Canadian funded star rating plan under fire

A star rating plan for hotels in the Philippines, similar to the ones done for free by travel websites like Expedia, has come under attack by the tourism sector and lawmakers in Manila.
The Philippines Depart of Tourism (DOT) is implementing the plan, funded by Canadian taxpayers to the tune of $7 million dollars.
Cebu third district Rep. Gwendolyn Garcia has filed a resolution urging the Philippine Congress to investigate the implementation of the DOT prescribed star grading system for accommodation establishments.
According to a press statement posted on the website of the House of Representatives, Garcia filed House Resolution 2503 urging the House committee on tourism to summon officials of the DOT to shed light on the implementation of DOT Memorandum Circular No. 2012-02 dated May 2, 2012.
According to the lawmaker, there are claims that the star rating system implemented by the DOT is only a “waste of time, efforts and government funds.” She said that “several accommodation establishments assail not only the veracity of the results of the star ratings issued by DOT, but also the propriety, necessity and wisdom of the star rating system.”
In a resolution, Garcia said the DOT received a $7.1-million technical assistance grant from the Government of Canada through the Canadian International Development Agency (CIDA) to fund the skills training programs for the private sector, local government units (LGUs), civil society, and DOT agencies, and to implement the new system of accreditation and the development of standards for service quality.
“The DOT has already commenced the system of accreditation of accommodation establishments, issued star ratings to several hotels, and published the results,” Garcia said in a statement.
Garcia added that the inquiry is necessary to determine whether the DOT should pursue the star rating system and recommend measures to improve the system if deemed necessary to implement it.
Last September, Cebu-based Plantation Bay Holdings Corp., owner of the Plantation Bay Resort and Spa in Mactan Island, filed a case before the Office of Ombudsman against Tourism Secretary Ramon Jimenez Jr., Tourism Undersecretary Maria Victoria Jasmin, Accreditation Division Head Jose Tolentino and DOT’s foreign consultants for the “alleged arbitrary and capricious implementation of an unnecessary star grading system for Philippine tourism enterprises.”
“We welcome Rep. Gwen Garcia’s call for an investigation into the DOT’s latest fiasco. The Government of Canada appropriated $7 million to help our tourism industry. Instead of spending it on something useful, our DOT embarked on a grandiose and frankly, stupid scheme to assign star ratings to hotels. This is something almost no other national government in the world does, not even Canada,” said Manny Gonzalez, founder and chief executive officer of Plantation Bay, in a statement.
“Now, we find out that no one in the DOT will admit to knowing how the $7 million was spent. How can that possibly be?...Based on what we have learned, over $5 million of that money was paid, or is due to be paid, to a mystery Australian company. No one knows who owns it,” Gonzales said, according to local media.
“That explains why the DOT is so eager to grade hotels, at a budgeted cost of $10,000 per hotel per night of inspection,” he added.
In its press release last September, the resort argued that the agency wasted millions of dollars for this rating system when entities like Tripadvisor, Expedia, Orbitz, Agoda and other travel sites give ratings of hotels for free. It noted that tourists “believe in their ratings because they represent the collective wisdom of real customers with real opinions on what is important in a hotel.”
It also argued that the government should not meddle in private enterprise and go around claiming to rate the quality of private companies in the same way other government agencies don’t rate or issue stars for shipping companies or taxicab fleets. The resort also questioned the hiring of “irrelevant” consultants.
Network of Independent Travel and Allied Services Philippines Inc., (Nitas) president Robert Joseph, likewise, welcomed Rep. Garcia’s action on the matter.
“We are happy that we earned support from a lawmaker to shed light on this issue,” said Joseph in a phone interview yesterday.
Joseph said hoteliers and resort owners approached him to complain about DOT’s rating system. 
They alleged that the DOT personnel who developed the rating system did not consult with the right people and that the third party, which are foreign consultants, were of questionable competence.
“The DOT should be in constant dialogue with the association of hotel owners, especially that these players invest billions of money to set up their properties. Others are even publicly-listed,” he said.
Joseph challenged the agency to be transparent in how the ratings system and criteria have been determined; how the $7.1 million was spent and how they are going to sustain it; and determine the people behind the fiasco. He also questioned how the agency obtained the funding from Canada when it has no government rating system for its own hotels.
For Joseph, who is also a hotelier, the ratings and recommendations should be left to consumers.
“What we want here is for the government to be on constant dialogue with the industry players and that they should be involved when coming up with guidelines. There should be a private-public partnership,” he said.
At present, the DOT is now engaging in dialogues with Nitas and hotel owners, Joseph said.
In a separate interview, DOT Director Rowena Montecillo stressed that the prescribed star rating system implemented by the DOT is meant to make all the country’s accommodation establishments become globally competitive and at par with international standards.
Montecillo said the $7 million financial assistance awarded by the Canadian Government through the Asian Development Bank covered projects such as the implementation of the new system of accreditation and the development of standards for service quality and the skills training program for the private sector, local government units, civil society and DOT agencies. The technical assistance was piloted in Cebu, Bohol, Palawan and Davao.
The new star rating, which has five levels from one to five stars, is based on a point system focusing on inventory, availability, condition and quality of facilities. Prior to the star rating system, accommodation establishments in the country were classified as deluxe, first class, standard and economy.
“We want to point out that these are efforts of the DOT to make our hospitality industry globally competitive. The star rating is a tried and tested rating used in many countries. It is known internationally and if we want to be globally competitive we have to be in the same footing with other players in the market,” said Montecillo.
Under the guidelines, assessors will assess the properties incognito and will check in as regular guests for them to experience the facilities and services offered. Properties are also given the right to contest the findings and are given 15 days to file a motion for reconsideration, either on certain items or the over-all rating.
Moreover the financial assistance has also helped the tourism workforce improve their skills.
Montecillo said efforts implemented by the DOT has already translated to positive results in the growth of arrivals, in the country’s overall ranking in the World Economic Forum on Travel and Tourism Competitiveness from 82nd ranking (2013) to 74th ranking in 2014.