Soaring pump prices now reshaping Philippine travel, retail demand

By Alexandria Grace C. Magno, Reporter

THE ATMOSPHERE feels more cautious than carefree under the midday heat inside Dreams & Destination Travel Services, a small travel agency in Cavite province south of Manila.

Clients no longer walk in asking about dream vacations on impulse. Instead, they quietly compare airfare prices on their smartphones while agents behind the counter repeatedly refresh airline websites, watching fuel surcharges rise almost in real time.

What used to be spontaneous travel planning has become a carefully calculated exercise in budgeting, timing and compromise.

“Some clients are booking earlier to secure lower fares, while others are delaying decisions or requesting rebooking to more affordable travel dates and destinations,” Maria Carmela Aldana, who owns and manages Dreams & Destination, told BusinessWorld.

The scene unfolding inside the travel firm reflects how the US-Israel war on Iran has begun to ripple through the Philippine economy. Beyond financial markets and news headlines, rising oil prices are feeding into transportation costs, inflation and weaker consumer spending, forcing businesses and households to rethink how they spend money.

“We’ve noticed an immediate impact on airfare pricing, with airlines adjusting fares and fuel surcharges more frequently,” Ms. Aldana said in an e-mailed reply to questions. “Because of this, we now monitor rates more closely, update quotations faster and advise clients to confirm bookings earlier when possible.”

For industries heavily exposed to fuel and foreign exchange movements, the impact has been swift.

“Oil-dependent and foreign exchange-sensitive sectors, particularly those with logistics heavily reliant on oil and dollar-denominated debt, are the most affected,” Shawn Ray R. Atienza, a stock research analyst at AP Securities, Inc., said in a Viber message.

He said airlines, property developers and consumer discretionary firms face weaker earnings as freight and fuel expenses rise while consumers pull back spending.

Marky Carunungan, an investment analyst at F. Yap Securities, said the Middle East war’s effects are reaching the Philippine market mainly through higher oil prices, inflation and peso volatility rather than direct geopolitical exposure.

“Higher oil prices are immediately pressuring transport and other fuel-intensive sectors, which could weigh on names like Cebu Air, Inc. and PAL Holdings, Inc., while logistics and manufacturing players also face margin compression,” he said via Viber.

For travel agencies, consumer behavior has already shifted.

Operating since 2012, Ms. Aldana’s company offers flight bookings, tour packages, hotel reservations, visa assistance and customized travel arrangements for both leisure and corporate clients. She said demand has not collapsed, but travelers are becoming increasingly price sensitive.

“Flights are the most sensitive because airfare responds quickly to fuel costs,” she said. “Hotel bookings have remained relatively stable so far, while tour packages are affected mainly when transportation and transfers are included.”

To adapt, the agency has begun focusing on early booking promotions, flexible payment terms and shorter, lower-cost itineraries. More clients are choosing “land-only” packages to reduce airfare expenses.

At the same time, domestic tourism demand has weakened as some Filipinos increasingly see overseas destinations as offering better value for money.

“Countries such as Vietnam, Thailand and Hong Kong remain in demand because of competitive airfare, attractive packages and a stronger overall travel experience compared with some local options,” Ms. Aldana said.

The shift highlights how inflation is changing not only what Filipinos buy, but how they evaluate spending decisions altogether.

MALL TRAFFIC
Still, some sectors continue to show resilience despite uncertainty.

Property consultancy executives said malls remain crowded, partly because they function as more than shopping destinations. For many Filipinos, they also serve as affordable spaces for comfort, leisure and escape from the heat.

Leechiu Property Consultants, Inc. Chief Executive Officer David Leechiu said malls could remain relatively resilient even during economic slowdowns because consumers continue to visit them for amenities such as free air-conditioning.

SM Supermalls President Steven T. Tan said mall traffic and sales in the first quarter exceeded expectations.

“Foot traffic is okay,” he told BusinessWorld in an interview. “We don’t see any slowdown. As a matter of fact, sales grew in the first quarter, which is good. It is more than what we expected.”

Robinsons Land Corp. Executive Vice-President Faraday Go likewise said mall traffic in the first quarter rose from a year earlier.

But while crowds remain steady, spending patterns inside malls are quietly evolving.

“People will still be in the mall, but they will not be spending the same way,” Mr. Leechiu said.

That shift is becoming visible among younger consumers trying to stretch increasingly limited budgets.

On most afternoons, Adamson University student John Ruiz Navarro heads to the nearest mall after classes. Sometimes, he window-shops. Other times, he simply sits inside to cool down from the heat.

“Most of the time, I spend my free time at the mall,” he said via Facebook Messenger. “Sometimes, when I’m bored, I just walk around or go window shopping.”

But even simple routines have become more expensive.

Mr. Navarro relies on a monthly allowance of P5,000 to cover transportation, meals and occasional leisure spending. Rising transport fares and food prices have steadily reduced what he can afford daily.

“My allowance is fixed, so my budget is really affected,” he said.

Bus fares now range from P30 to P35 per trip, while van fares can go as high as P45. Over time, his food budget has fallen from roughly P200 a day to P150, and sometimes as low as P50 depending on how much money remains.

Before, a fastfood meal often included small extras.

“If I ordered a chicken meal, I would also get a sundae on the side,” he said. “But now, I just go for the regular chicken meal.”

To reduce expenses further, he has started considering online shopping instead of traveling to malls during days without classes.

“Instead of spending on fare, I can just add that money to my savings or to whatever I want to buy,” he added.

For businesses and consumers alike, the effects of the war are no longer confined to distant headlines about oil markets or military tensions. They’re increasingly shaping daily routines, spending priorities and business strategies across the Philippines.

Inside small travel agencies, shopping malls and university budgets, the economic consequences of a war thousands of kilometers away are now being felt one fare increase, one skipped purchase and one tightened budget at a time.