Why Philippine Developers Are Shifting to Luxury Hospitality?

credits to: bworldonline.com

Philippine Developers Eye Luxury Hospitality Growth

A growing residential oversupply is pushing more Philippine developers to explore opportunities in luxury hospitality, with industry experts pointing to rising demand for upscale hotels, resorts, and branded developments.


Oversupply Driving Diversification

According to Bill Barnett, founder and managing director of Thailand-based hospitality consulting firm C9 Hotelworks, the Philippine real estate market is at a turning point.

“With real estate being overbuilt, developers will have to find a niche,” Barnett said. “The real estate situation in the country triggers more luxury because of the oversupply.”

He noted that while the Philippines has over 7,000 islands ideal for tourism, many hotel ventures remain family-run and risk being “commodity minded.” He cautioned that luxury cannot be treated as a numbers game, since pricing competition dilutes exclusivity.


Location and Access as Key Success Factors

Barnett emphasized that access is critical for luxury hospitality to succeed.

“You can’t stay there if you can’t get there,” he said. “There should be enough flights, which makes it attractive not only for guests but also for staff and services.”

Unique selling points such as localized experiences, distinctive dining concepts, strong internet connectivity, and exclusivity of location are also seen as essential to attracting high-spending travelers.


Surge in Luxury Hotel Projects

Industry data backs this trend. Alfred Lay, director for hotels, tourism, and leisure at Leechiu Property Consultants, reported that there are over 35 luxury hotel projects under development in the Philippines, set to deliver 7,500 rooms within four years.

“If you include projects yet to be announced, the number climbs to 50 luxury hotels and over 10,000 high-end room keys,” Lay said.


Air Access Remains a Key Challenge

However, air access remains a major roadblock.

“If you’re a high-spend international traveler, you don’t want connecting flights just to get to your resort,” Lay noted. “Where international airports exist, luxury hotels follow—such as in Mactan, Panglao Island, and Boracay.”


Strong Demand Despite Lower Arrivals

Despite international arrivals still being below pre-pandemic levels, demand for luxury hotels remains resilient. Colliers Philippines reported that five-star hotels in Metro Manila held a steady 67% occupancy in the first half of 2025, even as foreign arrivals slipped marginally.

Colliers’ research head Joey Roi H. Bondoc highlighted that the country’s penetration rate for branded hotels is still low at 4%, far behind Singapore (45%), Indonesia (10%), and Thailand (8%).

“It will take a few more years for the Philippines to catch up with its neighbors, especially when compared to pre-pandemic recovery rates,” Bondoc said.


Outlook for Developers

As the Philippine residential sector faces headwinds, developers are expected to pivot further toward luxury hospitality, supported by growing interest from foreign brands and a steady base of affluent local and international travelers.

With strong fundamentals, expanding airport infrastructure, and rising investor interest, analysts see the luxury hospitality sector as a bright spot for long-term growth in the Philippine property market.

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