PHILIPPINE REAL ESTATE and RELATED NEWS in and around the country . . .

Budget hotels invade travel

BY PAUL ICAMINA [ ] March 19, 2012

Keycard entry, wireless Internet access, cable television, handicapped-accessible suites, private baths and hot and cold showers, telephones, air-conditioning, swimming pools, free and scheduled shuttles, wide parking spaces – and a function room or two for small seminars and conferences.

These are standard services in five-star accommodations that now face stiff competition from budget chain hotels which offer the same world-class facilities at much lower rates.

These are no nonsense hotels for what used to be an underserved niche catering to cost-conscious frequent travelers and itinerant businessmen, many of them savvy with Internet bookings and promo flights, or corporate and institutional clients wanting to save on travel expenses.

The guests simply want comfortable beds, immaculate bathrooms and safe surroundings.

In recent years, Kabayan, Eurotel, Days Inn and Microtel accommodations have cornered downtown and business centers and prime tourist destinations.

"Different branches have different rates depending on location, but they are competitive with standard hotels," said one Eurotel manager. "Near SM North, our guests are mostly families and foreigners, mainly balikbayans and Americans."

The market is so enticing that the big ones like Ayala Land and the Gokongwei group want to have a share.

"We call it the limited service concept which we pioneered in the Philippines," said Albert F. Banaag, Microtel director of sales and marketing. "And a lot of them are trying to copy our business model of providing limited services at international standards." He said the template has been "a success for many years now."

"When you say a budget or economy hotel, it’s a Department of Tourism classification," he said. "For us, we provide what we believe the regular traveler needs: clean rooms, comfortable beds, hot showers, safety and security."


The industry is worth that much, in terms of the occupancy rate.

That’s 95 percent in Microtel Batangas, with mostly Japanese technicians and engineers at the booming First Philippine Industrial Park in Sto. Tomas, Batangas, said Norman Eusebio, Microtel area general manager for South Luzon.

"For the past three months we have had the highest occupancy rate chain-wide, with Microtel Mall of Asia coming in second," he said. "Really good foreign investments are coming into Southern Luzon." That means clients.

For January and February, the occupancy rate in all Microtel locations was 80 percent, up from the 72 percent rate during the same period in 2011. A very good figure considering that it is the lean season with the Christmas holidays just over.

"We get a lot of business from the local market," Banaag said, "so our clients say, why stay in 5-star hotels with price tags of P7,000 to P15,000 or more, say in Boracay, when the online rate for Microtel for this year until March is P3,000 for two."

Microtel opened its first hotel in Luisita, Tarlac, 11 years ago in a place where world-class accommodations were non-existent, a strategy it still follows where possible (it also built the first international chain hotel in Boracay).

Today, Microtel leads the market with nine Microtels nationwide. That’s almost one hotel built every year.

"We want a Microtel in every regional hub in the Philippines; that’s where the clients are. That’s why we’ll have one in General Santos City and two in Metro Manila: Acropolis, Libis, and at UP Technohub in Diliman, all by the end of the year."

The plan is to build 25 Microtels by 2016.

Microtel operations give an idea of what it’s all about.


It is an international chain with over 300 hotels worldwide, including those in the home country, the United States, as well as n Canada, Argentina, Honduras and Mexico. Its bed-and-breakfast rooms cater to budget local and international business travelers whom it considers an "unmet" demand in business travel.

What’s on offer is the similarity and familiarity of checking in at a Microtel in Davao and checking in at a Microtel in Las Vegas. That means two queen-sized beds, "chiropractor-approved" mattresses and even a baby crib upon request.

Guests are comfortable with the brand name because of the consistent features and value-for-money services.

"Normally, our clients have prior reservations, although walk-ins are noteworthy as well, especially at the Microtel Mall of Asia," Banaag pointed out.

All Microtels are independently owned. The minimum investment in a typical Microtel (excluding land value) is P2.2 million per room inclusive of franchise fees, construction cost, furniture, fixtures, equipment and beginning inventory.

Properties are constructed from the ground up and are completely consistent with regards to room types, designs and furnishings. Minimum land area required is 3,500 square meters. That means no conversion properties, or existing structures, are allowed.

The Microtel brand is part of the Wyndham Hotel Group, the largest hotel franchise in the United States whose brand portfolio of chain hotels include the Ramada, Planet Hollywood, Hawthorn Suites, Super 8, Howard Johnson and Wingate by Wyndham.

In Asia, Microtel is located only in the Philippines. The Microtel master franchise holder here is Microtel Inns and Suites, Pilipinas Inc., a Phinma Company.

The people behind Microtel Pilipinas are also the same group behind Paramount Hotels that manages the Phinma Training Center in Tagaytay, Atrium Hotel in Pasay, The Aquino Center in Tarlac, Salcedo Suites and Perla Mansion in Makati.


One upstart is Eurotel, which has branches in Araneta Center in Cubao, Las Piñas, Pedro Gil, North EDSA, Makati and its first provincial venture, in Baguio. For about five years now, it’s been building on average one Eurotel a year.

Reflecting the good prospects in the travel niche, a new comer is Malaysia-based Tune Hotel, which has opened 165 rooms at Clark Airport in Angeles City. It’s 10 minutes by car to Diosdado Macapagal International Airport and 10 minutes to the Clark Ecozone. It has properties in Ermita, Manila and Cebu.

A serious contender is Go Hotels which has 30 malls, all potential hotel sites. It opened its first hotel near Robinson’s Place in Boni, Mandaluyong. Backed by Robinsons Land Corp., it plans to open 30 locations in the next five years, most of them in Manila and half of them in franchises.


Go Hotels provides the system, brand, management and online booking similar to its sister company, the budget carrier Cebu Pacific, where the rates are lower when clients make their reservations early.

Rooms for as low as P388 a night are available compared with walk-in rates of P1,888.

Go Hotels is the fifth hotel property of RLC after the 285-room Crowne Plaza Galleria Manila, 263-room Holiday Inn Galleria Manila, 210-room Cebu Midtown Hotel and the 108-room Summit Ridge Hotel Tagaytay.

Enter Ayala Land Inc., the country’s biggest real estate developer, starting with four 150- to 175-room Cocoon hotel properties, including those in Bonifacio Global City and Davao. It plans to put up resorts in the Visayas, starting with its acquisition last year of Ten Knots Development Corp. in El Nido Palawan and Club Noah Isabel in Taytay, Palawan.

Cocoon business hotels are expected in Cagayan de Oro, Alabang and Nuvali in Sta. Rosa, Laguna.

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