Report sees mixed outlook for BPOs, tourism

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A survey among property developers and private firms expect the outsourcing sector to grow stronger after the COVID-19 lockdown, but hotels and similar establishments will likely remain weak over the next year or longer as people hesitate to travel.

Metro Manila (CNN Philippines, April 14) — About half of private businesses in the country expect activity to bounce back in two to three months after the COVID-19 lockdown is lifted, but tourism-related firms may have to wait up to two years to recover, a recent survey showed.

A poll covering 145 developers, landlords, and companies conducted by real estate brokerage firm KMC Savills revealed a very uncertain future for enterprises in the hospitality sector, which have been hit the hardest by the global pandemic.

"Their uncertainty is driven by fears of 'will the country reopen to tourism? Is that in the next month, two or three months?' Some of the respondents we talked to don't think we'll come back to where we were a few months ago until potentially two years," KMC Savills Managing Director Michael McCullough told CNN Philippines.

The enhanced community quarantine hoisted over Luzon froze all foreign travel until further notice, as well as domestic trips unless deemed essential.

READ: Philippines suspends visa issuance as worldwide COVID-19 cases soar – DFA

Also affected are big events and conventions, which may be canceled for a longer period as mass gatherings are prohibited to prevent the spread of the disease.

This will affect rentals of hotels and event venues, to name a few, with companies resorting to virtual meetings for now.

"I think they are really, really shocked with everything that's going on. I don't personally think it will be as bad as they are expecting," McCullough added, noting that the next three to six months would definitely be a "rough ride" for the industry.

On the flipside, 80 percent of businesses interviewed said call centers and other firms under the business process outsourcing sector will enjoy a boost during and after the enhanced community quarantine.

Greater demand for digital services, artificial intelligence, online food deliveries, and technical support would lift BPO operations, the property consultancy firm said, with some service providers expanding even during the quarantine period.

McCullough said the Philippines remains a preferred location for outsourced services given its "highly-talented workforce" with relatively low salaries compared to other countries.

The outlook is quite balanced for the office, industrial and logistics, residential, and retail segments, the survey showed, as 30-50 percent of respondents said they were optimistic about a recovery in the next three months.

Home sales and leases should benefit from lower interest rates, while the retail sector would enjoy higher demand for laptops and gadgets as more employees, executives and entrepreneurs work from home.

McCullough said the government's decision to freeze rental fee collections during the quarantine is unlikely to cause huge disruptions, but may cause temporary cash flow issues. On the other hand, lower interest rates would drive more people to buy houses or condominium units.

The logistics and manufacturing sectors, meanwhile, would also see an easy rebound as their production and inventories normalize after lockdowns are lifted.

KMC said most sectors expect to resume normal operations by June, adding that additional government spending and interventions made by te central bank should help offset the slowdown in economic activity due to the novel coronavirus outbreak.

Meanwhile, warehouses have been revealed as an enticing segment as firms seek to beef up their inventories following recent supply chain shocks as they likely sold more products compared to what they produced over the past month.

CNN Philippines' Lois Calderon contributed to this story.