P2.35-B hotel in Cebu gets BoI incentives

REPORT FROM BUSINESSWORLD The Board of Investments (BoI) has granted tax incentives to South Korean firm Philippine Busan Express Terminal Corp. (Phil BXT), which is building a P2.35-billion hotel and resort complex in Cebu City. BoI data showed the company was accorded a pioneer status, which means it will enjoy income tax holiday for six years. The facility, Imperial Palace Waterpark Resort and Spa, is offering sports and recreational facilities, food and beverage, health and fitness facilities, and other support facilities. The company is constructing a six-medium rise building, three-story townhouses and 20, two-story pool villas, with a total of 616 rooms. Imperial Palace is expected to operate commercially by January 2009 and provide about 1,200 jobs. "Cebu has only very limited five-star hotels or class AAA resort rooms. The industry’s very limited room capacity cannot readily accommodate many prospective in-bound tourists intending to visit Cebu," the company said. Phil BXT Corp. is a recently-formed Korean-led group. One of South Korea’s hotel networks, Imperial Palace has expanded operations worldwide through Summit Hotels and Resorts. The Cebu project is its first venture in the Philippines. Department of Tourism data showed the Philippines, which has less than 20,000 hotel rooms, needed to develop world-class accommodation facilities to meet its target of attracting five million foreign visitors by 2010. International visitor arrivals to the country grew 10.4% to 1.42 million in the first half of 2006 from the 1.286 million arrivals in 2005. Hotels in Cebu, Davao, Palawan and Boracay have been operating at full capacity. Waterfront Capex Meanwhile, Gatchalian-led Waterfront Philippines, Inc. is spending about P2 billion to expand its hotel chain and renovate existing hotels within the year. In an interview, businessman William T. Gatchalian of the Wellex Group, Inc. said the amount would be used for building five new hotels and improving some of the eight existing hotels. Wellex owns 60% of Waterfront. "Initially, it’s around P2 billion," Mr. Gatchalian said, adding his company is planning to acquire and build 20 more hotels by next year. The company earlier reported a 57% drop in net income last year due to higher expenses. It raked in a total of P1.91 billion in revenues, up 6.1% from P1.8 billion in 2005. Cost and expenses, however, rose to P1.45 billion last year from P1.3 billion in 2005 mainly because of higher prices. Revenues from hotel operations were 30% higher at P1.85 billion from P1.79 billion. Hotel operations however cost the company P1.25 billion in 2006, up 2.5% from P1.23 billion in 2005. Waterfront earlier said it expected revenues to rise by as much as 25% to P2.5 billion last year on the back of the continuous growth of the tourism industry. The company also said it is on the lookout for business opportunities in first-class casino hotels in major cities, as well as boutique hotels as it builds its G Hotel brand. It is also planning to venture in the resorts business in two to five years’ time. Waterfront entered the boutique hotel segment in 2005 with the 50-room G Hotel in Roxas Boulevard. Boutique hotels are high-yield yet small-scale hospitality facilities. It serves premium transient foreign travelers. Waterfront studies showed that Metro Manila has room for four more boutique hotels, three in Cebu and two in Davao. The same cities are eyed for more first-class hotel projects. Waterfront Hotels currently have close to 1,600 rooms. Cebu hotels post occupancy rates of about 75% to 80%, while hotels in Manila and Davao hit 65% to 70%. Mr. Gatchalian earlier said Wellex is building a P5-billion leisure and residential resort on a sprawling 1,200-hectare island in Palawan. — Bernardette S. Sto. Domingo/BusinessWorld