1. Undersecretary PHINEAS A. ALBURO
Managing Growth in Turbulent Times
Undersecretary PHINEAS A. ALBURO
Department of Tourism 1

2. Visitor Arrivals to the Philippines, 1997 - 2003
Foreign tourism arrivals in the Philippines from 1997 to 2003.
Visitor Arrivals to the Philippines,
(In Millions)
Trend Line
YoY Growth Rate (%)
8.5
-3.3
1.0
-8.2
-9.8
7.6
-1.3
Source of Data: Arrival/Departure Cards and Sea Manifests Visitor Sample Survey at International gateways 2

3. Definition of a good market portfolio for the DoT
Market Portfolio Prioritization Framework
High
Core Markets
Markets that deliver the “bread & butter”
Bulk of new investment
Best capabilities allocated
Investment / Turnaround Markets
Invest in these markets ahead of return i.e. invest for the future
Tactical / Momentum Markets
With focused spend can relatively quickly generate increased arrivals
Maintenance Markets
Markets that are on the radar
Activity only to occur if there is spare capacity
Ensure mix of countries creates balance across:
Growth cycles
Market development
Short haul vs. long-haul
Seasonality
Investment required
Ability to Win
Competitive Position: How competitive is the Philippines vs. key competitors (SE Asia) ?
Ability to Deliver: How adapted is the Philippines offer to consumer needs?
Low
High
Size of Opportunity
Current size and growth
Potential size and growth
Note: Competitive Position (market share, awareness (unaided, aided), positivity towards RP, consideration of RP, information seeking about RP, likelihood of visiting), Ability to Deliver (Ease of access, trade interest, product availability, importance of safety, Fit of assets vs. consumer preferences, seasonality of arrivals, presence of English speaking population), 3

4. Market prioritization results
Market Prioritization Framework
Implications
High
Continue to focus bulk of resources and best people on existing core markets (China, Japan, Korea, US Balikbayan)
Increase investment and focus on Tactical/momentum markets (Australia, Russia, Germany, US/Canada)
Maintain investment in turnaround markets (Hong Kong, Taiwan, Singapore) focusing efforts on addressing key barriers to growth
Monitor maintenance markets (UK, Netherlands, Switzerland, and Denmark) on an annual basis to test for low-hanging fruit
Cut focus on Italy, Spain, and India
Ability to Win
Competitive Position
Ability to Deliver
Low
Low
High
Size of Opportunity
Current Attractiveness
Future Attractiveness
Note: **US campaigns and activities can be extended to Canada; *Given limited resources and inherent barriers to activation, UK market has been de-prioritized. However, UK remains a good investment market in Europe
Source: Monitor Analysis 4

5. Visitor Arrivals to the Philippines, 1997- 2007
The 2007 has been a breakthrough for Philippine tourism as healthy growth in visitor arrivals was recorded.
Visitor Arrivals to the Philippines,
(In Millions)
Trend Line
YoY Growth Rate (%)
8.5
-3.3
1.0
-8.2
-9.8
7.6
-1.3
20.1
14.5
8.4
8.7
Source of Data: Arrival/Departure Cards and Sea Manifests Visitor Sample Survey at International gateways 5

6. Visitor Receipts by Key Market1,2 (2006 – 2007)
The tourism sector not only grew in arrivals, but also and more important it grew in receipts as well, all across the board
Visitor Receipts by Key Market1,2 (2006 – 2007)
Key Observations
MM USD
In general, key markets have increased receipts more than arrivals, indicating an increase of tourist quality
Above average performance has been noticed in NA, Europe, China and India
However, reducing arrivals from Japan combined with decreasing tourist quality have posted negative growth of receipts
Special attention should be paid to Korea as well, whose growth of receipts was slower than that of arrivals, indicating a decrease of tourist quality
+24%
+28%
+21%
+2%
+63%
-10%
+66%
+132%
Change
2006
2007
2,436
Total NA
APAC
Korea
Europe
Japan
China
India
# of Arrivals (000)
+8%
+4%
+11%
+14%
+5%
-6%
+18%
+20%
Note: 1APAC (Asia Pacific) refers to Australia, Hong Kong, Singapore, Taiwan, Malaysia, Indonesia, Thailand, New Zealand; Europe refers to United Kingdom, Germany, France, Russia, Scandinavia (Denmark, Finland, Norway, Sweden), Italy; NA (North America) refers to US & Canada; 2Applied average length of stay in AVSS 2006 for Indonesia, Korea, and Canada for both years – due to not reliable numbers in the most recent AVSS
Source: DOT Tourism Planning & Statistics Division, Arrival/Departure Cards , AVSS 2007, Monitor Analysis

7. Same or faster growth pace than last year Slower growth than last year
So far most of the markets has presented a higher growth pace in terms of arrivals than that of last year
Comparative % Growth in Number of Arrivals1 (2007 vs. 2006, Jan – Feb 2008 vs. Jan – Feb 2008)
Key Observations
The most positive result come from China at an astounding rate of 43%
It is also rewarding that Japan reduced its declining rates
Positive figures were also noticed in North America, despite of the recession in the US and the weak position of the US dollar
Nevertheless, Korea suffered a “hiccup” this January, which could be a first sign indicating that this market might face saturation in the next years
Same or faster growth pace than last year
Slower growth than last year
Note: 1APAC (Asia Pacific) refers to Australia, Hong Kong, Singapore, Taiwan, Malaysia, Indonesia, Thailand, New Zealand; Europe refers to United Kingdom, Germany, France, Russia, Scandinavia (Denmark, Finland, Norway, Sweden), Italy; NA (North America) refers to US & Canada
Source: DOT Tourism Planning & Statistics Division, Monitor Analysis

8. In addition to that, the Philippine Tourism is “victim of its own success” and tourism related infrastructure is already presents constrains of capacity
Estimated Maximum Capacity vs. Actual Arrivals (MM Foreign Arrivals / year)
Airport Utilization Rate
Air Flight Load Factor
MM Arrivals
Region
Utilization
Manila
135%
Cebu
76%
Davao
67%
Origin Market
Load Factor ‘07
China
64%
Japan
68%
Korea
77%
Middle East
88%
North America
76%
South East Asia
South West Pacific
73%
Western Europe
74%
4.2
Average Utilization (%) & Hotel Capacity (units) 2
DOT Census
5,355
3,290
2,826 1
2,158
Arrivals
Manila
Cebu
Bohol
O. Negros
Palawan
Boracay
Note: 1The capacity is estimated based on the theoretically maximum number of international arrivals in 2008; 2Hotel room capacity for Manila is based on January 2008 sample survey report, other regions are based on 2007 census conducted by DOT; average occupancy rate based on sample survey report data
Source: DOT Tourism Planning & Statistics Division, Monitor Analysis

9. % - Changes in Length of Stay and Daily Spend – (2007 vs. 2006) 1,2
A large part of the growth in receipts came from higher length of stay, and the challenge for the tourism sector is to increase spend
% - Changes in Length of Stay and Daily Spend – (2007 vs. 2006) 1,2
Key Observations
In general, we observed a higher increase in length of stay than that in daily spend
Several factors could explain this fact; some are beyond the reach of the DOT, such as macroeconomic factors
However, the DOT and the tourism sector can improve the spend of tourists by
Identifying key tourist segments to focus on
Developing product offers that motivate those tourists to spend more
The big challenge for the tourism sector is to attract the tourists who spend more
Note: 1APAC (Asia Pacific) refers to Australia, Hong Kong, Singapore, Taiwan, Malaysia, Indonesia, Thailand, New Zealand; Europe refers to United Kingdom, Germany, France, Russia, Scandinavia (Denmark, Finland, Norway, Sweden), Italy; 2Applied average length of stay in AVSS 2006 for Indonesia and excluded Korea, and Canada for both years – due to not reliable numbers in the most recent AVSS
Source: DOT Tourism Planning & Statistics Division, AVSS 2006 and 2007, Monitor Analysis

10. Hence, in the next years, the DOT and the Philippine Tourism Sector will have to go through a fundamental mind set change
From a situation of demand constrains to …
… a situation of supply constrain
Goals
Attract more tourists
Attract better tourists
Overall Strategy
Focused and segmented campaigns with heavy emphasis on conversion
Mass market awareness campaign
Tourism destination for all ages and preferences
Market Positioning
More exclusive tourism destination
General investment to attract the maximum number of tourists
Investment
Very much focused into the targeted types of tourists
Focus
Operational Efficiency
Innovation

11. THANK YOU! 11