Hotel developers in the Philippines may concentrate on midscale projects and consider reflagging existing assets rather than building new properties as construction costs climb, according to CBRE Philippines.

"Midscale is the way to go, and that is where most Filipino travelers actually stay. The logical route [is to] re-flag an existing asset, not build a new one," CBRE said in its report for the second quarter. Midscale hotels sit between economy and upscale properties in price and service level, while reflagging means shifting an existing property to a new brand, typically through renovation and rebranding rather than ground-up construction.

The property consultancy noted that the Philippines remains undersupplied in hotel rooms compared with Thailand. "The country is under-hoteled. [There are] less than 50,000 rooms for a population of 115 million versus [approximately] 150,000 rooms for Thailand with a population of 72 million," CBRE said.

On the pipeline side, CBRE is tracking 3,297 upcoming serviced-residence keys, with Makati accounting for 1,660, other parts of Metro Manila for 1,143, and Cebu for 430. Upcoming serviced-residence projects include Lanson Place with 389 keys, Novotel Suites with 310 keys, Wyndham with 100 keys, and Dusit Thani Residences with 85 keys.

CBRE is also monitoring hospitality developments in Mactan, Cebu, including 200 hotel rooms and 900 branded residences, as well as PARKROYAL with 169 keys, dusitD2 with 160 keys, and JW Marriott with 80 keys.

Meanwhile, construction costs are expected to continue rising through the second half of the year, according to Hearn & Hearn Consulting.

"Looking ahead, construction costs are expected to remain on an upward trend through the second half of 2026, particularly for projects with significant exposure to imported materials and petroleum-based products," Hearn & Hearn said in its second-quarter construction cost data report.

The consultancy also reported higher prices across key construction materials. "Construction-specific inflation accelerated, with higher prices recorded across key materials including structural steel, concrete products, electrical works, paints, and fuels," Hearn & Hearn added.

The National Capital Region's P85 increase in the daily minimum wage in July could also affect labor-intensive construction activities.

Separately, Colliers Philippines expects 2,486 hotel rooms to be completed in Metro Manila this year, up 236% from the 739 rooms delivered in 2025. For the 2026-to-2029 period, annual hotel completions in Metro Manila are expected to average 1,880 rooms.

The first half of 2026 saw 846 rooms completed, including 300 rooms at Wyndham Garden Manila Bay, 236 at W9 Hotel Manila, 182 at Somerset Valero Makati, and 128 at Alino Hotel, according to Colliers.

Foreign hotel brands are expected to account for 48% of incoming supply between 2026 and 2029, with Makati City accounting for 14% of the pipeline.

Hotels scheduled for completion through 2029 include Hotel 101 Libis-Bridgetowne with 745 rooms, Westside City Resorts World with 460 rooms, Canopy by Hilton with 400 rooms, Ascott DD Meridian Park with 350 rooms, Fili Hotel Bridgetowne with 300 rooms, and Mandarin Oriental with 275 rooms. The delivery of that tracked pipeline will serve as a measure of whether the country's room shortfall relative to Thailand narrows in the coming years.

— Juliana Chloe A. Gonzales