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Profits may elude La Fiesta in ’98
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Posted on Dec 31 1998
La Fiesta San Roque Shopping Plaza is not expecting profits in 1998 due to poor sales brought about by the plunge in tourism economy, according to Toshiro Arai, general manager.
“Business is very bad this year but we hope to see some improvement next year,” said Arai.
At least three shops in La Fiesta which include the United Colors Benetton and Donna Karan New York were forced to close down after their main companies in Japan went bankrupt.
Japan, the world’s second biggest, economy is mired in its worst recession since World War II as debt-ridden financial institutions scale back on lending, starving companies of cash.
Visitor arrivals from Japan, the main source of tourist, have suffered a double-digit decline since the Asian financial crisis began more than a year ago. Alarmed by the continuous decline in arrivals, the Marianas Visitors Authority has hired an advertising firm to recapture the lost market share in Japan.
Arai, however, said he is expecting the new tenants to come in by the first half of 1999 as Japan Airlines which owns La Fiesta, took an aggressive marketing campaign in the United States and Japan.
For the past 10 years, all the three firms owned by JAL in the Northern Marianas have failed to make any profits enough to recover the huge investment on the island.
“It will take time before these investments become profitable because we borrowed money from the bank,” Arai said. Since the Japanese government has drawn up economic reforms, Arai said he expects the tourism economy in CNMI to show a little improvement at a later part of 1999.
But the Japanese tourists, he said will continue to be cost conscious, he said. As a result, La Fiesta will encourage the sale of cheaper merchandise to attract more shoppers to visit the mall. To reduce huge losses in 1998, La Fiesta has decided to cut down manhours from the regular 40-hour work per week to 36 hours.
