Locals in the Philippine capital of Manila are becoming more and more open to spending on luxurious goods and services.

They go to expensive foreign hotels and buy high-priced fruits. The growing number of middle-class earners support the consumption boom in a way, but another significant factor may be the typical mindset of locals about spending.

A large, white building being constructed near Manila Bay is the Conrad Manila, slated to open this year. The first Conrad-brand hotel in the country, under Hilton Worldwide Holdings of the U.S., has about 350 rooms in the eight-story building that overlooks the bay. Guests can enjoy sunset over Manila Bay from rooms with a view of the sea.

The SM group, the country’s leading retailer, is the developer of the hotel, which also accommodates a high-end shopping area. The company aims to offer world-class facilities, said Harley Sy, president of SM Investments.

Along Manila Bay there are also several government-led projects underway to construct large casino complexes. These entertainment centers aim to attract not only foreign tourists but also middle-class citizens.

The Nobu Hotel brand, run by Japanese chef Nobuyuki Matsuhisa and his business partner and Hollywood actor Robert De Niro, launched its first location in the Philippines last year. A room at the Nobu Hotel Manila costs as much as several hundred dollars per night, but many locals stay at the hotel.

Room to spend

Enjoyment of small luxuries has now extended to Japanese food as well. Japan’s ramen chain Ippudo launched its first outlet in the Philippines in 2014. A bowl of ramen noodles typically costs around $8 here — priced even a little higher than in Japan. Red apples from Japan’s Yamagata Prefecture, available at high-end supermarkets in Manila, are priced at $2 each. These prices are surely high for the southeast Asian country, where people can enjoy reasonable meals for just several dollars. But locals are now willing to spend more to enjoy Japanese food.

Per-capita gross domestic product in the Philippines is projected to reach $3,000 this year. With the growing number of middle-class citizens, the country is in the midst of the stage in which consumption can grow significantly. However, the current jump by consumers to luxurious items may not reflect the real life of locals.

A representative from a Japanese retailer points out that the number of middle-class Filipinos could be less than estimated, according to the indication of sales figures generally.

At the same time, it would be too early to say this is a one-time bubble of consumption. Filipinos typically prefer spending rather than saving, and they are basically big spenders.
Expansion of the service industry in the country began allowing young Filipinos to earn more. At the same time, they have become familiar with quality goods and services overseas through the Internet. Foreign businesses looking to capture the appetite of Filipinos should not underestimate the potential of their spending power.
Source: asia.nikkei.com
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