Executive summary This feasibility study is commissioned by Mr. Jaime D. Reyes, a resort owner from Pinamalayan, Oriental Mindoro. The resort owner would like to further utilize his resort, Bulaklak Garden Resort, a 24-hectare beach front in Brgy. Pili. Currently, only 3-hectares of the land is being utilized, making 21-hectares a viable spot for improvements.

However, due to financial constraints, the owner would like to loan to the bank to finance the probable expansion of his resort, and before this pushes through, he would like to know what improvements must be done and if these improvements will be deemed feasible, enabling him to gain profit, and repay the probable loans in due time. To address the predicament of the owner, a feasibility study was commissioned.

The approach used by the proponents of this study is a step by step and a streamlined plan, starting from identifying which market much be targeted, supported with facts, figures, and in-depth study of the natural endowments of Bulaklak Garden Resort, the inbound tourist statistics in Mindoro Oriental, and the travel behavior and practices of the identified market segments.

The main purpose for this is to be able to create a fit between what the resort presently has and the future improvements, with the needs and wants of the chosen market, also taking into consideration the supply or the number of existing resorts offering the same as Bulaklak Garden. Through the in-depth study, the major expansion project that will require MR. Jaime Reyes to loan from the bank is seen feasible if the recommendations contained in this paper are closely complied with. One of the major recommendations of this study is to target foreign tourists—Europeans, specifically German tourists and Australian tourist.

The improvements that must take place, along with its corresponding costs is also shown in this paper. The project would require an initial investment of php6. 35M, and it is recommended that the resort owner loan not more than this amount. How the resort should market its services and facilities, along with the pricing of each is detailed in this paper. In following the recommendations of this paper, the project will turnout profitable, with a payback period of less than 10 years, with an IRR of 14% and an NPV of php5. 878M. I. Project Background A. LOCATION BACKGROUND

Mindoro is the seventh-largest island in the Philippines. It is located in southwestern Luzon, just northeast of Palawan. [1] It is about 10,000 square kilometers in size, and is the nearest big island to Manila. Two provinces make up the island, Mindoro Oriental and Mindoro Occidental. It is endowed with many attractions, and surprisingly, the island has been well preserved, as tourism is very much managed in the area. There are limited airline connections to the island. Travel time takes about five hours from Manila. The road network is very poor, with some sections even impassable during the rainy season.

Most of the area is owned by wealthy Filipino families who wish to keep the island as it is. [2] Trading Port[3] Because of its strategic location, trading has always been an important part of Mindoro. It has a colorful history and is a virtual melting pot of cultures because of the influences brought by traders. During the pre-Spanish era, the natives were already engaged in active trade with the Chinese, who called the province “Ma-I. ” Puerto Galera, whose name translates to “port of galleons,” was one of the ports of call of the Spanish colonizers’ galleons because of its natural harbors.

Today, the development of Mindoro is once again geared towards trading. While Batangas City is considered the region’s new trading center because of its international port, Mindoro still plays a big role in the development of the area. It serves as the highway that bridges the provinces of the MIMAROPA region, namely, Mindoro Occidental and Oriental, Marinduque, Romblon, and Palawan. Surrounded by industrial and development zones and vastly improved infrastructures, Mindoro is being positioned as one of the food baskets for Manila and the Southern Luzon region. Its medium- and long-term development lans look to strengthen its agricultural sector to provide for the requirements of surrounding cities and provinces. Mindoro is one of the biggest sources of rice and fruit produce in Southern Luzon. Reviving Tourism in Mindoro[4] Mindoro is also part of the Strong Republic Nautical Highway and serves as one of the links between Metro Manila and the southern Philippine islands through the roll-on, roll-off program of the government. This has boosted the tourism trade of the island because Mindoro is now a stopover for tourists wanting to visit the southern islands, Boracay and Palawan in particular.

While Boracay and Palawan continue to enjoy the attention of foreign and local tourists, Mindoro is being rediscovered and again being groomed to become a major tourism hub. Mindoro, Puerto Galera in particular, is popular for its beaches. But more tourists are appreciating the other attractions being offered by the island. Seasoned climbers consider Mount Halcon, the country’s fourth-highest peak, as one of the most challenging mountain treks. Mindoro’s breathtaking mountains also shelter numerous majestic bodies of water, like the Tamaraw Falls. Developing Mindoro[5]

The development plan of Mindoro is fairly simple. Local government officials want to take advantage of the province’s best assets: location and topography. Mindoro has booming fishing and farming sectors. It has an established reputation for having some of the country’s best beaches and sceneries. Officials have no plans to ride the wave of industrialization that neighboring provinces have already caught, and their reasoning is sound. Amidst the emergence of fast-paced and highly competitive industrial cities, Mindoro prefers to carve its own niche and be the source of agricultural produce of its neighbors.

Mindoro is currently the Philippines’ biggest producer of calamansi and is the main source of rice in Southern Luzon. Its livestock industry is also one of the major sources of meat for Metro Manila. But Mindoro is in no way a backwater agricultural province. Besides a busy national port, it has a commercial district abuzz with activity that offers such facilities and services as good educational institutions, commercial and business centers, telecommunications services, and others. Oriental Mindoro’s capital of Calapan City is being used as the major commercial entry port to the island.

Nevertheless, Mindoro is still best known as a place where one can escape the hustle and bustle of city life. This is what the local government is banking on to support the island’s tourism industry. People will always be in search of the proverbial island paradise. Mindoro Oriental[6] The inverted-J-shaped Oriental Mindoro is endowed with some of the islands’ best naturescapes. It is endowed with powdery white sand beaches as well as interesting mountain lairs, lakes, rivers, rain forests, wild animals, rare flora and fauna, and pocket communities of the existing ethnic groups

The province’s foremost asset is Puerto Galera, blessed with one of the world’s most beautiful natural harbors. Known as the Pearl of Mindoro, it is world-famous for splendid beaches, coral reefs, and exquisite dive sites for new and experienced divers alike. There are shallow coral gardens, interesting rock formations, and colorful species to watch, like crabs, shrimps, sea anemones, moray, and trumpet fishes. Oriental Mindoro is composed of 15 municipalities, with Calapan City as the capital of the province.

The municipalities are Baco, Bansud, Bongabong, Bulalacao, Naujan, Mansalay, Pinamalayan, Pola, Puerto Galera, Roxas, San Teodoro, Socorro, and Victoria Gloria. The Mindoro Oriental Map is presented in the diagram hereafter. Figure 1. Mindoro Oriental Provincial Map Source: www. pinamalayan. gov. ph[7] The Municipality of Pinamalayan The Regional Tourism Master Plan of Southern Tagalog has envisioned Oriental Mindoro as an island paradise focusing on the sustainable development of its eco-tourism sites as well as its various historical, cultural and archeological features.

Further, its goal is to develop tourism in a manner that preserves the values and ways of the local people including indigenous communities. Included in the tourism priorities for Oriental Mindoro are the following: Mount Halcon in Baco, Lake Naujan, Bulalacao and the Establishment of a convention center in Pinamalayan. Pinamalayan offers a variety of tourist attractions and destinations. The municipality has an inland resort (Barangay Rosario), white beaches (Pili, Ranzo and Banilad), panoramic mountains, waterfalls, clean rivers, green farms and forest.

Tourists can engage in various activities like swimming, banca riding and fishing. They can also visit Mangyan settlement in Barangay Sabang and interact with their way of life. Native crafts made by Mangyans from barks of trees, rattan, nito and bamboo can be purchased in the municipality. The Municipality of Pinamalayan can be reached in all three possible ways: by air, land and sea. It is quite strategically positioned that it was once called “The Gateway to MIMAROPA”. [8]

Pinamalayan is accessible by a fourty-minute travel via Corporate Air Cessna Caravan plane that flies on a three-times-a-week schedule (Monday-Wednesday-Friday) from Manila and vice versa. It also has two informal ports in Barangays Pili and Zone I. At present, the Recodo Port [in Zone I] accommodates all vessels routing the islands of Marinduque, Concepcion and Simara in Romblon, and other local destinations. Once fully developed, these ports can accommodate other long-distance shipping lines including a fast ferry linking directly to Manila.

The establishment of the Strong Republic Nautical Highway made Pinamalayan more accessible to tourists. It is just about one-and-a-half hour ride from Calapan, where nine shipping lines operate linking Calapan and Batangas. Three major lines of passenger vans operate in the municipality: the Oriental Transport Services Association, Inc. (OTSAI), the Yellow Van and Roxas Operators and Drivers Cooperative, Inc. (RODASCO). All of which have routes: Calapan-Pinamalayan-Roxas-Mansalay. B. COMPANY BACKGROUND

Bulaklak Garden Resort is a natural cove that has historically provided shelter for seafarers. The resort is ideal for travelers seeking the idyllic beauty of an exclusive tropical island. Situated on the shoreline of baranggay Pili in Pinamalayan, the 24 hectare beach resort is surrounded with white powdery sand extending to 1. 4 km, crystal clear sea and well preserved aquatic life. The surrounding waters yield a wide variety of marine life and dive sites are just a boat ride away. The resort’s existing facilities are as presented in table 1. Table 1. Bulaklak Garden Resorts Facilities Quantity |Facility |Capacity | |7 |Cottages |14 pax | |4 |Guest Rooms | | |1 |Restaurant/Dining Area |150 | |6 |Picnic Area with Concrete Tables and Chairs | | |4 |Gazebo Type Nipa Huts | | The beach front is just a short walk away from the cottages made from materials found within the beach resort. Designed as a Filipino bahay kubo, all casitas feature polished tile floors, single size beds, furnished toilet and bathroom, closets and a private outdoor terrace complete with a hammock, bamboo chairs and a dining table. The company receives seasonal tourists, both local and foreign tourists alike. It has been a trend that local tourists visit the resort when “balikbayan” relatives or foreign friends come to visit the province.

On an average, local tourists stay for 3 days. Foreign tourists on the other hand, from Australia, Spain and Korea frequent the place, staying for an average of 3 to 4 weeks. Foreign visitors enjoy the place, even with its very minimal facilities due to the tranquil and laid-back feel the resort offers. Once in the resort, there is no need to go elsewhere for dining as the resort offers home-cooked meals for visitors at a low cost. There are times however, that visitors themselves go to the market place to get fresh produce and have it cooked in the resort. The resort’s rates are presented in table 2. Table 2. Room and Food Rates of Bulaklak Garden Resort Services |Rates (php) | |Room Package |1,200. 00 | |Additional Person |1,200. 00 | |Food Package (breakfast, lunch, merienda, dinner) |500. 00 | Due to the seasonal influx of tourists, the resort does not find the need to maintain a high number of work force, as this entails higher overhead cost. It simply maintains three regular workers which acts as the resort’s care-taker. Should the need arise to have more people, they have a pool of on call workers living within the resort’s vicinity. C. STRENGTH AND WEAKNESSES Table 3. Strength and Weaknesses Strengths |Weaknesses | |Abundance of local food supply |Accessibility | |White Sand Beach |Poor Infrastructure | |Southern Location |Average Features | |Mountain slopes in rear | | |Nearby Attractions | | |Support from local van drivers | | |24 Hectare land Area | | Strengths Abundance of Local Food Supply The area of Orriental Mindoro is known as the food supplier for Southern Luzon, assuring a supply of plentiful, fresh, and wide range of food for Bulaklak Beach Resort.

Its proximity to its suppliers also assures that the resort will be able to quickly replenish its food supply, therefore minimizing spoilage. Aside from the abundance and variety of food from the local market, the resort has its share of fresh fruits located near the beach resort. Its land has been utilized to grow fruits like atis and banana. Because of this, the property can be converted into an orchard resort by planting a large variety and numbers of fruits and flowering trees to provide year round harvest and fragrant blossoms. This cultivation will create a garden focus and stimulate interest with urban tourists who are unused to seeing ripening fruits in the resort. White Sand Beach

Bulaklak Resort has a 1. 8 km long white sand beach. The beach is a gradual slope which leand itself to a beach resort for sunbathing and swimming. The presence of a white sand beach is a big advantage for Bulaklak Beach Resort because there are not that much resorts that posses this advantage of having white sand similar to Boracay. Beaches that posses this advantage are few, especially near the proximity of Manila. Puerto Galera is one of a few beach resorts that have come close to the beach of Boracay. Other beach resorts have spent a lot to renovate their beaches to white sand status by transporting white sand from Boracay. Southern Location

The beach property faces due south which is the most ideal and is protected by a land mass that juts out and shelters it from the north wind. Given the location, only the southern wind causes waves a few days in the year in the protected beach area and seldom lasting beyond two choppy days. Mountain slopes in rear The slopes and mountains located in the rear of Bulaklak Resort creates drama and invites creative placement of mountain/tree houses that will have sweeping views of the ocean, islands silhouetted in the distance and majestic mountains in the horizon. Also present in the foreground during the daylight hours are the blowing mists and regular appearances of rainbows that the Pinamayan Legend is known for. Nearby Attractions

The presence of nearby attractions to the vicinity of the resort offers tourists numerous options for them to engage in. The traveling time to reach these destinations are just under an hour’s driving. These famous locations are the Naujan lake, Mt. Halcon, and indigenous Mangyan villages. Lake Naujan is an 81 square km lake famous for its variety of fish and the underwater hot springs which can cook a hardboiled egg in 15 minutes. Mt. Halcon rises to 8,000 feet, rich with its rare flora and intriguing caves. Tourists also have the chance to interact with indigenous Mangyans and join their events such as the colorful Moriones and its unique masks. Support from Local Van Cooperatives

A big reason for Bulaklak resort’s foreign visitors comes from the support or below the line advertising of local van drivers stationed at the port of Mindoro. According to Mr. Reyes, when foreign tourists ask van drivers about beautiful resorts in Mindoro, the van drivers suggest Bulaklak Resort. This method has been proven to be effective and majority of the foreign tourists stayed in the resort for a month, some even planning to come back and spend their vacation in the resort. 24 Hectare Land Area Given the 24 hectares of the property, the development can accommodate both the city hotel type with a central vertical structure and the cottage types with projected maximum of 250 rooms. The cottages can have their own

Jacuzzi or mini pool with all rooms facing the ocean. Activities around can include tennis courts, archery, basketball, beach volleyball, jogging track besides the full spectrum of marines sports offered in the black sand beach. Restaurants with specialty focus will help the resort develop a reputation that would encourage day trippers. Weaknesses Accessibility As its secluded location may attract other tourists, the accessibility and difficulty in reaching Bulaklak beach resort may pose as a hindrance for many to visit the resort. After a 45 minute ferry ride from Batangas City, tourists would then have travel via van for 1 hour and 45 minutes to reach Bulaklak beach resort.

From our survey, many of the respondents are already dismayed by the fact that they have to ride a ferry going to Mindoro. Ferries here in the Philippines are termed as floating caskets due to an increase of ferry mishaps and sinking in the 90’s. Furthermore, the road going to Bulaklak is in desperate need of repairs. The delay of Pinamalayan Airport’s opening has also caused accessibility problems in the area. Infrastructure Currently, the resort lacks proper facilities to attract tourists. The resort only consists of 7 cottages/casitas and a dining area. The cottage consists of 2 single beds a toilet and a veranda complete with a hammock, tables, and chairs.

For the resort to attract visitors, it must add infrastructures and facilities that will address the needs of the visitors and add activities in the resort. Average Features The beach itself has average features and little underwater charm with few outstanding corals and few colorful fish population. The gradation in depth is minimal which cerates very little drama in flora and fauna. To have unusual under water sights, it must have steeper slopes where different plants appear at each level with its own type of fish and sea creatures. This kind of feature is similar to the beaches of Anilao, Batangas where divers enjoy the sight of many corals with its sea life.

Bulaklak resort’s is so slight that at low tide the part normally underwater is too shallow to swim in and displays unattractive dead corals and stones. The maximum depth of the drop off area is 10 meters, located about 20 meters from the end of drop off. It is an in between depth – insufficient for diving yet too deep for snorkeling. D. OWNERSHIP AND MANAGEMENT The ownership of Bulaklak Garden Resort is being shared by a family of six (6) headed by the father, Jaime D. Reyes. E. RATIONALE OF THE PROJECT At Present, 3 hectares of land are being utilized out of the 24 hectare property of the Bulaklak Garden resort. The 85. 71% of the undeveloped land coupled with the natural endowments of the resort present opportunities for development for the owner of the resort. The 1. km beach front, the mountainous setting, the availability of vegetation and other nearby attractions exhibits the lavish natural environment of the resort. The resort also provides a very private and relaxed atmosphere perfect for family vacations and leisure trips. However, as what was pointed out earlier, 85. 71% of the land is not yet utilized, hence, there is definitely room for improvement and expansion. The need to optimize this large percentage of land by constructing more amenities to expand the market of the resort and to offer the land as real estate are the presented needs for this feasibility project. Bulaklak Garden Resort presently has 7 cottages that can accommodate 2 persons, a picnic area, and a main hall that serves as the lobby, dining hall and front desk.

In order to tap a larger market and to be aggressive in their marketing strategies, the resort must be able to construct more amenities that will suite the preferences of their desired market and that will provide differentiation amongst the other nearby resorts. The desired expansion for facilities as mentioned by the owner includes the construction of more cottages, a swimming pool, a recreation area and air conditioning. This expansion will be able to utilize more of the remaining 21 hectare land in order to further market the resort to tourists and make the resort competitive as compared to the other resorts in Pinamalayan and in Mindoro Oriental.

The expansion will also try to draw on the opportunities that are present in the external environment of the resort; these are the trend in tourist arrivals in the province of Mindoro and the amenities such as the airport that is approximately 20 km away from the resort. Hence, bettering the amenities will be able to explore such opportunities in order to tap a larger market and to further appraise the value of land. The second reason for land optimization includes offering the land as a real estate. A portion of the 85. 71% of land will be translated into a residential community, wherein investors can buy the land and then built rest houses or homes. Aside from this, the land can also be offered for lease for commercial purposes for those that would want to set up restaurants, spas or other services to serve the residents or tourists of the resort.

This opportunity for land optimization will be used after the resort amenities is established, this is primarily because of the appraisal benefit that the amenities may provide the resort. Hence, the project is concerned with optimization of the land through the construction of facilities that may expand the market of the resort and may be translated into further opportunities in terms of real estate development and commercial lease. The study then will explore the opportunity of adding facilities and improving the amenities of the resort in order to tap a larger market and to gain competitive advantage as compared to the other resorts in Pinamalayan. This will include the forces that are present in the environment that can be translated as opportunities for the resort.

This can then be transformed into real estate and commercial lease purposes that can provide further optimization of the remaining 21 hectare land. F. OBJECTIVES OF THE PROJECT The objective of this feasibility study is: • To be able to search for and analyze the market group that has a strong inclination towards the natural endowments found in Bulaklak Garden Resort; • To be able to investigate the needs and wants of this market segment; • To be able to match the needs and wants of the chosen market segment with the proposed development of the resort; • To be able to analyze the profitability of developing Bulaklak Garden Resort and tapping the chosen market segment; To be able to provide the resort with recommendations for development needed to appraise its land value for future expansion. These objectives mentioned are what the project would want to achieve in order to address the present circumstances and opportunities presented to Bulaklak Garden Resort. II. Industry analysis A. INDUSTRY DEFINITION Together with telecommunications and information technology, travel and tourism has been identified as one of the three “paradigm service industries” that will serve as the catalyst for the service-led economies of the 21st Century. [9] That is to say, the travel and tourism industry will spur societal changes and will experience a powerful shift, all over the world. 10] A contributing component to this shift is the increase in the mobility level of people, with the corresponding increase in the willingness of people to travel and explore what lies beyond their borders. Definition The tourism industry is a composite of industries and entities, both public and private, involved in the planning, development, marketing, sales, operation and evaluation of destinations, products and services that cater to the needs of the travelers, both foreign and domestic. [11] Planning and development of destinations, in its broadest sense, is primarily a role of the government sector, in its narrowest sense on the other hand, such as the planning and development of specific tour product, it is often undertaken by individual private sector entities.

In like manner, the marketing of the Philippines and its various destinations is primarily undertaken by the government sector, while private entities undertake the marketing and sale of specific products and services. The operation of tour products is primarily the role of the private sector, while the delivery of tourism services is a joint function of both the government and private sector. [12] Both the government and the private sector undertake the evaluation of tourism results vis-a-vis predetermined, specific objectives. Table 6 below best illustrates the landscape of the tourism industry in the Philippines. Table 6. Philippine Tourism Industry Landscape The Government Sector |The Private Sector | |Department of Tourism |Transportation Companies | |Philippine Convention & Visitors Corporation |Hostelry Industry | |Philippine Tourism Authority |Entertainment Industry | |Local Government Units |Travel Trade | |Other National Government Units |Other Private Sector Entities | Source: Claravall, Bienvenido. 2000 The Government Sector The government sector in the tourism industry is responsible for the formulation of tourism policies. It provides guidelines for the development of destinations, and regulates the industry, in collaboration with other government agencies. The Department of Tourism

The Department of Tourism (DOT) is the national government’s organization overseeing the country’s tourism industry. Its primary obligations are to assist in coordinating the plans and actions of various government instrumentalities in tourism matters. Also, the organization discharges the government’s responsibilities arising from treaties, agreements and other commitments on tourism and travel. Moreover, DOT undertakes the formulation of standards and the compilation of statistics in tourism matters. [13] The Philippine Convention and Visitors Corporation (PCVC) The PCVC is the marketing arm of the DOT. Its main task is to promote the Philippines as a tourist and a convention and incentive travel destination.

It is made up of three distinct divisions[14]: • The Travel Trade Division, which undertakes marketing activities to promote the Philippines as a tourist destination among travel agents, tour operators and other travel related institutions. • The Conventions and Incentive Travel Division, which focuses marketing activities on event planners, meeting organizers and other entities that provide travel incentives to their constituents. • The Corporate Affairs Division, which provides support service to the management and marketing units of the PCVC. The PCVC, in collaboration with the DOT, coordinates with and provides assistance to tourism associations, Local Government Units (LGUs), local ourism councils (TC) and non-governmental organizations (NGO) with respect to tourism and marketing. [15] Membership in the PCVC is open to all DOT-accredited entities with economic, social or cultural interest in tourism and in convention incentive travel. Current members include tour operators, travel agencies, congress and exhibit organizers, hotels, restaurants and other related establishments. [16] The Philippine Tourism Authority (PTA) The PTA is tasked to pursue destination development based on eco-tourism projects with emphasis on sustainable development, environmental development, and preservation of the country’s cultural and historical assets.

Also, they are responsible for undertaking continuous product research for tourism development and to gather and analyze relevant statistical data, as well as the strengthening of tourism investment unit. The Local Government Units The LGUs, by virtue of the Local Government Code of 1991 is given authority to “regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar establishments, including tourist guides and transports. ”[17] Other National Government Units[18] There are other government offices that indirectly participate in the tourism industry in the course of day to day activities.

To name a few, the Department of Transportation and Communications which is responsible for the regulation and supervision of the transportation and communications industries; The Department of Public Works and highways which oversees the country’s infrastructure, including roads and bridges; the Department of Foreign Affairs which develops and maintains friendly relations with other countries; the Department of Justice, under which the Bureau of Immigration regulates the entry and exit of foreign nationals; Department of Finance, which is responsible for revenue collections through the Bureau of Internal Revenue and Bureau of Customs; the Department of Environment and Natural Resources which oversee the protection of the natural environment; and the Department of Interior and Local Governments which supervises both the Local Government Units and the Philippine National Police which is responsible for peace and order. The Private Sector Transportation Industry The transportation sector plays the most important role since without travel, there is no tourism.

This sector comprises all entities involved in the transportation of goods and people from one point of origin to a destination point, or number of destination points, and back to the point of origin. [19] It includes all air transportation companies, whether providing scheduled services, like Philippine Airlines, Cebu Pacific, Asian Spirit and Air Philippines, air-taxis operators, plus all charter companies. Airports, air fields and air strip are an integral part of this sector. The sector also includes all water transportation operators such as WG and Negros Navigation Company. Land facilities required to service these services are ports, piers and wharves.

Also included in this sector are all land transportation entities, from the smallest units such as tricycle associations, to large bus companies such as Victory Liner and BLTB. Bus depot, gasoline stations, highways, roads, bridges, and the maintenance of these are essential to this sub sector. The transportation industry is made up of all those involved in the movement of people and goods from point to point, or points beyond, within a specific area by air, sea or land, including all required and necessary infrastructure, such as airports, piers, roads, bridges and the like. [20] The Hospitality Industry The hospitality or hostelry industry includes all the establishments that provide board and lodging to people.

These are the highly sophisticated five-star hotels in the urban centers, or minute boarding houses in the remotest locations. This industry is made up of all those involved in providing board and lodging to travelers regardless of location in city hotels, including seaside resorts. [21] Attractions and Activities[22] The latest addition to the tourism industry is the activities and attractions industry also referred to as the entertainment, recreation or leisure sector which is best exemplified by theme parks, such as Enchanted Kingdom, the shopping malls, night clubs, restaurants and the like. It comprises all sites, destinations and organizations that offer attractions and provide entertainment to the travelers.

These also include museums, cultural villages, fast food centers, disco houses, experiences, events and the like. The foregoing sectors do not strictly operate independently of each other, but rather, they are interrelated and most often dwell into each other’s activities. As an example, most hotel operators, provide, aside from dining facilities, bars and discos, which are entertainment establishments. Airlines most often provide meals and in-flight movies and entertainment. Bus companies operate overnight trips, with such amenities as small pillows blankets, like most train operations overseas thus providing lodging convenience to the passengers while traveling. [23] The Travel Trade[24]

The travel trade is made up of travel agents and tour operators, also referred to as intermediaries or middle men, and the tour guides. A travel agency is comparable to a department store of travel. It is a place where a person can secure information, expert counseling and make arrangements to travel by air, sea or land to any point in the world. It is basically a retailer as it conducts business transactions directly with each individual supplier, as agent, and with each individual traveler. [25] A tour operator, on the other hand, contracts and purchases the separate travel components and assembles them into one package, which it sells to the travelers through the travel agents.

By buying a number of individual components and packaging them into a single product, tour operators are seen as wholesalers, retailing their products through the travel agents. [26] The tour operator is generally a wholesaler, since it transacts business with the travel agents (retailers), who, in turn, sell to travelers. In the Philippines, most tour operators occasionally trade directly with the travelers, making them both wholesalers and retailers. This is most evident with Outbound Tour Operators. [27] Other Private Sector Entities The other Private Sector are primarily the members of the media as they play an important role in the tourism industry of “image building. Other industries included in this sector are educational and training institutions. Industry Summary The table seen below presents the summary of tourism related industries that comprise a comprehensive tourism industry. Table 7. List of Tourism Specific Industries and Products/Services in the Philippines |Tourism Characteristic Industries |Products and Services |Description | |Hotels and similar |Accommodation |Includes hotels, motels and other lodging | | | places; excludes catering services of hotels | |Restaurants and similar |Restaurants, cafes and other eating and |Includes food and beverages served in | | |drinking places |restaurants, cafes and other drinking and | | | |eating places | |Passenger Transport |Rail Transport Services |Include railway transport services | | | |Include bus line operators; public utility cars| | |Road Transport Services |and taxicab operations; jeepneys and auto | | | |calesa operations, tricycle and other road | | |Water Transport Services |transport operation | | | | | | |Air Transport Services | | |Travel Agents, Tour Operator, Tourism Guide |Travel Agency, tour operator and tourist guide |Include tour and travel agencies services | | |services | | |Transport Equipment Rental |Transport Equipment Rental |Includes operation of tourist bus and cars and | | | |rent-a-car services | |Recreation, entertainment, cultural services |Recreation, entertainment and cultural services|Include motion picture distribution and | |and similar | |projection; radio and TV programming theatrical| | | |production and entertainment; other | | | recreational and cultural services | |Retail Trade |Retail Trade Services |Include on the production side all retail trade| | | |services; on the consumption side, it accounts | | | |for shopping and miscellaneous items | | | |(novelties, handicrafts, wearing apparels, | | | |souvenirs, gifts, and similar) | Connected Tourism Industries and Products/Services Tourism Connected Industries |Products and Services |Remarks | |Manufacturing |Embroidery |Considered as souvenir items | | |Articles made of native materials | | | |Wood Carvings | | |Construction |Construction |Roads/Infrastructures leading to airports, | | | |tourist spots; tourist facilities | |Communication |Communication Services |Include telephone; telegraph service; postal; | | | |messengerial and other communication services | |Finance |Banking Services |Foreign Exchange | |Private Services Sector |Private Services |Include sanitary and similar services; private | | | hospital, private medical, dental and similar; | | | |laundry, dry cleaning and similar; barber and | | | |beauty shops; photographic studios; other | | | |personal services | |Whole Trade |Whole Trade services | | Source: NSCB, 2001 Market Definition The tourism industry caters to the needs of both foreign and domestic travelers, not necessarily tourists. Not all tourists are “white, blonde and blue-eyed. ” Any individual who undertakes a journey that exceeds twenty-four hours outside his regular place of residence, for purposes other than earning a living, is considered a tourist. [28] Diagram 1 presents the market composition of the tourism industry. Diagram 1. Market Composition of the Tourism Industry [pic] Source: Libosada, Carlos. 2003 B. INDUSTRY AND THE MACROECONOMY

As the Philippines has an endowed competitive advantage in tourism due to the warmth of its people and its natural wonders, the government recognizes tourism as a major contributor to the services sector and is expected to grow in the future because of the influx of foreign exchange revenues from tourist spending, foreign direct investments[29] and the boom of a related industry known as medical tourism. The tourism industry faces vast opportunities. In fact, the World Travel and Tourism Council (WTTC) is highly confident that the travel and tourism industry would open more than 100 million new jobs for people across the globe between the years 1997-2007. [30] To substantiate these claims, statistical measurements are used by means of aggregate indicators and non-monetary indicators. As mentioned earlier, the tourism is composed of sub industries that fall under the umbrella of tourism industry.

Truly, knowing the contribution of tourism in these industries is a tedious process, and that is why in 1988, the National Statistical Coordination Board (NSCB), thru the Grants-in-Aid statistical development program, provided funds and technical assistance to the Department of Tourism (DOT) in the conduct of a research study, which aimed to explore the contribution of tourism to the Philippine economy using an input-output analysis approach. [31] Through the years, the Department of Tourism has collaborated with both local and international organizations to properly assess tourism’s contribution in the economy to deliver a range of policies and programs to identify and address impediments to growth and to maximize yield. [32] Main Aggregates Estimated Value-Added

One indicator being used to assess economic contribution is the Industry Value Added or the sum of the value-added of all tourism-characteristic industries listed above. This does not include the value added contribution of industries producing tourism only as a secondary output. [33] These are businesses that are directly classified as having tourism-specific activities. Table 8 presents these data. Table 8. Estimated Value Added of Tourism Industries in the Philippines, 1994 and 1998 (in million pesos, at current prices) |Industries |1994 |1998 |% Change | |Tourism Specific Industries | | | | | | | | |Characteristic Industries |200,439 |334,121 |67% | |Hotels and Similar |6,249 |11,916 |91% | |Restaurants and Similar |20,708 |39,488 |91% | |Passenger Transport |39,485 |66,882 |69% | |Railway |440 |742 |69% | |Road |22,911 |38,658 |69% | |Water |7,801 |13,162 |69% | |Air |7,593 |12,812 |69% | |Passenger Transport Equipment Rental |740 |1,507 |104% | |Travel Agencies and similar |1,112 |1,556 |40% | |Cultural services; sporting and other recreational services |18,060 |34,439 |91% | |Retail Trade Services | | | | | |114,825 |179,841 |57% | |Gross Domestic Product |1,670,325 |2,570,161 |54% | |Share of Value Added of Tourism to GDP |12% |13% |8% | Source: Input-Output Table; NIA of the Philippines; NSCB; Author’s Calculations

From years 1994 to 1998, the value added of tourism industries experienced overall growth. Noteworthy is the passenger transport equipment rental industries, with the highest percent change among all. These data are in fact positive indicators as these are the years when the Asian crisis has hit the country. Gross Fixed Capital Formation Apart from the indicators mentioned above, the contributions of tourism industries to the economy can also be measured using the gross fixed capital formation of public and private investments on infrastructure such as buildings and roads constructed specifically to support tourism activities. [34] Table 9. Gross Fixed Capital Formation of Tourism Industries in the Philippines, 1994 and 1998 Tourism Industries |1994 |1998 | |Private Sector | 10,839 | 15,722 | | Hotels and Similar | 4,059 | 5,887 | | Restaurants and similar | 1,047 | 1,519 | | Passenger Transport | 5,057 | 7,335 | | Travel Agencies and Similar | 104 | 151 | | Cultural services; sporting and other recreational services | 572 | 830 | |Public Sector | 2,433 | 3,529 | |TOTAL, Tourism Industries | 13,272 | 19,251 | |TOTAL, Philippines | 442,400 | 447,690 | |Share to TOTAL, Philippines |3% |4% | Source: Census of Establishments; NSO Current Situation of the Philippine economy The Philippines has a population of over 80 million growing at around 2% per annum, with a GDP per capita of USD 1,042. The GDP growth rate for the year 2005 is at 4. 9% and the growth rates over the next 5 years are estimated to range from 3. 5% to 5. 5%. [35]

Inflation is averaged at 6% per annum based on long term crude oil price assumption of USD 45 to 55/bbl. Inflation is at 6. 9% as of May 2006 and could be much higher in case current oil prices are pegged at USD 75/bbl or higher. [36] Budget deficits and financial burden continue to play a big role in the economy. Public sector debt (50% of which is denominated in foreign currencies) at 3. 36 trillion pesos is 130% of GDP. Over 30% of the government’s expenditure budget is for interest on debt alone. [37] The Bangko Sentral ng Pilipinas reports that country’s outstanding debt increased by 2. 1% from the year end in 2005 to March 2006. The year-end figures in 2005 show that the GNP of the Philippines experienced a growth rate of 5. % and the GDP experienced a growth rate of 4. 9%. Majority of the growth of the country’s GDP is attributable to the services sector where 47. 92% of the total GDP comes from. The agriculture sector on the other hand, contributes 19. 07% to total GDP while the industry sector contributes 33. 0% of total GDP. [38] The GNP growth is attributable to the continued expansion of NFIA or income from Overseas Filipino Workers or OFWs as seen in table 10. Table 10. Gross Domestic Product, Gross National Product, Net Factor Income from Abroad, 2003-2005 |Period |GDP |Growth Rate |NFIA |Growth Rate |GNP | |1994 1,399,051 |159,169 | 15,601 | 1,573,821 | | |1995 |1,593,532 |149,903 | 16,728 | 1,760,163 |12% | |1996 |1,887,777 |142,753 | 18,837 | 2,049,367 |16% | |1997 |2,067,755 |134,541 | 20,227 | 2,222,523 |8% | |1998 |1,951,406 |174,277 | 23,674 | 2,149,357 |-3% | |1999 |1,950,210 |199,290 | 22,548 | 2,172,048 |1% | |2000 |1,826,067 |150,386 | 16,764 | 1,993,217 |-8% | |2001 |1,678,715 |98,831 | 19,347 | 1,796,893 |-10% | |2002 |1,832,803 |83,754 | 16,120 | 1,932,677 |8% | |2003 |1,789,863 |100,324 | 17,039 | 1,907,226 |-1% | |2004 |2,164,803 |103,742 | 22,802 | 2,291,347 |20% | |2005 |1,413,883 |125,476 | 21,599 | 1,560,958 |-32% | |May-06 |212,659 |13,528 | 2,377 | 228,564 | | Source: DOT Tourism and Statistics Division; Author’s Calculations The preceding table shows that inbound tourism has a fluctuating trend. More than anything else, the table shows that there are more than a million visitors that enter the country annually. Seemingly impressive, it is rather just a very minimal share relative to domestic visitors, presented in table 2. Table 13 presents another way to present market size, where all travelers are included in the data-tourists and excursionists. Table 13.

Tourism Market Size Expressed in Number of Travelers, 2004 and 2005 |Year/Type of Traveler |Foreign Travelers |Overseas Filipino|Domestic Traveler |TOTAL Traveler |Growth Rate | |2004 |2,164,803 |103,742 |10,834,210 |13,102,755 | | |2005 |1,413,883 |125,476 |13,631,247 |15,170,606 |16% | |% Distribution, 2005 |9. 3% |0. 8% |89. 9% |100. 0% | | Source: DOT Tourism and Statistics Division; Author’s Calculations

Table 13 shows that from 2004 to 2005 travelers in the Philippines increased by 16%, where more than 80% are domestic travelers, or Filipino residents. This shows an optimistic view on the domestic travel industry and shows that Filipinos are becoming more and more willing to travel within the country amidst security threats. In December of 2005, travelers are accounted for more than 15 million. C. INDUSTRY COMPETITION The Philippines constitutes an archipelago of 7,107 islands with a total land area of approximately 300,000 square kilometers (116,000 sq. mi). It lies between the Philippine Sea on the east, on the South China Sea the west, and the Celebes Sea on the south. The Philippine islands are commonly divided into three island groups: Luzon, Visayas, and Mindanao.

To further understand how the Philippine archipelago is segmented geographically, refer to table 14. Table 14. Geographic Segmentation of the Philippines |Segmentation |Inclusion | |Island Groups |3 Major Island Group | |Philippine Regions |17 Regions | |Philippine Provinces |79 Provinces | |Philippine Cities |117 Cities | |Philippine Towns/Municipalities |1501 Municipalities | Philippine Barangays |41,939 Barangays | Source: NSCB As mentioned in table 13, in 2005 alone, 15 million travelers journeyed within the Philippines. These 15 million travelers are distributed among the different regions and provinces within the country. Thus, on a national level, it can be contended that the battle to gain a portion of Philippine travelers is put forth on a regional basis, each having distinctive natural attractions to boast. Regions are generally organized to group provinces that have the same cultural and ethnological characteristics. The provinces are actually the primary political subdivision.

They are grouped into regions for administrative convenience. Most government offices establish regional offices instead of individual provincial offices, usually (but not necessarily always) in the city designated as the regional center. [53] Market Share Regional Market Share Central to the demand perspective of the tourism industry is the concept of a visitor. [54] Having established earlier that on a national level, the competition to win visitors is on the grounds of per region basis, it is relevant to express market share in terms of the distribution of regional visitors in the Philippines, as seen in table 15. Table 15. Regional Market Share, 2004 and 2005 (number of visitors per region) Region/ Years |2005 |Share to |2004 |Share to |Growth in Share | | | |Total | |Total | | |Cordillera Administrative Region |866,242 |6% |844,765 |6% |- | |Region I: Ilocos Region |287,649 |2% |301,141 |2% |- | |Region II: Cagayan Valley |624,021 |4% |673,933 |5% |-25. 00% | |Region III: Central Luzon |396,214 |3% |372,417 |3% |- | |Region IV: CALABARZON / MIMAROPA |6,645,943 |44% |5,064,469 |39% |12. 2% | |Region VI: Western Visayas |1,411,643 |9% |1,218,814 |9% |- | |Region IX: Zamboanga Peninsula |431,168 |3% |402,194 |3% |- | |Region X: Northern Mindanao |707,807 |5% |701,266 |5% |- | |Region XI: Davao Region |715,926 |5% |691,961 |5% |- | |Region XII: SOCCSKSARGEN |592,302 |4% |557,547 |4% |- | |Region XIII: Caraga |365,032 |2% |314,702 |2% |- | |Grand TOTAL |15,170,606 |100% |13,102,755 |100% | | |Source: DOT | | | | | | | | |Tourism and | | | | | | | | |Statistics | | | | | | | | |Division; Author’s| | | | | | | | |Calculations | | | | | | | | | | | | | | | | | |The market share | | | | | | | | |presented in table| | | | | | | |10 shows that a | | | | | | | | |big proportion of | | | | | | | | |visitors are | | | | | | | | |captured by the | | | | | | | | |CALABARZON/MIMAROP| | | | | | | | |A region with an | | | | | | | | |average of 41. 5% | | | | | | | | |visitor share for | | | | | | | | |2004 and 2005. | | | | | | | |This is followed | | | | | | | | |by Central Visayas| | | | | | | | |and Western | | | | | | | | |Visayas, acquiring| | | | | | | | |10% and 9% visitor| | | | | | | | |share, | | | | | | | | |respectively. The| | | | | | | | |region with the | | | | | | | | |lowest visitor | | | | | | | |share on the other| | | | | | | | |hand is Eastern | | | | | | | | |Visayas with an | | | | | | | | |average of 1% | | | | | | | | |visitor share.

In| | | | | | | | |terms of growth in| | | | | | | | |visitor share on | | | | | | | | |the other hand, | | | | | | | | |region IV | | | | | | | | |maintains a | | | | | | | | |positive standing | | | | | | | | |with a 12. 2% | | | | | | | | |increase in | | | | |