A motorcycle journey across Bohol highlights a fundamental principle of hospitality development: the right concept should be driven by the market, the location and the target clientele — not simply by the availability of land.
By Marc-Olivier Levy – OPKO Finance
I recently had the opportunity to travel across Bohol by motorcycle, from Panglao through Loboc and the island’s interior, before continuing towards Candijay, Guindulman and Anda.
Beyond the pleasure of rediscovering Bohol, the journey provided an interesting opportunity to observe how dramatically tourism environments can change within a relatively small geographical area — and how hospitality concepts need to change with them.
For investors and developers, this raises an important question:
Should we start with a piece of land and decide what to build on it, or should we first understand the market and then determine what the site can commercially support?
In my view, successful hospitality development starts with the second approach.
Panglao: When Architecture Creates Commercial Value
We began our journey by staying in a villa developed by one of my clients in Panglao.
Beyond the quality of the accommodation itself, what was particularly interesting was the efficient use of the available land.
The architectural concept provided comfortable living spaces, privacy and a private swimming pool while maintaining an optimized footprint.
This is particularly important in locations where land represents a significant part of the overall investment.
Every additional square metre of land and construction has a cost. But every square metre does not necessarily generate the same value for the guest.
Good hospitality architecture therefore goes beyond aesthetics.
The layout of a villa, the relationship between indoor and outdoor spaces, privacy, landscaping and the presence of a private pool can materially influence the guest experience and, ultimately, the property’s ability to achieve a stronger Average Daily Rate (ADR) and occupancy.
The objective is therefore not simply to build more.
It is to determine which elements of the development generate sufficient additional guest value to justify their CAPEX.
Move Away from Panglao, and the Hospitality Equation Changes
As we travelled through Bohol’s interior and towards the more natural areas of the island, the tourism environment changed considerably.
The landscape became part of the hospitality experience itself.
In these locations, simply replicating a Panglao-style private villa with an individual swimming pool may not necessarily be the right investment decision.
The target guest may be looking for something different: nature, tranquillity, local experiences, landscapes, activities or simply a comfortable base from which to discover the region.
In such an environment, investment may be better allocated towards outdoor spaces, landscaping, common facilities, activities or a strong food and beverage experience.
This naturally leads to a different CAPEX structure.
But lower investment per accommodation unit does not automatically mean lower profitability.
A simpler hospitality concept, when correctly positioned and operated, can potentially generate attractive returns if it responds precisely to what its target market values.
East Bohol: One Island, Different Hospitality Markets
Continuing towards Candijay, Guindulman and Anda reinforces this observation.
Rice terraces, mountains, less-developed coastline and smaller communities create tourism environments very different from Panglao.
The reasons for travelling there may also be different.
This can affect the target clientele, length of stay, seasonality, activities, acceptable room rates and expectations regarding accommodation.
The implication for investors is important:
A concept that works extremely well in one tourism destination should not automatically be replicated in another.
Private pools may create considerable value in one market.
In another, guests may place greater value on the surrounding nature, a restaurant with a strong identity, activities or simply well-designed accommodation integrated into the landscape.
The question is not which concept is objectively better.
The question is which concept creates the strongest relationship between customer expectations, investment cost and commercial performance in that specific location.
Commercial Diagnosis Before Architectural Design
This is why I believe hospitality investment should begin with a commercial diagnostic.
When investors discover an attractive piece of land in the Philippines, the natural reaction is often:
“We could build a resort or some villas here.”
Before answering what should be built, however, several other questions should come first:
Who is the target customer?
Why would that customer choose this location?
What ADR can realistically be achieved?
What occupancy can reasonably be expected?
How seasonal is demand?
Who are the relevant competitors and what are they offering?
Which facilities and experiences actually influence the customer’s purchasing decision?
And ultimately:
How much investment can the commercial potential of the location support?
A proper benchmark of existing hospitality supply, pricing, positioning and observable occupancy indicators provides the basis for answering these questions.
Only then should the development concept be defined.
From Market Opportunity to Investment Decision
Once the market and site have been assessed, the hospitality concept can be developed accordingly: number and mix of accommodation units, level of comfort, private or common pools, F&B, common areas, supporting facilities and potential development phasing.
The next step is to translate that concept into an investment model.
Indicative CAPEX must be compared with realistic assumptions for ADR, occupancy, revenue, operating costs, EBITDA, cash flow and investment returns.
Sensitivity analysis is equally important.
What happens if construction costs increase?
What happens if ADR is 10% below expectations?
What happens if occupancy takes longer to build?
And perhaps most importantly, there must be circumstances in which the conclusion is simply:
Do not develop.
A beautiful site does not automatically represent a viable hospitality investment.
A Different Way to Think About Hospitality Development
Our journey across Bohol illustrated how much hospitality opportunities can change within the same island.
Panglao, inland Bohol and the eastern coast may all offer tourism potential, but they do not necessarily require the same product, the same investment per unit or the same operating model.
For investors, the development sequence should therefore be:
MARKET → CUSTOMER → SITE → CONCEPT → CAPEX → RETURNS
rather than:
LAND → ARCHITECTURE → CONSTRUCTION → FIND THE CUSTOMERS
Architecture remains essential.
But architecture should translate a commercially validated hospitality concept into the best possible guest experience within the constraints of the site and investment budget.
Sometimes, travelling across an island by motorcycle provides a useful reminder of a fundamental investment principle:
The objective is not to build the most impressive hospitality project. It is to develop the right product, for the right customer, in the right location, with the right level of investment.
About the author
Marc-Olivier Levy is Managing Director and Founder of OPKO Finance, an Outsourcing, Accounting and Advisory Services company, advising businesses and investors in Hong Kong, Singapore, China mainland and the Philippines. OPKO’s Hospitality Investment & Development Advisory approach combines market and commercial diagnostics, site assessment, hospitality concept development and preliminary investment feasibility to support hospitality investment decisions.