Acesite suspends Manila Pavilion hotel rebuild as costs swell to P3.6B

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 that 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.

“Both materials and labor have become drastically more expensive with the spiraling rise in fuel costs, placing the budget way beyond the scope of the insurance collected,” the company said. “Moreover, certain imperative structural and civil corrective measures and important re-layout additions have made the overall reconstruction budget rise further.”

The reconstruction began in 2019 and was scheduled under a phased development plan that targeted a soft opening this year.

Acesite said it has decided to defer further investment because market conditions do not support the project’s expected returns.

The company said foreign room demand remains insufficient to justify the timing of the investment, adding that the local tourism sector has yet to recover to levels that would 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 will have stabilized, management elects to adopt a cautious stance towards the commitment of sizeable investments needed for the rebuilding of the hotel,” the company said.

The company noted that despite visa-free entry arrangements for Chinese tourists, inbound operators have been reluctant to bring in the gaming customers that frequently visited the country when Philippine offshore gaming operators were still active.

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 company expects reconstruction to restart in early 2028.

To prepare for the eventual rebuilding, Acesite said it has allotted P764 million from retained earnings. It also plans to maintain the existing structure through annual maintenance spending to keep the property safe and in usable condition while reconstruction remains on hold.

The Waterfront Manila Pavilion Hotel was among 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