Hotels still iffy on future investments

Some members of the Hotel Association of the Northern Mariana Islands are holding back on making future investments on their hotels if they cannot get any assurances that their land lease agreements will be extended.

Without such an assurance, hotels whose public land leases are close to expiration say the uncertainty is putting a damper on their plans to improve amenities and raise hotel standards.

HANMI president Gloria Cavanagh said that right now there has been very little communication regarding the lease proposal that Marianas Resort and Spa had turned in back in August 2014.

“We also turned in our proposals at the end of June and Department of Public Lands has not gotten back to us. We’re just asking for a yea or nay on some negotiations through friends who have been talking to DPL to get us back on the table,” Cavanagh said.

“The fact that there is no announcement from [Department of Public Lands] Secretary [Pete A. Tenorio] makes it difficult on who we’re negotiating with. We’re also waiting for the [Inos] administration on their appointment of a DPL secretary if they will be changing,” she added.

Mariana Resort’s public land lease expires on April 30, 2018. It is pursuing a new lease with a commitment of some $30 million in added investment.

Aside from Mariana Resort, other hotels with land leases that are close to expiring are Fiesta Resort and Spa Saipan, Hyatt Regency Saipan, Pacific Islands Club, and Kanoa Resort, Cavanagh said.

She noted that Hyatt had committed to pour in $25 million to renovate the hotel but because of what happened to Marianas Resort earlier in the fall, Hyatt has put everything on hold.

“It has affected our tourism market as far as the addition to rooms and renovations because we have not settled this matter. Mariana Resort has been here for 37 years. We sent our first lease draft in early summer and they still haven’t gotten back to us on our investments, which were within our proposal. We’re going to continue doing that because letting the resort run to disrepair is not good for anyone and is not good for the CNMI and the central government,” Cavanagh said.

“I have the catalogue of new flooring on my conference table that remains there and the drawings of additional rooms have been put into another file until negotiations are in place and these are hotel plans that gets held back,” Cavanagh said.

She believes that, without the assurance of their continued stay, the quality of HANMI hotels is going to be lower because no one is going to put in the millions of dollars in investment.

“It doesn’t create a very good market for new investors coming in and being on time and meeting our commitment. A new kid in town can come and say I want that property and you’re out. They’ll think twice about investing. We all have been here for 30-plus years and through thick and thin. When Japan Airlines pulled out, we have proven that we want to stay and be contributing corporate citizens and if I want to look at a long term investment, I want to see first how we are treated,” Cavanagh said.

Press secretary Ivan Blanco said the general process is that when a public land lease with a private entity is about to expire, the administration provides the lessee—in this case, one or more of the CNMI’s resorts and hotels—a letter asking whether the lessee wants to enter into a new lease.

“If said lessee is interested to enter into a new lease and if the public land exceeds one hectare or more, then the process of legislative approval is required, including the submission of said lessee’s business plan as if it were a new lease,” Blanco said in a statement.