Harry Tarjanto, director of sales for South and Southeast Asia at STR/CoStar, delivered a clear message to Philippine hoteliers at the ninth Hospitality Philippines Conference: disciplined pricing is the key to protecting yields in a market that is shifting from recovery to stabilization.
Speaking at the Hotel Revenue Summit on Thursday, 10th September, Tarjanto presented the Philippine Hospitality Outlook 2026, offering a data-driven roadmap for stakeholders planning through 2027. His central thesis: global hotel demand is entering a phase of low single-digit growth, and supply expansion has slowed dramatically, creating a window for operators to maintain pricing power.
Global supply slowdown bolsters pricing power
Tarjanto noted that global hotel supply growth has decelerated from 2.4 percent in 2023 to roughly one percent this year, constrained by high interest rates and elevated construction costs. This restricted pipeline, he argued, is a silver lining for existing operators: with less new inventory coming online, they can sustain rate levels without the pressure of oversupply.
In the Asia-Pacific region, Singapore and Japan lead occupancy benchmarks at nearly 80 percent. The Philippines, by contrast, holds a stable average occupancy of 61 percent, trailing regional leaders but matching the clustering levels of Indonesia and Malaysia. On average daily rate (ADR), the Philippines records a national average of US$93, placing it alongside Cambodia and Indonesia, though it is closing the gap on Malaysia.
Critically, the country's rate environment remains robust: while regional occupancy sits below 2019 levels, ADR is comfortably above pre-pandemic baselines. This divergence, Tarjanto emphasized, is a direct result of operators favoring value-add packages over outright discounting.
RevPAR trends and Manila's resilience
Southeast Asian RevPAR trends highlight the regional divergence. Vietnam leads with a 21.6 percent surge, Indonesia posts a 13.4 percent rise, and the Philippines delivers a solid 5.8 percent gain. These figures underscore the effectiveness of disciplined pricing strategies in protecting yields.
At the domestic level, Metro Manila faced early 2026 headwinds from elevated energy costs, higher transport fares, and a surge of new room supply, particularly in the Bay Area. Despite these pressures, the capital remains a resilient corporate stronghold, experiencing peak occupancy on Wednesdays and Thursdays alongside strong rate performance on Fridays.
Upscale and upper-midscale properties represent the market's current sweet spot, achieving a 7.5 percent RevPAR increase by capturing cost-conscious corporate travelers. Regionally, Quezon City emerged as Manila's standout submarket, generating the highest RevPAR growth thanks to steady institutional demand from local government, healthcare, and educational sectors.
Cebu's contrasting outlook
Beyond Manila, resort destinations like Cebu are seeing demand acceleration outpace immediate supply additions. Although luxury resorts in Cebu contend with softer occupancy due to a cautious Korean source market and rising transit costs, operators have successfully pushed higher rates to preserve overall yield integrity.
Tarjanto's strategic imperatives for Philippine hoteliers are distinct. Manila's recent supply wave is tapering off, opening a clear window for city hotels to consolidate occupancy and drive yields. Conversely, Cebu's peak supply additions are still on the horizon, requiring resort operators to fortify their rate discipline before new inventory lands.
He also pointed to expanded e-visa policies and enhanced air connectivity as vital catalysts to close the volume gap with regional peers. For more on how Philippine developers are navigating capital constraints, see our analysis of mixed-use strategies easing hotel capital strain. And for a look at the broader tourism picture, read about inter-island transit gaps that could hinder growth.
As the market matures, the focus on regenerative design is also gaining traction, reflecting a longer-term shift in how Philippine hotels approach development and operations.
