ACESITE (Phils.) Hotel Corp. has suspended the reconstruction of the Waterfront Manila Pavilion Hotel, citing rising construction costs and weak tourism and gaming industry conditions which have undermined the project’s viability.
In a stock exchange filing on Thursday, the listed hotel operator said the rebuilding budget has risen to about P3.6 billion, well above the P1.5 billion insurance proceeds earmarked for reconstruction after the property was destroyed by fire in 2018.
“Each materials and labor have develop into drastically costlier with the spiraling rise in fuel costs, placing the budget way beyond the scope of the insurance collected,” the corporate said. “Furthermore, certain imperative structural and civil corrective measures and vital re-layout additions have made the general reconstruction budget rise further.”
The reconstruction began in 2019 and was scheduled under a phased development plan that targeted a soft opening this yr.
Acesite said it has decided to defer further investment because market conditions don’t support the project’s expected returns.
The corporate said foreign room demand stays insufficient to justify the timing of the investment, adding that the local tourism sector has yet to get well to levels that might support the hotel’s reopening.
Acesite also pointed to the absence of gaming-related tourism that previously helped drive demand in Manila’s hotel sector.
“Until such time that the industry indicators on visiting tourist arrivals could have stabilized, management elects to adopt a cautious stance towards the commitment of sizeable investments needed for the rebuilding of the hotel,” the corporate said.
The corporate noted that despite visa-free entry arrangements for Chinese tourists, inbound operators have been reluctant to herald the gaming customers that steadily visited the country when Philippine offshore gaming operators were still energetic.
Acesite said construction would resume only when hotel room rates, occupancy levels and gaming revenues show sufficient improvement to support debt servicing and investment returns.
The corporate expects reconstruction to restart in early 2028.
To organize for the eventual rebuilding, Acesite said it has allotted P764 million from retained earnings. It also plans to take care of the present structure through annual maintenance spending to maintain the property protected and in usable condition while reconstruction stays on hold.
The Waterfront Manila Pavilion Hotel was amongst Manila’s landmark hotel properties before it was gutted by fire in March 2018.
Shares of Acesite were unchanged at P1.51 each on the local bourse. — Juliana Chloe A. Gonzales