The Philippine tourism sector continues to show clear signs of improvement, with domestic travel expected to reach record highs in 2025 and 2026, and new hotel developments expanding across major destinations this year. These trends point to a steady, broad-based recovery supported by improving investor sentiment.

Tourism Sector Builds Steady Momentum

The Philippine tourism market is seen to have shown and anticipated to have steady improvement, supported by projected record-high domestic travel, a growing pipeline of hotel developments, and improving investor confidence following the approval of the 99-year foreign lease law.

While international arrivals have yet to return to pre-pandemic levels, consistent local travel activity is providing a dependable base for growth and helping the sector align for sustainable, long-term expansion—hence this quarter’s theme: “Aligning for the Long Term.”

Domestic Travel Reaches Record Levels

Domestic tourism continues to anchor the sector’s recovery. In 2025, 58.7 million Filipinos are expected to travel within the country, rising to 62.2 million in 2026. This is supported by strong economic fundamentals, with the Philippine economy projected to grow by 7.63% in 2025 and 5.8% in 2026.

Over the past two decades, domestic tourism spending has consistently outpaced GDP growth, underscoring its importance to local economies and its role in supporting small and medium enterprises across the regions.

Hotel Development Broadens Across Key Destinations

Growing travel demand is encouraging more hotel construction and expansion nationwide. A total of 5,210 new hotel rooms are expected to be completed in 2025, with over 4,300 keys scheduled to open in the fourth quarter.

Most of these projects are under local hotel brands and developers, who continue to identify opportunities in Metro Manila, Cebu, Boracay, Davao, and Palawan. This broad distribution of projects reflects both the depth of local demand and the readiness of regional destinations to accommodate larger visitor volumes.

99-Year Lease Law Strengthens Long-Term Investment

The recently enacted 99-year lease law has introduced a stronger framework for long-term tourism investment. By extending lease terms for foreign investors, the law provides the security needed for large-scale developments such as resorts, integrated communities, and leisure estates.

This reform is expected to draw more foreign direct investments into Philippine tourism—similar to other island economies like the Maldives, where extended leases helped establish stable, investment-led tourism growth.

Renewed Interest from Global Capital

There is renewed attention from international family offices, private equity firms, and sovereign wealth funds exploring tourism and hospitality assets in the Philippines. Strong demographics, established destinations, and an improved policy environment are prompting investors to revisit long-term opportunities in the market.

Future investments are expected to focus on branded resorts, lifestyle-oriented communities, and hotel portfolios suited for REIT listing, particularly in Cebu, Clark, and Palawan, where infrastructure and accessibility continue to improve.

Outlook: Steady Growth Through 2026

The combination of strong domestic demand, additional hotel capacity, and favorable policy reform positions the tourism sector for continued progress through 2026. As connectivity improves and new investments materialize, the sector is expected to remain a key contributor to national growth.

“With the anticipated growth in domestic and long-haul tourism, along with increased hospitality FDIs driven by the newly approved 99-year lease to foreign investors, the tourism sector is poised to strengthen its position as a key investment area and a vital pillar of the Philippine economy,” — Alfred Lay, Director for Hotels, Tourism, and Leisure at Leechiu Property Consultants