Higher airfares brought on by the Iran conflict stalled the growth of foreign arrivals to the Philippines in 2026, with 4.40 million visitors from January to August, barely more than last year. Yet that flat headline masks sharp shifts underneath, as arrivals from China surge, South Korea declines, and hotel developers press ahead with nearly 46,000 rooms in the pipeline. What ties these trends together is access: tourists go where travel is easiest.

Foreign tourist arrivals to the Philippines reached 4.40 million from January to August 2026. That is essentially flat against the 4.38 million recorded in the same period of 2025.

The year started well, with arrivals growing steadily in the first quarter and year-on-year growth peaking at 12% in February, before the Iran conflict changed the picture:

The closure of the Strait of Hormuz doubled jet fuel prices
Airfares rose, and airlines cut or cancelled flights
Arrivals turned negative year-on-year from May

As a result, full-year arrivals are now expected to fall below 2025 levels. Still, the flat total hides a bigger shift: Chinese arrivals are up about 93% while South Korea, the second-largest source market, is down 22%, and developers continue to build hotels where the flights land.

Arrivals stalled at 4.4 million

Arrivals totaled 4.40 million in the first eight months of 2026, compared with 4.38 million in 2025 and 4.32 million in 2024. Gains from the United States, China and Canada were only enough to keep the total roughly level.

The top five source markets:

United States: 926,000, up 2% from 901,000
South Korea: 744,000, down 22% from 951,000
Japan: 321,000, down 2% from 327,000
China: 303,000, up 93% from 156,000
Canada: 237,000, up 9% from 218,000

Growth turned negative from May

Year-on-year growth started at 3% in January, peaked at 12% in February, then slowed to 7% in March and 1% in April. From May, it turned negative: −2% in May, −8% in June, −6% in July and −5% in August.

The main reason is cost. The Strait of Hormuz closure doubled jet fuel prices, which pushed up airfares and led to flight cuts and cancellations, and because the Philippines relies heavily on long-haul connecting flights, higher travel costs make it a harder sell. Arrivals have now fallen for four straight months, and the decline is expected to continue until the end of the year.

China and India surged, while South Korea slid

China is the standout, with arrivals up about 93% from January to August and growth above 50% every month since February, helped by 14-day visa-free entry and the return of direct flights from China.

There is still plenty of room to grow, since the jump comes off a low 2025 base, arrivals remain well below 2019 levels, and flight capacity from China is only about half of what it was before the pandemic.

India also grew more than 50% in the first quarter, helped by the same visa-free entry and additional direct flights, before dipping in July.

Other markets moved the other way:

South Korea: down more than 30% every month from May to August, reflecting weaker outbound travel
Japan: negative since May
United Kingdom: negative since March, amid higher long-haul travel costs and flight disruptions

Developers are still betting on the Philippines

Hotel developers have not pulled back. Our 2026 Accommodation Pipeline Report, produced with the Philippine Hotel Owners Association, counts 45,884 keys (hotel rooms) across 213 properties, which is 14% more keys and 35% more properties than the 2024 edition, backed by PHP 387 billion in committed capital for openings from 2026 to 2032.

About 70% of these keys, roughly 32,000, are in areas with direct international flights, a clear sign that hotels are being built where the flights go. The largest concentrations are:

Metro Manila: 11,130 keys
Cebu City and Lapu-Lapu City: 8,482 keys
Clark and New Clark City: 3,727 keys
Panglao Island: 3,299 keys
Davao: 755 keys

Eastern Luzon is a place to watch

Beyond the usual destinations, eastern Luzon stands out as an area for new tourism products and experiences. Its biggest advantage is how close it is to Metro Manila's large domestic market:

Rizal: 1 to 2 hours
Bulacan: 2 hours
Nueva Ecija and Quezon: 3 to 4 hours each

None of these provinces has hotel keys in the pipeline yet, and new roads and rail lines, one already open and others expected over the next 5 to 10 years, will make the trip even shorter:

Central Luzon Link Expressway, already operational
South Luzon Expressway Toll Road 4, from Sto. Tomas, Batangas to Lucena, Quezon
Metro Rail Transit 7 to Bulacan
Metro Rail Transit 4 to Rizal

Industry insight

"Unless we change how we do tourism at a basic level, foreign arrivals are likely to stay near today's levels into next year.
The clearest evidence for what works comes from China and India. Where the Philippines made travel easier, through visa-free entry and additional direct flights, arrivals from both markets grew by more than 50% in the first quarter, and China has sustained that pace since February. Reducing travel friction produces results.
The same logic shows up in the hotel pipeline. About 70% of planned hotel rooms are in areas with direct international flights, which shows that private developers are building where access is strongest.
The report's pipeline map also points to a gap. Some destinations with strong private-sector commitment, such as Puerto Princesa, are served by international airports that sit underused because they have no direct international routes. Developers are betting on these places, but travelers cannot yet fly to them directly. Government can match that commitment quickly by introducing direct international routes to these destinations. Compared with building or expanding airports, new routes can be put in place sooner and can lift arrivals faster.
On domestic tourism, which earns four times what foreign travelers bring in, we also need a closer look at the relocation of turboprop flights from NAIA to Clark. Island destinations that depend on turboprops report that business is down. Is the relocation a factor? The industry needs the data to answer that. A review of the impact would show what works best for the whole industry, from travelers and resorts to the workers who depend on them." — Adam Domingo, our Senior Manager of Hotels, Tourism, and Leisure

Market outlook: what to watch for the rest of 2026

Philippine tourism arrivals have stopped growing, but the mix is changing, with China and India rising while South Korea falls. That argues for building on several source markets rather than relying on any single one.

What to watch:

Fuel costs and airfares, which are expected to keep pulling arrivals down through year-end
China and India, the bright spots, with China's flight capacity still only about half of pre-pandemic levels
South Korea, whose steep decline continues to weigh on overall growth

With these pressures, full-year arrivals are projected to land below 2025 levels.

We remain cautious about the months ahead, but the hotel pipeline is a clear bright spot: while not every planned project will be built, developers continue to commit capital to the Philippines despite geopolitical setbacks, and they are building where international flights land. Building the rooms, however, is only the part the industry can solve on its own. With Vietnam, Thailand and Indonesia competing for the same travelers, the government needs to match the conviction the private sector has already shown, through a long-term tourism strategy that improves connectivity, reduces travel friction and opens up new destinations such as eastern Luzon, so the industry can stay afloat and continue to thrive.

Find the next opportunity in Philippine hospitality, from gateway cities to emerging destinations like eastern Luzon, in the full 3Q 2026 Philippine Property Market Report at leechiu.com/market-insights.