Unlocking tourism growth

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According to a recent AMRO commentary by Zhan Bella Guo, former associate economist of the ASEAN +3 Macroeconomic Research Office, the Philippines has been claiming the global spotlight for its tourist attractions.

At the prestigious World Travel Awards Asia and Oceania Gala held in October this year, the Philippines swept six major titles — including Asia’s Leading Beach Destination, Leading Dive Destination and Leading Island Destination. Boracay and the Clark Freeport Zone earned individual honors, while the Department of Tourism (DOT) was named Asia’s Leading Tourist Board.

The accolades, Guo pointed out,  reaffirm the Philippines’ standing as one of Asia’s premier destinations. However, despite the string of successes , she said, lies a deeper question: How can the country convert global recognition of its natural beauty into a powerful engine for sustainable and inclusive growth — one that benefits communities across the archipelago?

Tourism, she noted, has long been a cornerstone of the Philippine economy. In 2024, the sector’s gross value added reached P3.5 trillion — seven percent higher above pre-pandemic levels — and accounted for 13.2 percent of gross domestic product or GDP.

It also supported 4.9 million jobs, or 13.8 percent of the labor force. AMRO’s analysis, Guo cited, shows that tourism-related industries — such as hotels and restaurants — can generate higher domestic value-added per unit of production input than the average for all sectors, making the sector a key driver of the country’s post-pandemic recovery.

Yet the picture is uneven, she said, while domestic tourism continues to anchor overall demand, the rebound in international visitors has been slower than expected. In 2024, domestic tourism expenditure rose to P3.2 trillion, marginally higher than in 2019 and accounting for three-fourths of total tourism spending.

Foreign arrivals totaled only 5.9 million in 2024, still about 28 percent below pre-pandemic levels. A major drag, she observed, has been the sluggish return of Chinese tourists. Arrivals from China stood at just 312,342 — only 17.9 percent of the 2019 level — shrinking their share of total international arrivals from 21.1 percent in 2019 to 5.3 percent. Thus, among ASEAN peers, the Philippines has experienced the weakest recovery in Chinese arrivals.

Encouragingly, inbound tourism receipts tell a more positive story. Revenues surged to P760.5 billion, 26.7 percent higher than in 2019, suggesting that those who visit are spending more and staying longer — reflecting stronger traveler confidence and improving service offerings.

Unlocking the next phase of the Philippines’ tourism growth, Guo said, requires addressing long-standing infrastructure gaps that limit accessibility, competitiveness and visitor experience.

Compared with its ASEAN peers, the Philippines’ international tourism market remains relatively small. Even before the pandemic, the country lagged regional peers in foreign arrivals — 8.2 million foreign visitors — well below Indonesia’s 16 million, Malaysia’s 26 million, Thailand’s 40 million and Singapore’s 15 million. Moreover, foreign tourists remain concentrated in a few destinations: the National Capital Region and Central Visayas (home to Cebu) account for over 60 percent of total foreign overnight stays. Many promising sites remain underdeveloped or difficult to reach.

A strategic, long-term expansion and diversification of the tourism footprint, she highlighted, must address bottlenecks in the following areas.

Transport connectivity: Investments in airports, seaports and road networks are essential to improving access across islands, increasing visitor flows and dispersing tourism benefits more evenly.

Basic utilities and sustainability infrastructure: Reliable utilities — water, sanitation, electricity and waste management systems — are critical for sustaining service quality and strengthening visitor experience, especially for island and eco-tourism destinations where carrying capacity is a concern.

Digital readiness and visitor facilities: Complementary investments in broadband connectivity, digital booking and payment systems, and well-designed facilities such as visitor centers and convention halls can elevate comfort, safety and service quality for visitors.

Meanwhile, soft infrastructure — human capital, service standards and institutional capacity — remains equally vital. Government initiatives such as the Philippine Experience Program and Filipino Brand for Service Excellence seek to upgrade service quality, rehabilitate various destinations, diversify product offerings and emphasize Filipino hospitality.

The recent resumption of the e-Visa program for Chinese nationals is another important step in revitalizing inbound markets. Going forward, expanding training programs for hospitality workers and local enterprises, strengthening inter-agency coordination and sustaining reforms in zoning, environmental management and safety standards will be key. These efforts, anchored in the National Tourism Development Plan 2023–2028, can help forge a more harmonized and efficient tourism ecosystem.

The DOT, in response, acknowledged that  the pace of recovery of the Chinese market continues to significantly influence the Philippines’ overall visitor arrival figures for 2025, as China remains one of the country’s largest and most important source markets.

The DOT is eager to welcome more Chinese visitors. As of Dec. 20, the Philippines has recorded 5.606 million international visitor arrivals, with China ranking sixth, contributing 262,144 arrivals, behind South Korea, the United States, Japan, Australia and Canada — a performance largely influenced by visa disruptions, security perceptions and limited air connectivity.

Tourism Attaché to China Ireneo Reyes said the reintroduction of the Philippine e-Visa in November marks a critical step toward restoring confidence and easing travel for Chinese tourists, with stronger gains expected in early 2026.

“The e-Visa resumption is a critical step forward and a clear signal that the Philippines is open, ready and eager to welcome our Chinese friends. While the timing meant that its full benefits could not be felt within the peak booking periods of 2025, we expect a more visible impact beginning the first quarter of 2026,” she added.

The DOT explained that recovery has also been constrained by reduced flight capacity, with China-Philippines routes operating at only about 45 percent of pre-pandemic levels. It is now working closely with aviation and tourism stakeholders to gradually rebuild connectivity and confidence.

“With China being one of the world’s largest outbound travel markets, improving air connectivity presents a major opportunity,” the DOT said, citing ongoing engagements with airlines and aviation stakeholders to gradually restore routes and seat capacity.

Despite budget constraints and market-specific challenges, Philippine tourism remains resilient, generating P3.86 trillion in receipts in 2024 and supporting 6.75  million of tourism-related jobs for  Filipinos.