Cruise tourism uses the Philippines' natural landscape to expand sector

A major thrust of the sector’s development strategy, carried out by the Department of Tourism ( DoT), is to strengthen cruise tourism so it becomes a driver of foreign visitor arrivals. Indeed, as an archipelago with over 7000 islands, and with one of the world’s longest coastlines, the Philippines should be a natural market for the industry. However, due to underdeveloped facilities and a lack of promotion, the country was historically overlooked as a destination, with the South-east Asian cruise map dominated by Singapore, Malaysia, and Thailand, followed by Hong Kong, China and Taiwan.

Gathering Momentum

Despite its low profile, cruise tourism in the Philippines has seen consistent growth, expanding by 52.5% since 2011. A total of 117 cruise calls are scheduled in 2017, a number that is expected to bring an estimated 120,000 foreign passengers to the shores of the Philippines, according to Maria Lourdes Japson, assistant secretary for tourism development planning, who spoke during a Star Cruises press conference in January 2017. The high-growth prospects of the industry, which has been expanding at double-digit rates in Asia, have led to strong government support and private sector participation to boost the preparedness and visibility of the sector, as well as enthusiasm from major cruise lines to visit several islands across the archipelago.

Market Potential

According to the “Asia Cruise Trends 2016” report commissioned by Cruise Lines International Association, the regional industry has positioned itself as the world’s fastest-growing source of cruise passengers and exhibits the highest year-on-year growth across all metrics, including cruise deployment, capacity, destinations and source markets. According to the report, 60 cruise ships sailed Asia in 2016 – a 15% increase over 2015 levels. Similarly, the number of cruises offered in the region has witnessed sustained growth, with 1560 sailings scheduled for 2016 alone, representing a steep 43% increase over the previous year. This translated into a total of 5570 cruise calls in Asia in 2016, an increase of 43% over 2015. The destinations with the highest growth in total port calls were Japan, China and South Korea, with 1526, 859 and 745 calls, respectively. In tandem with higher frequency and larger ships, the absolute volume of cruise travellers sourced from Asia has nearly tripled – from 775,000 passengers in 2012 to nearly 2.1m in 2015. China has transformed itself into the main engine of passenger growth in Asia, accounting for almost half of the regional passenger volume in 2015. Additionally, 80% of Asian cruisers sailed within the region in 2015, highlighting the attractiveness of the regional market for a country like the Philippines, which is looking to promote cruise tourism primarily to China but also other cruising markets like Hong Kong, Australia, Taiwan, Japan, South Korea, Singapore, Malaysia and India.

Strategy

To develop the cruise tourism market and accommodate growing demand for cruise calls in different parts of the country, the DoT launched the National Cruise Tourism Development Strategy in 2016, developed with assistance from the US Agency for International Development. The strategy’s overall aim is to ensure the Philippines is cruise ready and cruise friendly, and that the market is aware of the country’s offerings as a competitive cruise destination in Asia.

The roadmap seeks to implement a number of infrastructure initiatives, including the improvement of existing port facilities to better cater to the requirements of international cruise lines; the construction of dedicated cruise terminals; and the enhancement of guest activities and attractions. In addition to facilities, the strategy aims to boost the country’s attractiveness to cruise lines by streamlining the regulatory environment and providing incentives for ships calling at Philippine ports. Enhancing the travel experience of cruise tourists will also be targeted through the simplification of port immigration and quarantine policies.

Building market awareness of the Philippines as a cruise destination is a key strategic aim, and is being planned through effective promotion of the Philippines’ offerings and communications initiatives undertaken by the government. Lastly, the roadmap aims to amplify the carry-through effects of cruise ship visits through the development of merchandising activities and capacity building within local communities to allow them to benefit from the industry’s multiplier effect.

Mirroring the region’s growth trajectory, the rise in cruise ship calls at Philippine ports has been significant. In 2015 the country attracted 52 port calls, representing an 18% increase over the previous year. Cruise passenger volumes also rose to reach 69,802 in 2015, up 16% from 2014. This momentum was sustained throughout 2016, when a total of 72 cruise ships and 72,350 passengers made port calls in the country.

Revenue

The DoT estimates that a cruise ship with 2000 passengers calling at Manila will generate $250,000 in tourism revenues, and therefore help the sector achieve its aim of increasing foreign visitor receipts. Despite the growth, port call numbers are still well below those of the top Asian ports. Singapore saw 374 port calls in 2014; Jeju Island in South Korea 217; and Hong Kong 200. However, the DoT estimates that the Philippines will have 117 port calls of ships carrying 120,000 passengers in 2017, while the long-term goal is to reach 402 ships with 456,164 passengers by 2022. The top-three domestic cruise destinations in the Philippines in terms of aggregate visits are Puerto Princesa, Palawan, with 39 transits and 16 overnights over the last four years; Manila, with 48 transits and five overnights; and Boracay, with 29 transits.

As part of the National Tourism Development Plan (NTDP) 2016-22, the government of the Philippines has already allocated an estimated P6bn ($126.9m) to the improvement of port facilities and the attraction of international cruise tourists, with P1.9bn ($40.2m) earmarked for 2017 alone. The immediate priority ports identified for development by the cruise tourism master plan are the ones found in the so-called Turquoise Triangle, namely the ports of Manila, Puerto Princesa and Boracay Island. According to Benito Bengzon, undersecretary for tourism development planning, who spoke at a press briefing in December 2015, to accommodate 5000-passenger-capacity ships, which are becoming increasingly dominant in Asia, the ports will require a minimum draft of roughly 13.5 metres, a pier length of 350 metres and a turning basin of 500 metres, while the bollards must have a capacity of approximately 150 tonnes.

In addition to the Turquoise Triangle ports, many other competitive tourism ports have been pegged for upgrades, namely Bohol and Poro Point in La Union, which can currently accommodate only mid-sized ships; as well as Salomague Island in Ilocos Sur, Currimao in Ilocos Norte, Hundred Islands in Pangasinan and Kalanggaman Island in Leyte, all of which can currently accommodate only small vessels or expedition cruises.

Partnerships

In March 2017 the DoT and the province of Aklan secured a partnership with Miami-based Royal Caribbean Cruises to further unlock the potential of the Western Visayas Region – which includes the world-renowned beach destination of Boracay – for the international cruise market. The agreement, inked on the sidelines of the Seatrade Cruise Global conference in 2017, will see the global cruise company provide technical and financial assistance for the construction of a purpose-built terminal in Aklan, to be located in either Caticlan, Malay or Boracay Island. Major local or international private sector participation is expected to support the development of necessary port facilities.

Promotion of the Philippine cruise tourism value proposition has been centred on the DoT’s efforts to attract international cruise lines to call at the Philippines or include the Philippines in their cruise itineraries in the region. These activities include participation in major cruise events, such as the Seatrade Cruise Global conference – the international cruise industry’s leading exhibition. In addition, tourism sales missions are being carried out at the headquarters and regional offices of major cruise lines to explore partnerships and provide information about the Philippines and its islands as cruise destinations, as well as existing port facilities and shore excursion programmes.

On March 19, 2017 the Philippines received its firstever home porting of a global luxury cruise liner, the 13-storey SuperStar Virgo operated by Hong Kongbased Star Cruises. The ship, which can accommodate more than 2000 passengers, will be based in Manila, and will tour three cities in three countries – Laoag in the Philippines, Kaohsiung in Taiwan and Hong Kong – as part of its Golden Triangle programme. The cruise is projected to bring some 50,000 visitors to the Philippines. While Star Cruises has indicated it may consider setting up more home ports in the country, other global cruise companies have also expressed interest, further strengthening the government’s bid to make the country a major cruise tourism hub. To this end, the DoT is actively encouraging cruise lines, such as Carnival Cruise Line, Royal Caribbean Cruises and the Genting Group, to add the country to their itineraries.