40 more years for Hyatt
Several years of negotiations between Hyatt Regency Saipan and the CNMI government finally boiled down to a signing ceremony last Friday at the hotel’s Miyako restaurant, with Hyatt agreeing to a new 40-year lease that solidifies the continued presence of the Hyatt brand in the Commonwealth.
Hyatt Regency Saipan general manager Nick Nishikawa signed the lease on behalf of Kobe Portopia Hotel Corp., which owns the Hyatt brand in the CNMI, while the CNMI government side was represented by Gov. Ralph DLG Torres, Lt. Gov. Arnold I. Palacios, and Public Lands Secretary Sixto K. Igisomar.
The signing of the new lease also short-circuits the expiration of the original Hyatt lease in December this year.
According to Torres, the process of the Hyatt lease renewal, which he described as “monumental,” is a testament of how the government and private sector can work together for the benefit of the community. “This morning is very sentimental for all of us. …This collaboration between the government and the private sector is beneficial to all of us,” he said.
Torres recognized the work of former DPL secretary Marianne Concepcion-Teregeyo, who was involved in the negotiations with Hyatt while “carefully following guidelines,” current DPL Secretary Igisomar for “finishing the race,’’ the Office of the Attorney General for “constantly making sure that every word is done right,” both the CNMI Senate and House of Representatives for being “at the forefront of issues regarding public lands,” and Hotel Association of the Northern Mariana Islands chair Gloria Cavanagh “for constantly helping the CNMI’s tourism industry.”
Nishikawa, who has been Hyatt Regency Saipan’s general manager for 13 years, said he and his staff are simply happy that the lease renewal has finally been signed. He also delivered a message from Kobe Portopia Hotel Corp. president and owner Hitoshi Nakauchi that conveyed a message of excitement and hope.
“I am very excited that the land lease had been extended by the CNMI government through the DPL for another 40 years. Thirty years ago, Portopia took over the responsibility of ownership of Hyatt Regency Saipan and we have enjoyed for many years welcoming people from all around the world to this beautiful island. Unfortunately, COVID-19 has caused so much suffering…,” Nakuchi said “…Now we are seeing the world begin to open and connect once again. The return to pre-COVID days will be slow and difficult and we would like to offer any assistance that will help lift the people and the island. I look forward to the day when flights between Tokyo and Saipan [will] return. We will to continue to encourage the people in Japan to visit Saipan for them to be able to meet the wonderful people of the island and experience its natural beauty.”
The lease renewals of hotels on public lands were a challenge for both government and hotel owners because legislative action and new procedures from DPL were needed to effect responsibilities that are in tune with current times since many of the contracts were entered into in the early 1980s and updated procedures needed to be allotted to new players or investors who were also coming in to bid on expiring leases.
According to Saipan Tribune archives, initial action on Hyatt’s lease renewal, together with other hotels situated on public lands, started in 2013. In March 2016, former DPL secretary Pedro A. Tenorio came out with two “alternative” lease agreements: first, by allowing the hotels to get an extension on a portion of public land that is currently being leased; and second, to allow the hotels to terminate their respective leases and apply for another long-term lease. both of which should undergo legislative approvals.
In 2017, then-Senate President Arnold I. Palacios (R-Saipan) took action and authored Senate Bill 20-35 that extends the lease terms of public lands from 25 years to 40 years and would allow an extension of 15 years for a total of 55 years.”
In Dec 31, 2018, S.B. 20-35 was signed into law by Torres and became Public Law20-84. With legislative action done and a law in place, DPL and Hyatt went back and forth on negotiations and two years later, the final contract was signed on Oct. 4, 2021 and thus, the public announcement last Friday.
With Hyatt’s lease renewal, there are now two international hotel brands on Saipan, the other one being the Crowne Plaza Resort (the former Fiesta Resort & Spa Saipan).
Hyatt’s current lease will expire on Dec. 31, 2021, and the new lease will take effect on Jan. 1, 2022. The area is composed of approximately four hectares or a little bit over 40,000 square meters. As part of the new lease requirements, Hyatt is required to improve the hotel and bring it up to par with current Hyatt standards and total improvements. This is estimated to cost $45 million.
“This is important to DPL and the CNMI as part of our tourism enhancement efforts,” said Igisomar.
He said the rental rate is about 0.5% base rent, the value of the appraised value of the properties, which is about $50 million, plus or minus, an additional rent of 1% of their business gross receipts, and a security deposit of $250,000.
A part of Hyatt Regency Saipan’s commitment is a contribution of $1.5 million to a community benefit fund to be apportioned as follows: $500,000 allotted to homestead infrastructure; $500,000 allotted to Garapan revitalization projects, $200,000 allotted for scholarship of Northern Marianas descent students and $300,000 to promote traditional arts and culture.
“It’s really a blessing for the people of the CNMI that Hyatt wants to continue putting their investment here,” said Torres. “We look forward for a stronger relationship and friendship. …To other private partners, we encourage you to come to the CNMI. You will see that we have a strong partnership within the government and the private sector. This is the right place to make an investment.”