‘We’re in an urgent situation’

The CNMI’s tourism industry is in an urgent situation as the picture is not very rosy for the summer in terms of air service into the Commonwealth, according to Ivan Quichocho, who is the Hotel Association of the NMI board vice chairman.

Quichocho, HANMI board president Dennis Seo, and HANMI board director Sachiko N. Gerrard granted a media interview shortly after the association held this month’s general membership meeting at the Grandvrio Resort Saipan last Thursday afternoon.

Quichocho said the average room rate for April was dropping by $10 as compared to April 2023, and HANMI members are making less money with low average room occupancy at 35%.

“So it’s tough situation. Critical situation,” he said.

Quichocho said the reality is it’s really about the numbers and there’s only one way to improve the hotel occupancy—through more flights and more tourists.

“We just talked about what’s not coming. And we just talked about the effort to try and get us to the base number of flights that we had last year without the additional Guam diversions and that’s already a struggle,” he said, referring to their membership meeting.

Quichocho said CNMI leaders should really take heed and listen to what Marianas Visitors Authority board chair Gloria Cavanagh stated at a recent economic forum because it’s serious.

“I mean, we’re in an urgent situation,” he pointed out.

Cavanagh stated in the recent Economic Forum that this summer will be make or break and will decide whether or not hotels close permanently or temporarily.

As to the question whether other hotels, not just Hyatt Regency Saipan, considering closing their doors or talking about possibility closing their doors, Quichocho said nobody’s out there openly talking about it.

“As an organization, we’re not talking about hey, are you closing? That conversation doesn’t happen. But we all understand the numbers,” he said.

Seo said they have not heard of any HANMI members closing very soon.

HANMI has 13 member hotels.

Seo, however, said all their members are losing money and struggling financially.

He said their members have been losing $100,000 or even more every month.

Quichocho said one hotel could be losing half a million a month so those are serious numbers.

Gerrard said they don’t want another Hyatt Regency Saipan closure so they share information and work together as much as possible.

“We get together, [talk about] what we need, plan it and then speak out and reach out wherever we can get help,” she said.

Gerrard said they are working closely with MVA.

As to the question on how HANMI members are preparing or going to make further cost cutting measures, Quichocho said as an association, basically everybody understands the hotel business, and they know that their members are making significant cuts already.

“And so our membership has to make some difficult decisions based on the summer volume,” Quichocho said.

He said they talked during the meeting that day about the air service that they are expecting for the summer period, primarily with the Korean market.

Quichocho said they do know that there were some charters that were planned for the summer but have not materialized.

“So essentially, they’ve canceled. So, there’s a good chance that our air seats in 2024 for the summer period, will not meet or exceed last year’s numbers,” he noted.

Quichocho said as a matter of fact they know it won’t meet or exceed because last year Guam experienced Typhoon Mawar and so a lot of those flights were diverted to Saipan.

“We know that’s not to be the case this year. So, all we have is what’s unscheduled today, all the charter flights that are being discussed with the foreign exchange rate as well being a factor that’s driving some of the pricing that the carriers need,” he said.

Quichocho said MVA is working hard to try and secure one of those additional flights, the summer flights, through partnership and marketing agreements with agents.

He said they just found out that it won’t materialize so it’s a good chance they’re going to be net negative for the total number of flights 2023 versus 2024.

Seo said during their general membership meeting they went through the hotel occupancy for the month of April.

Seo said there was a slight drop the in the average room rate by $10 something compared to April 2023, because the competition among beach destinations is getting stronger.

He said tourism is increasing in Guam and East Asia like Thailand, Vietnam, and the Philippines.

Seo said there are other factors like strong U.S. dollars and because the Koreans and the Japanese are now pretty much cost conscious.

Seo said the drop by $10 is not deliberate as these are brought by the competitive nature amongst destinations.

“So, when the CNMI, or Saipan competes against Thailand, Vietnam, their exchange rate for the Japanese yen or the Korean won is far more favorable,” the chairman said.

He said to stay competitive, they have to be also competitive with their room rates.

“So, as a result, the overall average daily room rate throughout the membership has dropped as a result,” Seo said.