By Abigail Marie P. Yraola, Deputy Research Head
THE TOURISM industry’s contribution to the Philippine economy fell to its lowest level in three years in 2025, weighed down by weaker tourism spending by foreign visitors, according to data from the statistics agency.
Preliminary data from the Philippine Statistics Authority (PSA) showed tourism’s direct gross value added (TDGVA) accounted for 8.1% of the gross domestic product (GDP) in 2025, down from 8.7% of GDP in 2024.
This was tourism’s lowest contribution to the national output in at least three years or since 2022 when it contributed 6.3% to the country’s GDP.
The country’s TDGVA was estimated at P2.27 trillion last year, down by 1.4% from the revised P2.3 trillion in 2024.
The TDGVA measures the value generated from various tourism-related activities and is based on the results of the Philippine Tourism Satellite Accounts report, which the PSA compiles from the Department of Tourism.
Tourism Congress of the Philippines President James M. Montenegro said the drop reflected external pressures, structural constraints and a weaker recovery in international tourism relative to the rest of the Philippine economy.
“While domestic tourism remained resilient, inbound tourism weakened significantly in 2025, which pulled down overall tourism value creation,” Mr. Montenegro said in a Viber message.
He said a major factor was the slower-than-expected recovery of inbound tourism from key Asian markets such as China and India even after the Philippine government eased visa requirement for Chinese and Indian nationals.
Mr. Montenegro said another challenge is the Philippine tourism industry’s ability to remain competitive in attracting foreign tourists. He said the Philippines should prioritize making key destinations more accessible to major regional markets.
“Many neighboring countries accelerated aggressive tourism recovery programs, including visa-free access, expanded airline incentives, stronger destination marketing, and airport infrastructure improvements. The Philippines continued to face challenges in air connectivity, airport capacity, inter-island transport efficiency, and tourist friction points,” Mr. Montenegro said.
He said that while the Philippines’ tourism sector has one of the highest contributions to GDP in Southeast Asia, it continues to lag behind regional peers in attracting tourists.
In 2025, the Philippines attracted 6.48 million international tourist arrivals, compared with Malaysia’s 42 million, Thailand’s 33 million and Vietnam’s 19 million.
PSA data showed shopping accounted for 24.7% of the total TDGVA with P560.3 billion, followed by various tourism services, which include the health and wellness sector (22.6% share or P512.94 billion) and accommodation services for visitors (17.4% share or P394.14 billion).
Mr. Montenegro said the decline in the TDGVA was mainly driven by “softer inbound tourism receipts, weaker discretionary spending among travelers, and operational pressures across the industry.”
Domestic tourism expenditure, which includes resident visitors’ spending within the country on a domestic trip or as part of an international trip, rose by 3% to P3.26 trillion last year.
Outbound tourism spending, which refers to money spent by Filipinos traveling abroad, reached P357.93 billion last year, 3.5% higher than the P345.68 billion posted in 2024.
“This indicates that while travel demand remains strong, a growing portion of tourism spending is leaving the country instead of circulating within the domestic tourism economy,” Mr. Montenegro said.
Inbound tourism expenditure amounted to P698.46 billion in 2025, falling by 6.4% from P745.99 billion in 2024.
Mr. Montenegro said the decline in inbound tourism expenditure “is significant because foreign tourists typically spend more per capita and generate higher value across accommodations, food and beverage, transportation, retail, and recreation.”
“A reduction in high-yield foreign travelers directly impacts tourism value added,” he added.
Tourism-related spending by foreign visitors in the accommodation services accounted for 28% of the total with P195.66 billion. This was followed by transport services (25.1% share or P175.1 billion) and food and beverage serving services (17.8% share or P124.43 billion).
Workers employed by the industry totaled 7.7 million last year, 2.5% higher than the 7.51 million a year earlier. Tourism accounted for 15.7% of the total workforce in the country in 2025.
Accommodation and food and beverage made up the bulk of the tourism-related jobs, accounting for 38% share with 2.93 million workers. The health and wellness sector employed 1.95 million workers (25.4% share) while retail trade on tourism-characteristic goods employed 1.67 million workers (21.7% share).
Metropolitan Bank & Trust Co. Chief Economist Nicholas Antonio T. Mapa expects tourism to remain a steady source of economic output and employment in 2026.
“However, there may be a need to temper expectations given the likely challenging outlook due to the global increase in airfare costs due to the ongoing conflict in the Middle East,” he said in an e-mail.
For his part, Mr. Montenegro said his outlook for the tourism industry is “cautiously optimistic,” with domestic tourism expected to remain stable.
He said the industry still has significant growth potential, particularly in international tourism.
“To expand tourism’s contribution to national output, the focus should shift toward long-term structural improvements rather than short-term visitor growth alone. Key priorities include improving airport efficiency, expanding direct international and regional flights, strengthening inter-island connectivity, modernizing tourism infrastructure, and reducing travel friction across destinations,” Mr. Montenegro said.
The Tourism department is aiming for 6.7 million visitors this year.
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