The Exotic Manila Hotel keeps a watching brief on city’s fortunes
- Greg Mills
- 16 Mar 2016 02:06 (South Africa)
The Manila Hotel has seen the Philippines’ capital shift through many periods of upheaval and change and has seen personalities from General Douglas MacArthur to Michael Jackson and John F Kennedy walk its corridors. After a slow start, the economy has picked up in the most densely populated city in the world. By GREG MILLS.
The Manila Hotel was built in 1909 to rival Malacañang Palace, the official home of the president of the Philippines. It served as the residence of another generalissimo, Douglas MacArthur, when he was deployed by Washington to serve as Field Marshal and military advisor to the “Philippine Commonwealth” from 1935 to 1941. His tenure was however cut short by the Japanese invasion and conquest of the 7,100 island grouping. During the occupation the hotel was used as a Japanese headquarters.
Today it’s decidedly upmarket. The MacArthur Suite tops out at $3,300 a night, the marble and mahogany lobby punctuated with Doric columns and adorned with five brass, crystal and seashell chandeliers. Photos of famous entertainers line the adjoining Tap Room, including Liza Minelli, Michael Jackson and Sammy Davis Junior, all of whom stayed as guests along with Ernest Hemingway, John Wayne and John F Kennedy.
Photo: The Manila hotel lobby. (Greg Mills)
But the glitz and the glamour mask a tough history. Three hundred years of Spanish colonialism was ended with the US victory over the Spanish in 1898. Manila was supposed to be a planned town, though anyone today trying to survive its traffic might dispute that. William Taft, the Philippines’ first civilian Governor-General, hired Daniel Hudson Burnham, who had built Union Station and Washington’s Postal Square Building, as his city planner, and William E Parsons, a New York architect, to design the Hotel, its top floor intended as a viewing deck to watch the US Navy at play.
With a chief of staff none other than one Lieutenant-Colonel Dwight Eisenhower, MacArthur was charged with building the Philippine army as a regional surrogate; Washington was concerned (correctly, as it turned out) by the rise of Japanese militarism.
The US military finally left its Philippines bases in 1992. That is not the only major change in the last quarter of a century. Long the sick man of Asia, especially under the 22-year dictatorship of Fernando Marcos and the shoe-aholic Imelda, the economy barely scraped by. Since then, with regular if dynastic and occasionally eccentric political leadership, the economy has picked up, slowly at first and, since 2005, with some gusto, at almost 6 percent average growth. Two-thirds of this increase is, according to the Asian Development Bank, headquartered on the prestigious Roxas Boulevard, driven by domestic demand among the 100-million strong population. This has increased as per capita income tipped over the $3,000 level in 2012.
Photo: A handout picture released by the Malacanang Photo Bureau shows Filipino President Benigno Aquino III (R) and Vice-president Jejomar Binay (L) gesturing during the graduation rites of the elite Philippine Military Academy (PMA), in the northern resort city of Baguio, Philippines, 13 March 2016. President Aquino III commissioned the new graduates of the academy as second lieutenants and ensigns of the Armed Forces of the Philippines (AFP). The Philippine Military Academy (PMA) is the training school for future officers of the Armed Forces of the Philippines. EPA/ROBERT VINAS/MALACANANG
There have been exceptionally sophisticated domestic companies and entrepreneurs to take advantage and feed this phenomenon. In March 2016 the front page of The Philippine Star ranked the country’s richest men, giving prominence to the 11 who made it on to the Forbes annual list of 1,810 billionaires. Mall and real estate magnate Henry Sy Senior ranked first among his countrymen, and 71st overall, with a net fortune of $12.9-billion. In second place was 86-year-old John Gokongwei with a net worth of $5-billion, and in fifth the 63-year-old Jollibee fast foods founder Tony Tan Caktiong.
Gokongwei’s fortune has been made from the Universal Robina Corporation, a food, airline and real estate conglomerate. Changing consumer trends are driving this business. With increased incomes comes eating better, not just more, where branding and quality of ingredients becomes more important.
His son, Lance, now president of the company, notes that “convenience stores would not have survived in the Philippines 10 years ago. Now they are spouting everywhere. Ten years ago sari-saris (a Tagalog word for ‘variety’) were the biggest outlets. As more and more people join the middle class, the credit these mom-and-pop stores provided is less important, and branding and convenience become more so”.
The bank estimates that the service sector is responsible for creating between 60 and 70 percent of all new jobs in the Philippines, with as many as 3-million in the IT sector alone.
In this regard, smiles Lance Gokonwei, “Millennials are all the same. They all want the same experience: a smartphone, low-cost travel, and eating out.” Engaging with this sector, in which life revolves around likes and dislikes at the click of a Facebook button, means “moving media to Facebook” while avoiding hard selling, and rather telling stories to encourage the customer.
This also demands developing uniquely Filipino products. “Not everyone can afford a Starbucks every day,” he shrugs, “but they can afford a ready-to-go ‘Great Taste White’ [coffee mix] for seven pesos, whereas five years ago they would have bought an instant coffee at two pesos.” Now ready-to-go coffees comprise 80 percent of the market.
His company is not alone. Manila’s streets are a billboard battleground for fast food brands.
Jollibee is a market leader with more than 750 stores, encompassing a variety of other food outlets, from Chowking to Burger King. Its success likewise reflects changes in Filipino spending patterns. National spending on food is very high as a proportion of household income, at 45 percent. A quarter of this amount is spent on ready-made food, and of that, 27 percent on formal restaurant chains, a lot less than in the West, but double that, for example, of Indonesia.
The volume is vast. More than half a million rolls a day are sold out of McDonalds in Manila alone, to take another “casual dining” — as Filipinos prefer to describe it — example.
Increasing consumerism is also driven by a change of employment. The Philippines economy has been revolutionised in this regard by the drive to Business Process Outsourcing, with more than 1.5-million working in an industry worth $25-billion to the economy, and which has enjoyed constant double-digit growth.
Today, two-thirds of GDP is driven by consumer spending. This is fuelled, too, by continued remittances. More than 11-million Filipinos work in the diaspora, sending home $28bn annually, or 9 percent of GDP. The Philippines is principally an exporter in people and services, not goods, though there are opportunities through building regional brands.
Photos: Food outlets are everywhere. (Greg Mills)
There are challenges. One is the low capacity within government, which artificially keeps state spending lower than budgeted. High logistical and infrastructure costs add another premium, estimated to be perhaps as much as eight percent of GDP in lost productivity and wasted energy. The experience of Icel, a waitress at a new Korean restaurant in the $1.2-billion Solaire casino resort, is not uncommon, with a 2.5-hour journey each way to work.
With a weak mass rapid transport system, the roads are paralysed with 2.2-million buses, cars, and antiquated if vivid and cheap ($0.25c per 10km) 50,000 jeepneys. Manila is the most densely populated area in the world, with 42,857 people per square kilometre, while its wider metro accommodates an estimated 12-million people.
Photo: Greg Mills
A further, related challenge is in lifting the quarter of Filipinos out of poverty. This is mainly a rural issue. Agriculture employs a third of the population, yet comprises just 10 percent of GDP. As Sona Shrestha, the country economist of the Asian Development Bank, notes, “it is difficult to address poverty without addressing this sector — both by improving income, and by getting people into different employment.”
It’s a tough haul matching skills with jobs. Icel, the waitress, is a history graduate. While unemployment is just 5.6 percent, underemployment is at 18 percent. A graduate chemical engineer, for example, can expect to earn just $400 per month.
Still, no one expects any, in the words of the Asian Development Bank, “mega disruption” politically or economically.
Outside the Manila Hotel’s grand entrance is a tablet placed by Jacob Dickinson, the US Secretary of War, in September 1910. Where the US Navy once cruised into Manila Bay, cruise ships now ply their trade. Tourism, too, is a growth sector, up from under 2-million arrivals in 2000 to more than 5-million in 2015.
And the wheel slowly turns. Now Jollibee is breaking into the US consumer market with 26 stores already opened, nearly 120 years after the US took over their country.
Development, it seems, is a dish best served fast. DM
Dr Mills, who heads the Johannesburg-based Brenthurst Foundation, has been researching in the Philippines.
Main photo: The Manila Hotel by Analie Astorga-Motilla.
Reader notice: Our comments service provider, Civil Comments, has stopped operating and will terminate services on 20th Dec 2017. As a result, we will be searching for another platform for our readers. We aim to have this done with the launch of our new site in early 2018 and apologise for the inconvenience.