[NEWS FEATURE] Baguio tourism: The numbers vs. the reality

May 14, 2024 | By Rain Julia Maduli

Park-goers at the Burnham Park Lake Deck. (The Companion/R.J. Maduli)

As tourists flock to Baguio City, its Gross Domestic Product (GDP) per capita rises, hinting at prosperity. Yet amidst this economic growth, vendors find their sales stagnant — leaving them puzzled by the disparity between the city’s apparent wealth, and their own struggles.

A common consensus for why they do not perceive the city's prosperity is that they have to meet sales targets, and additional pasalubong stalls pop up in the city, especially during tourist peaks.

“Nasa minimum wage naman ‘yung kinikita namin, pero hindi naman sapat yun,” said Christopher, a vendor in the Baguio City Public Market. For reference, the minimum wage in the Cordillera Region is P430.00, according to the IBON Foundation, a nonprofit research organization.

However, based on the numbers alone, Baguio City is currently experiencing economic growth due to tourism activities according to the recent report of the Philippine Statistics Authority (PSA). In 2024, Baguio reported a GDP per capita of 420,016 pesos, which is 2.3 times higher than the national average. GDP growth in the city went from 10% in 2021 to 11.3% in 2022, and the city alone accounts for 45.9% of the region's output.

If the numbers are to be believed, Baguio citizens are the most prosperous, as every citizen brings in about 420,016 pesos to the local economy. Holidays also bring influxes of tourists to the city, with the Holy Week and Panagbenga Festival being recent and prime examples of what draws the crowds. The post-pandemic tourism boom has led to all these rising growth indicators, but the reality on the ground is much more complex.

Reliance of Baguio economy on tourism

Baguio City, also known as the Summer Capital of the Philippines, sees economic growth from its tourism activities, according to the city’s local government unit (LGU). In addition, most of the vendors rely on tourism for their daily source of income.

The sentiments shared by the pasalubong vendors, who are a key part of the tourism-based economy, run counter to the idea of true economic growth. Many of them lament in interviews that despite the increased tourism, their sales vary widely.

“Umiikot kasi ang mga tourists. Pagdating sa isang lugar, pupunta naman yan sa iba,” said Jesil, the owner’s son of Baguio Five Star, a 40-year wholesaler of Baguio pasalubong at the public market.

He also said that while they have high supply, demand remains low due to the reduced number of tourists actually visiting pasalubong stalls recently. Nonetheless, he remains hopeful for an increase in tourist activity this coming Christmas season.

Additionally , Espie, a salesperson of a pasalubong stall, said that their income varies depending on the quantity of sales.

“Kung maraming turista, mas mataas ang kita. Kung kaunti, talagang mahina, mahina ang sweldo,” Espie said.

Edgar Suguiatan, an Economics lecturer at the University of the Philippines Baguio, agreed with the vendors’ perspectives in an interview, stating that they do not feel the GDP growth as it is an unreliable indicator of prosperity. He mentioned that when reporting these numbers, it should be emphasized that it is just one aspect of the stoDry that needs to be complemented by other economic indicators.

“Pwedeng very productive in terms of goods and services sa Baguio level pero individually, i-divide mo siya per person. Hindi talaga siya nakikita,” Suguitan said.

He further expounded his point by referencing a lecture by Winnie Monsod, Professor Emeritus in the University of the Philippines Diliman’s School of Economics.

“Higher income can be alien. It can be isolating. As Winnie Monsod said, you cannot talk about income and growth all the time because macro-indicators yan, but it can be inhumane, and it cannot capture things that make life worth living,” Suguitan added.

Adapting to the changing economy

Many factors can be attributed to the decline in sales experienced by the pasalubong vendors. Rielle Alcantara, an Assistant Professor in the University of the Philippines Diliman’s Asian Institute of Tourism, stated that oversaturation of the pasalubong market is a possibility.

“Halos pare-pareho lang kahit sa ibang lugar,” Prof. Alcantara said in an interview.

The nature of pasalubong lends itself to a lack of product differentiation relative to other destinations. She also noted the possibility that there are too many vendors who sell the same products within the city itself.

She also stated that the behavior of tourists themselves could be a factor in the decline.

“Visitors have different motivations when visiting a destination. Not all of them may have interest in buying a pasalubong item. Furthermore, not all visitors may have the money or budget to buy these extra items,” Prof. Alcantara said.

Consumer preferences are also contributing factors. Repeat visitors to the city are not enticed by pasalubong as much as first timers. There is also a distinct lack of unique or innovative products, and peak seasons lead to price gouging by vendors.

However, the decline of the pasalubong industry has repercussions for the larger Baguio economy as a whole, which derives much of its income from tourism activities. Prof. Alcantara explained that a majority of tourism businesses are micro, small, and medium enterprises (MSMEs).

“If small businesses go into decline, then it may mean that the tourism performance of the destination is not doing so well, and the inflow of visitors or clients is not sufficient to sustain their operations.” she stated.

Furthermore, a decline in tourism MSMEs leads to a loss of jobs and opportunities for many in Baguio.

“But for the pasalubong [industry], take note that it is considered an ancillary service or amenity. Visitors can still go to a destination and enjoy it even without them. So you can go to Baguio, stay in a small bed and breakfast and eat in a local café. Your experience is complete kahit walang pasalubong,” she said.

Prof. Alcantara also stressed the need for innovation for these MSMEs, given their ancillary nature.

By innovating, ancillary MSMEs escape obsolescence and help provide jobs for the local community.

“They just need to be creative and strategic in the pasalubong items that they will sell,” she stated.

Recognizing true prosperity

Suguitan stated that there is no single best metric used to give a good overview on the prosperity of a place and its people.

“You could check other measures. But if you are talking about prosperity, hindi lang dapat metric lagi ang income dahil prosperity is multifaceted,” he added.

A measure he recommended instead of GDP growth was the Human Development Index, which is a more comprehensive measure. It includes mean years of schooling, expected years of schooling, life expectancy at birth, and gross income per capita.

Prof. Alcantara also elaborated further on how tourism can bring prosperity to a certain destination. She referenced the three pillars of sustainable tourism, that it should benefit locals socially, environmentally, and economically. Economically, tourism leads to more job and investment opportunities. These opportunities flow back and fund local communities, leading to improvements that can be felt by all, through infrastructures, facilities, and welfare programs.