From the Chairman
Waterfront in 2023: Renewed Strength, Unwavering Adaptability
Source: Waterfront Philippines Inc. Chairman’s Message, Annual Report 2023
Dear Esteemed Stockholders,
The true resilience test of an organization is its ability to navigate periods of uncertainty and pivot itself to a new period of growth and reinvention.
Despite continued challenges, we are entering a new period of growth potential. The global travel and tourism climate is becoming stronger as it moves farther away from the pandemic. Internationally, the start of 2023 already proved different—it signaled tourism’s ability to bounce back, perhaps more quickly than other industries. As a result, our establishment continues to ride the wave of renewal and optimism as it navigates the challenges that come with change.
The travel and tourism sector continues to make good on its forecasts on track to a full comeback from the economic stresses of the COVID-19 pandemic. The UNWTO World Tourism Barometer‘s comprehensive industry report forecasted that by year-end of 2023, tourism would recover up to 88% of pre-pandemic levels—2019 being a benchmark for when international travel reached its peak. The 88% figure translates to 1.3 billion international arrivals.
Figures from January to September 2023 reflect the accuracy of the projection. Tourism recovered 87% of its pre-pandemic stats, putting the sector on course to recover nearly 90% by Q4. Moreover, earnings got a significant boost as international tourism receipts were projected to reach an annual total of USD 1.4 trillion—about 93% of 2019 figures.
The formidable return of international travel is attributed to increased air connectivity and the release of pent-up consumer travel demand from the past years of slowed movement. Moreover, some Asian destinations have demonstrated robust recovery figures, both economically and travel-wise. Experts believe that by the end of 2024, the industry will have generally recaptured its previous peak.
Nonetheless, it must be noted that the recovery is uneven. When examined per region, the Middle East enjoyed the best results. It leads regional recovery in relative terms.
Arrivals in the region were at 20% above pre-pandemic levels in the nine months through September 2023, making it the only region in the world so far to surpass 2019 levels this period. Its success has been attributed to enhanced visa facilitation measures, substantial investments in tourism-related projects, the development of novel destinations, and the hosting of large tourism-related events.
The world’s largest regional destination, Europe, brought in 550 million international tourists. This number represents 56% of the global total and 94% of the region’s pre-pandemic arrivals. Europe’s success was fueled by strong US demand and revived intra-regional demand.
Africa successfully brought back 92% of its pre-pandemic visitors nine months into 2023. The Americas matched 88% of its 2019 numbers in the same period, driven by strong US demand for its Caribbean destinations. Asia-Pacific also had a strong showing albeit less than other regions, reaching 62% of its pre-pandemic. The lag has been attributed to the slower easing of restrictions and more gradual reopening to international travel.
Moreover, performance among Asian subregions is mixed. South Asia recovered 95% of its re-pandemic levels while North-East Asia only revived up to 50%.
On an even more granular level, the Philippines has distinct deviations from the overall trend. Compared to the developed world and its Asian neighbors, the Philippines has yet to fully harness the global trend of resurgence. The country’s Department of Tourism (DOT) recorded 5.4 million visitor arrivals from international air and sea ports all over the country from January to December 2023. Of the total number, over 5 million visitors were foreign nationals. Overseas Filipinos comprised 447,082 of the total arrivals.
We are well above the target set by the DOT (4.8 million arrivals) but still rebounding slower than other Asian destinations and international regions. We have yet to recover our peak arrival statistics of 2019 at 8.26 million.
Tourism spending has also increased. From January to Dec. 31, 2023, the Philippines generated an estimated international tourism revenue of PHP 482.54 billion, over twice the receipts it recorded in 2022.
The promising growth has nevertheless been an impetus for Waterfront. WPI’s consolidated gross revenue in 2023 is PHP 1.80 billion, a growth of 21.34% from PHP 1.49 billion in 2022. Gross Operating Profit (GOP) for the group rose from PHP 493.06 million in 2022 to PHP 659.95 million this year—an increase of 33.85% . After-tax net income for the year is PHP 38.56 million.
Our revenue and KPIs grew by double digits this year. WPI overall rooms revenue grew from PHP 338.81 million in 2022 to PHP 472.47 million in 2023—a 39.5% increase. Food and beverage (F&B) revenue rose from PHP 516.36 million in 2022 to PHP 673.54 million in 2023, reflecting a growth rate of 30.4%. The group’s other income increased from PHP 24.52 million to PHP 39.32 million—a growth of 60.3% .
WPI’s total rent and related income increased from PHP 606.75 million in 2022 to PHP 618.26 million in 2023—a growth of 1.9% .
The significant F&B growth was due to Meetings, Incentives, Conventions, and Exhibitions (MICE). Most of the demand came from local groups and institutions, specifically loyal or returning clients from government and non-governmental organizations (NGOs).
MICE revenue in 2023 reflects the release of pent-up demand due to the prior restriction of gatherings and conventions. It also highlights Waterfront’s expertise in handling MICE bookings. We remain competitive in the space because of our experience in handling clients, ensuring they are highly satisfied with our facilities, rates, and service.
Our rooms category has been progressing significantly every year but still hasn’t rebounded to pre-pandemic levels. The increase in revenue reflects the amount of inbound flights and tourism spending in the Philippines. Hence, with future tourism demand, it is set to improve.
Waterfront Cebu City Hotel and Casino (WCCHC) showed an impressive 22% increase in gross revenue. The property’s total gross revenue from all operations was PHP 964.67 million in 2022, which grew to PHP 1.18 billion in 2023.
The property’s rooms revenue increased by 38% from PHP 201.46 million in 2022 to PHP 277.83 in 2023. Rent and related income for WCCHC grew by 1% from PHP 414.31 million in 2022 to PHP 418.84 in 2023. F&B revenue increased by 38% from PHP 344.61 million in the previous year to PHP 475.1 million currently. Other revenue for the property increased by 107% from PHP 4.29 million in 2022 to PHP 8.89 million in 2023.
WCCHC’s gross operating profit (GOP) rose by 36% from PHP 396.57 the previous year to PHP 540.99 in 2023. Net income for the year is likewise up, from PHP 156.01 million in 2022 to PHP 283.45 in 2023, a growth of 82%. Total asset value grew by 9% from PHP 6.16 billion the previous year to PHP 6.69 billion currently.
Waterfront Insular Hotel Davao (WIHD) has had a year of satisfactory growth as well. Gross revenue advanced by 15% from PHP 217.93 million in 2022 to PHP 250.1 million in 2023. Rooms revenue from the hotel increased from PHP 84.1 million in 2022 to PHP 97.77 million in 2023—a growth of 16%. Rent and related income for WIHD saw a 21% increase to PHP 2.12 million in 2023 from PHP 1.76 million the previous year.
WIHD’s F&B operations generated PHP 143.49 million in 2023, a 14% increase from PHP 126.09 million in 2022. Other income for the property increased from PHP 5.97 million in 2022 to PHP 6.71 million in 2023, reflecting a growth rate of 12 %.
The property’s GOP increased by 20% from 2022’s PHP 39.79 million to PHP 41.58 million—a 4% growth. Net income for 2023 is PHP 4.9 million.
As its sister properties are delivering robust numbers, Waterfront Manila Hotel and Casino (WMCH) is continuing on its path to become the center of tourism, business, and entertainment in the Manila Bay area. Its steady construction progress, planned innovations, and new offerings will position it to be a top value and revenue generating property in the years to come. (See Acesite Chairman’s message for details.)
Throughout the year, each Waterfront property has tailored its marketing programs and campaigns to local culture and international trends, embracing a spirit of inclusiveness, innovation, and sustainability.
We have also ensured that the group stays ahead of the competition through continued improvements in efficiency and technology. We continue to leverage technology to expand and develop markets, entice new demographics, increase access to services, deliver utmost convenience to our guests, and create a seamless experience leading to better guest satisfaction.
With the notable improvements in KPIs and overall revenue, the Waterfront group is confident in pursuing even larger goals as it rides the global wave of travel and tourism optimism and resurgence.
Boosted by marketing and technological innovations, WPI will face this future of revival with zeal. This year is an important turning point. As proud as we are of our achievements, we are called to a greater purpose—to push our profitability, leadership, and competitive advantages to new heights, as we join the country in reaching its goals and rest of the world in attaining a full industry revival in 2024.
SERGIO R. ORTIZ-LUIS JR.
Waterfront Philippines, Inc, Chairman
Rising Resilience: Charting Our Journey of Growth and Renewal
Source: Acesite (Phils.) Hotel Corporation Chairman’s Message, Annual Report 2023
Dear Esteemed Stockholders,
The year 2023 marked a significant turning point in our business journey. This year, revenue and KPIs grew by double digits. On its emergence from the tail-end effects of the pandemic on tourism and hospitality, Waterfront Philippines, Inc. (WPI) has demonstrated its strategic excellence and mastery of steering its organization through challenging times, to emerge triumphant and renewed.
In 2023, international tourism has been well on track, estimated to return to pre-pandemic levels in 2024. According to the UNWTO World Tourism Barometer, 2023 wrapped up at 88% of pre-pandemic levels—that’s an estimated 1.3 billion international arrivals. This signals a robust return of international travel, unleashing the remaining pent-up consumer demand of past years. The figures have also been impacted by increased air connectivity and the strong recovery of Asian destinations. By the end of 2024, the industry will have reached full recovery levels.
However, arrivals to the Philippines have yet to catch up to the magnitude of the resurgence we have seen on the global front. According to the Department of Tourism (DOT), visitor arrivals to the Philippines are improving but not keeping pace with the global trend. From January to December 2023, the country recorded 5.4 million visitor arrivals from international air and sea ports all over the country. Out of the total number of visitors, over 5 million were foreign nationals. Overseas Filipinos made up 447,082 of the total.
While these figures indicate we were off to an excellent start in the beginning of the year, they also show that our rebound is slower than that of other destinations and regions. It is also much lower than pre-pandemic levels. According to Statista, tourist arrivals peaked at 8.26 million in 2019.
Nonetheless, the readjustment has spelled good news for Waterfront. Our group consolidated gross revenue for the year is PHP 1.80 billion, an increase of 21.34% from 2022’s PHP 1.49 billion. Gross Operating Profit (GOP) likewise increased. It grew from PHP 493.06 million the previous year to PHP 659.95 million this year—a rise of 33.85%. The group’s after-tax net income is PHP 38.56 million.
Breaking these figures, Rooms revenue increased by 39.5% from PHP 338.81 million in 2022 to PHP 472.47 million in 2023. Rent and related income rose by 1.9% from PHP 606.75 million the past year to PHP 618.26 million currently. Food and Beverage growth was strong, increasing from PHP 516.36 million in revenue in 2022 to PHP 673.54 million in 2023—a growth of 30.4%. Other income rose by 60.3% from PHP 24.52 million to PHP 39.32 million.
As we look forward to the re-opening of the Waterfront Manila Hotel and Casino, it is important to highlight the robust asset base that underpins our continued growth and stability. Despite ongoing construction and absence of operational revenue, our assets remain testament to our financial strength and strategic investments. In 2023, our total assets stood at a formidable 2.92B, slightly down from 3.01 billion in 2022. This marginal decrease reflects our prudent allocation of resources and strategic investments we’ve made in bringing our premier facility to life.
Nonetheless, the year comes with mixed news, as Waterfront Manila Hotel & Casino experienced some challenges in its reconstruction process. Unforeseen structural issues that emerged mid-stage of the construction posed significant setbacks, delaying the expected completion of the property. Nevertheless, we have remained committed to restoring and enhancing this iconic property. Numerous assessments and strategic revisions of our construction plans were set in motion. Initiating a phased reconstruction plan and reshuffling to a more capable and strategic project management team has brought steady progress.
The compartmentalized approach has re-phased the expected completion schedule, leading to more focused accomplishments. Our recent re-phasing plan outlines the first phase of reconstruction focusing on the renovation of public areas such as the lobby, several food and beverage outlets, and the casino area up to the third floor, targeted for completion by the end of 2024. Phase two, which includes guest amenities and facilities like guest rooms, is projected to be completed by the second quarter of 2025. Phase three will finalize the remaining hotel rooms and enhancements by the fourth quarter of 2025. This comprehensive reconstruction will modernize our facilities, bringing Waterfront Manila Hotel & Casino back to its operational state and re-establishing our property as a premier destination in the hospitality scene.
The entire reconstruction project is not merely designed to repair the damage caused by the 2018 fire. It is a full renewal of Waterfront Manila Hotel & Casino’s brand and experience, modernizing its facilities and upscaling the hotel to a brand new premier destination for both accommodation and gaming at the heart of Manila.
In line with this thrust, as of December 2023, we have achieved 36.21% completion based on the overall construction cost, with significant milestones including structural retrofitting, demolition for new builds, installation of aluminum composite panels, MEPF riser and distribution lines, procurement of critical mechanical equipment, and fit-out works for the Casino and back-of-house areas.
These developments ensure that our future building has sound structural foundations. They provide a strong base, a functional building envelope, and enable the framework for upcoming equipment installations and MEPF systems. They also kick started the preliminary fit-out work, providing a strong base for a successful project. All construction aspects completed in this initial phase are essential for the hotel’s subsequent phases of construction.
Being keen on the absolute safety and sustainability of our product, we hired structural consultants to conduct a thorough assessment of the building. The assessment revealed the necessity of substantial reinforcements and further retrofitting to guarantee the building’s long-term structural integrity and safety.
We gladly complied with the assessment. However, the decision implied a revision of our initial plans and additional costs.
The additional retrofitting projects would entail new and large-scale work, including the incorporating extensive brackets, supports, and framing to the facade, podium, and tower of the building. In addition to their impact on the project’s downstream activities, these added crucial safety measures had a cascading effect on the construction timeline as a whole.
The additional retrofitting required a temporary pause to several downstream works. These works included the installation of curtain walls and demolishing slabs for mechanical, electrical, plumbing, and fire protection (MEPF) penetrations.
The downstream activities are dependent on the completion of the structural work. Hence, they cannot proceed safely until the retrofitting is concluded.
Acesite Philippines Incorporated and Waterfront Manila Hotel & Casino consider safety an utmost priority. Thus, we have taken proactive measures to assess and solve these structural concerns. Through these efforts, we can develop a safer and more durable building for many years to come, averting risk to business and ensuring the best possible customer and guest experience.
Ultimately, this will reduce the risk of future issues and guarantee a project that is finished to the highest standards. Thus, it became a crucial undertaking before proceeding with the rest of the construction project.
Having these additional plans installed, we are confident in moving forward with our hotel’s extensive upgrade. While we have encountered challenges and delays in the effort to renew and improve our product, we believe all is for the best.
Each phase of reconstruction is meticulously planned to ensure the project is not only competed but done right. As the completion of Phase 1 approaches in late 2024, and with the entire project set to be finalized by the end of 2025, Waterfront Philippines Incorporated reaffirms its promise to rejuvenate this iconic establishment, making it a beacon of indulgence and entertainment in Manila once again.
Our efforts today will ensure that Waterfront Manila Hotel & Casino emerges stronger, safer, and ready to offer an unparalleled guest experience. This extensive upgrade is a testament to our commitment to resilience and renewal.
Thank you for your unwavering support and belief in our vision. Together, we will continue to rise and achieve greater heights.
ARTHUR M. LOPEZ
Acesite (Phils.) Hotel Corporation, Chairman
