy is slowly rising, and visitors are growing much faster because of the promotional efforts.”

The typhoon destroyed resorts in Cebu’s northern islands, while the temblor a month ago damaged centuries-old churches and led to cancellations by Korean and Chinese tourists.

Economic Contribution

The industry’s share of gross domestic product is expected to rise to 7.8 percent by 2015 from 6.7 percent now as integration in the Association of Southeast Asian Nations pushes tourism growth, according to Tourism Secretary Ramon Jimenez. The government expects revenue from international visitors to rise to $4.8 billion this year from $3.8 billion in 2012, Tourism Undersecretary Daniel Corpuz said on Oct. 17.

Foreign arrivals in the seven months to July rose 11 percent from a year earlier to 2.8 million, and the government is on track to achieve the 5 million mark for the year, it said on Sept. 17.

The government doesn’t have an estimate yet of Haiyan’s tourism impact, Jimenez said in a mobile-phone message yesterday.

“The disruptions are temporary and soon enough they will realize that the great number of tourism sites, dive spots included, in the over 7,107 islands of the Philippines remain available and ready for visitors,” Jimenez said.

No Electricity

The island resort of Boracay in the Visayas, while escaping the widespread destruction Haiyan brought to some other areas, lost more than 4,000 visitors after about 40 incoming flights were canceled on Nov. 8 and 9, field officer-in charge Artemio Ticar said by telephone. Boracay has attracted 1.1 million foreign and local visitors in the 10 months to October, and the target is 1.5 million people for the year, he said.

Coron town in Palawan province will probably miss its goal of as many as 80,000 foreign and local visitors this year after being hit by the super typhoon, Palawan Governor Jose Alvarez said by phone. There’s still no electricity in the town, where at least eight people died, he said. The province declared a state of calamity covering 14 towns, according to a government report yesterday.

More than 50 beach and dive resorts in Cebu province’s northern islands of Bantayan, Camotes and Malapascua were destroyed by Haiyan, Rowena Montecillo, the tourism regional director, said by phone. “The storm destruction has affected so many families and tourism businesses,” Montecillo said.

Discover World Corp.’s Club Paradise in Coron and Discovery Shores Boracay were damaged, according to an exchange filing.

Double-Whammy

“Tourism is a double-whammy for Cebu province because it’s connected to nearby Bohol province,” Lito Maderazo, president of the Cebu Chamber of Commerce and Industry, said by phone.

Central Visayas is seeking to attract 3 million foreign and local visitors this year, with a quarter of them bound for Cebu, Montecillo said. Arrivals in the province reached 1.4 million in the seven months to July, with tourists spending 5.3 billion pesos ($121 million), she said.

The Philippines ranked 82nd in tourism competitiveness out of 140 countries, according to the World Economic Forum’s Travel and Tourism Competitiveness Report for 2013, which looks at gauges including infrastructure and business environment. Vietnam ranked 80th, Indonesia was 70th, Thailand reached 43rd and Singapore was 10th.

‘Major Impact’

About 1,300 Koreans and 100 Chinese tourists scrapped their Visayas tours after the earthquake, Tourism Undersecretary Corpuz said last month. About 2.3 billion pesos of roads and buildings including churches were damaged, according to a government report.

“The earthquake and super typhoon will definitely have a major impact on our tourism industry,” Cebu Chamber’s Maderazo said. “A number of tourists who go to Bohol use Cebu as their gateway.”

The Philippines is the most at risk globally from natural hazards, according to Maplecroft, a risk research company based in Bath, England. The Asian Development Bank estimates losses from typhoons to earthquakes average $1.6 billion yearly, the most in Southeast Asia.

The budget department proposed a 180.1 billion-peso budget for its transport infrastructure program for next year, 64 percent higher than this year’s allocation, according to a government presentation.

To help meet its target of attracting 6.8 million international and 47.7 million domestic tourists by 2014, the public works department will receive 14.5 billion pesos so it can build and maintain 679 kilometers of access roads to tourist destinations, the budget department said in July.

“The biggest irony is that while the Philippines is made up of more than 7,100 islands, we have fewer seaports than Cambodia,” Neri said.

To contact the reporter on this story: Norman P. Aquino in Manila at naquino1@bloomberg.net

To contact the editor responsible for this story: Lars Klemming at lklemming@bloomberg.net


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