PIDS study flags structural gaps limiting PHL tourism

By Francis Allan L. Angelo

The Philippines is recovering from the pandemic-era tourism slump, but structural weaknesses in infrastructure, connectivity, and governance continue to hold the sector back from reaching its full potential, according to a study by the Philippine Institute for Development Studies (PIDS).

The study, titled “Philippine Tourism Sectoral Review (2000–2025): From Promise to Power — Accelerating the Philippines’ Tourism Transformation toward Sustainability, Competitiveness, and Inclusion,” was presented during a recent PIDS webinar by Senior Research Fellow Dr. John Paolo Rivera.

“Tourism recovery is real… we are not maximizing that growth,” Rivera said in a PIDS press release. “The issue here is not just demand. The issue here is systems.”

Recovery without traction

In 2024, the Philippines ranked seventh among Association of Southeast Asian Nations members in international visitor arrivals, welcoming 5.9 million tourists. That figure placed the country well behind Thailand at 35.5 million, Malaysia at 25 million, and Vietnam at 17.5 million.

The country’s post-pandemic recovery rate of 72.02 percent also trailed behind Cambodia, Vietnam, Malaysia, and Thailand.

While the Philippines ranked first in ASEAN for tourism’s overall GDP contribution, generating USD 78 billion in 2023 driven largely by its domestic market, it placed only fifth in international visitor expenditures at USD 11.3 billion.

The World Economic Forum’s 2024 Travel & Tourism Development Index ranked the Philippines 69th out of 119 economies globally, pulled down by a low score of 1.55 out of 7 in tourism services and infrastructure.

Rivera pointed to persistent structural gaps: fewer arrivals relative to regional peers, lower spending per visitor, shorter stays, and slower investment flows. He said the country’s underperformance stems not from weak potential but from weak systems.

“We are underperforming not because of weak potential… [but] because of weak systems,” he said.

Revenues have surged to nearly PHP 700 billion in recent years, driven largely by domestic tourism, which has served as the backbone of the sector’s rebound.

Weak links in the chain

Yet inbound tourism, the main source of higher-value spending and foreign exchange, remains constrained by limited airport capacity, high travel costs, weak inter-island connectivity, and investment friction.

Discussant Dr. Maria Cherry Lyn Rodolfo of the Asian Institute of Management said tourism performance is fundamentally a system and network issue, not a branding problem.

“Connectivity policy is actually tourism policy,” she stressed.

In an archipelago of more than 7,600 islands, with nearly all international visitors arriving by air, tourism is experienced as a chain — from international access to domestic transport and local services.

“In a network, the performance is determined by the weakest link,” Rodolfo said.

The study identified specific bottlenecks, including airport capacity constraints and a lack of direct flight routes connecting international markets to destinations beyond major gateways, as well as inadequate inter-island transport that drives up travel costs and inconveniences visitors.

Uneven infrastructure development concentrates tourists into a few highly visited areas, leading to overtourism and environmental pressures in hotspots like Cebu, Bohol, and Boracay while leaving other high-potential regions underdeveloped.

Department of Tourism Region III Director Dr. Richard Daenos emphasized that the challenge also lies in execution.

“We would like to focus on something that is not negotiable, and this is to fix infrastructure first,” he said, noting that without these fundamentals, even strong marketing efforts will have limited impact.

“This cannot be done at the same time, not everything at once,” Daenos added, underscoring the need to sequence reforms strategically.

Niche markets, untapped edges

He cited priority segments where the Philippines has a competitive edge, including island and beach tourism, diving, community-based tourism, and cultural and culinary experiences.

The study highlighted several emerging niche markets that could help diversify offerings and attract higher-spending tourists.

Culinary tourism pilot programs in places like Iloilo, which showcase iconic dishes like La Paz Batchoy and Pancit Molo alongside local seafood, and Bohol’s Loboc River Cruise, which merges dining with music and nature, are helping build global recognition for Filipino cuisine.

Farm tourism hubs like the La Trinidad Strawberry Farm in Benguet and Damires Hills in Iloilo allow tourists to experience rural life through crop picking and eco-recreation, creating climate-smart livelihoods for local farmers.

Adventure tourism leverages the country’s diverse topography through activities like canyoneering at Kawasan Falls in Cebu, spelunking in Sagada, and ATV rides around Mayon Volcano.

Dark tourism sites linked to history and resilience, including Corregidor Island, Camiguin’s Sunken Cemetery, and the Liberty Shrine in Mactan, are also drawing growing global interest.

Medical tourism, meanwhile, leverages affordable, high-quality healthcare facilities and English-speaking professionals to provide coordinated care for international patients.

Fixing the system, not just the pitch

Commission on Higher Education Technical Panel for Tourism and Hospitality Management Member Dr. Maria Christina Aquino reinforced the need for a whole-of-system approach.

“It takes a village to raise tourism,” she said.

Aquino pointed to gaps in workforce development, accreditation systems, infrastructure, and destination planning, as well as the concentration of tourism benefits in a few major hubs.

The study recommended a coordinated, whole-of-government approach involving the Department of Tourism, the Department of Transportation, and the Department of Public Works and Highways to modernize airports, upgrade seaport infrastructure, and develop road networks linking tourism areas.

It also called for bridging connectivity gaps through public-private partnerships and integrating regional tourism circuits into the national Public Investment Program and the “Build, Better, More” portfolio.

The study recommended revising the Tourism Infrastructure and Enterprise Zone Authority charter to expand PPP models and local investment portfolios, and urged Congress to craft a “tourism circuit development and investment act” that provides targeted incentives for multi-LGU tourism clusters and infrastructure corridors.

To address fragmented local governance, the study proposed establishing inter-LGU tourism councils secured through memoranda of agreement, harmonizing local tourism codes with the National Tourism Development Plan 2023–2028, and creating permanent plantilla positions for local tourism officers to ensure institutional continuity.

The NTDP’s nine strategic pillars cover improved tourism experience, enhanced connectivity, workforce development, authentic tourism experiences, digitalization, high-value tourism, enhanced promotions, sustainable and resilient tourism, and greater collaboration across national agencies, LGUs, and global partners.

The study also called for mainstreaming digital innovation, including the development of a tourist lifecycle app, integration of financial technologies, and improved internet access across destinations.

It emphasized institutionalizing the Filipino Brand of Service Excellence, which blends core Filipino values like compassion, empathy, and respect with practical service skills for frontline workers.

Among the regions benefiting most from domestic tourism growth are CALABARZON, Central Visayas, the Bicol Region, Central Luzon, and the Davao Region.

Tourism-specific products, including shopping, accommodation, passenger transport, and food and beverage, account for 70 percent of the country’s Tourism Direct Gross Value Added. Tourism-related products make up the remaining 30 percent.

“Tourism has always been the fastest driver of employment… but only if tourism is treated as a national economic strategy — not just a sector,” Rivera said.