The Philippine tourism industry is poised for renewed growth in 2026, driven by long-awaited catalysts such as improved air connectivity, expanded government promotions, and diversified source markets, according to an industry outlook presented this week.
Alfred Lay, Director for Hotels, Tourism and Leisure at Leechiu Property Consultants (LPC), described the sector as “set for growth,” noting that while tourism performance has plateaued over the past three years, recent developments point to a positive trajectory for next year and beyond.
“After three years of relatively flat international arrivals following the pandemic, tourism figures have stabilized at around 5.8 to 5.9 million visitors annually, forming what we now consider a ‘new normal,’” Lay said. This is below the pre-pandemic peak of 8.2 million arrivals, but marks a period of consolidation for the industry.
Catalysts for growth
A year ago, the outlook for 2025 was largely neutral. In recent months, however, progress has been made on multiple fronts. Improved accessibility through airport privatization, PPP arrangements for secondary and tertiary gateways, and new infrastructure projects has strengthened the country’s connectivity. The reactivation of the e-visa system for Chinese travelers is expected to help revive arrivals from a key source market.
Government investment in tourism promotion has also surged, with the Department of Tourism’s marketing budget rising from ₱100 million to approximately ₱1 billion. This increase aims to boost the country’s international profile, though Lay cautioned that “people plan travel well in advance, and agents are already arranging trips not just for next year, but into 2027.”
As a result, LPC projects a 9 percent increase in international arrivals next year, with foreign arrivals expected to reach around 6.3 million by 2026.
Hotel sector outlook
Occupancy rates have remained largely flat this year, despite strong early-year performance, as regional competition and external factors tempered growth. Lay expects occupancy to improve gradually, with average daily rates stabilizing after recent increases aimed at offsetting higher operating costs.
Investor confidence remains strong, with 50 new hotels and over 12,000 room keys expected nationwide in 2026. Most developments will fall within the upper midscale segment, while international brands are expanding into secondary and tertiary cities such as Baguio, Zamboanga, Batangas, and Laguna.
Connectivity, MICE, and regional growth
New and expanded international flight routes—including services to the US, Australia, the Middle East, and Europe—combined with increased promotions, are expected to generate results by mid-2026. PAL is launching Manila-Palau flights in March and boosting Manila-LAX to 18x weekly, while Cebu Pacific adds Manila-Riyadh to strategically capture new demand.
MICE maintains its status as a high-growth sector supported by key infrastructure such as the opening of SMX Convention Center Seaside Cebu in Q4 2026, and Megaworld’s Mactan Expo Center which will host to the upcoming ASEAN Tourism Forum travel exchange in January. ASEAN-related events are also expected to further boost the MICE sector within Manila and Cebu.
While growth is expected to be incremental rather than dramatic, industry leaders are cautiously optimistic. “It’s been a year of moving sideways,” Lay said, “but the pieces are starting to align. Getting the industry moving again—even gradually—is the foundation for long-term growth.”
