By IRMA ISIP

The Philippines has become an expensive destination according to travel agents due to the strong peso.

This, they said, has led to an average 40 percent increase in hotel and air rates.

As a consequence, tourist arrivals can grow by only five percent this year, half the ten percent target set by the Department of Tourism.

Philippine Travel Agencies Association (PTAA) president Jose Clemente III said that the downgrade by the Federal Aviation Authority in the safety rating of Philippine airports will discourage travelers.

Clemente said the DOT’s ambition to increase the number of tourists by 10 percent to 3.4 million from 3.08 million in 2007 "would be harder to achieve."

Clemente added that "there won’t be as much increase in revenues." because of the weaker dollar, where airline and hotel rates are pegged.

"It is hard to sell inbound" traffic because of negative perception we are getting in the international travel community, namely the downgrade by the Federal Aviation Authority of our airport and the pullout beginning March 15 of German carrier Lufthansa.

Clemente said hotel rates in the Philippines are now approaching the $200-mark per day rate from just $120 to $130 a year ago. Some hotels are now beginning to peg their rates in pesos to protect themselves from the currency fluctuations. Clemente added that similarly, airfares internationally are up 30 to 40 percent. Although some increases should be felt as more travelers would be encouraged to travel at less the value of the dollar they would normally spend abroad, Clemente said this does not mean there would be a rush of tourists in the Philippines.

"A 5 percent increase in arrivals is a more realistic target. We need to temper those expectations," Clemente said.

Revenue-wise, Clemente said, since the DOT pegged last year’ s figure at 47 to 50 to the dollar, there is not much increase with the peso now at 40 to the dollar.

"Rates this year makes it harder for us to sell some of our destinations. Whereas before we could compete with Singapore, Malaysia and Hong Kong on rates, we now have become an expensive destination," he added.

Meanwhile, Clemente urged government to enact as soon as possible the law creating the Civil Aviation Authority as an immediate step towards lifting of the FTAA downgrade.

"The longer the protracted the issue becomes. The worst it would be.

It’s a government issue more than anything. Govnment was slow in reacting to the FAA warnings," Clemente said.

Clemente said the government should resolve it ideally before summer sets in when US travelers to the country peak.. However, realistically, he hopes the issue would be resolved before the end of the year.

The impact though in the tour operators business of the FAA downgrade remains negligible as balikbayans and US travelers remain confident on the safety of the flag carrier, Philippine Airlines.

He said wholesalers in the US market accept that but the FAA downgrade could affect PAL’s bottomline over the long term, especially that the airline is very much limited

It also could impact on the airline’s plan to expand to other US cities like Chicago.