Business, heritage collide over Managaha

Business or cultural heritage? These are two crucial issues confronting the commonwealth in deciding the next franchise holder of Managaha Island, the premier destination for the Northern Marianas’ tourism located west of the main Saipan island.

At stake is a potential earning of $25 million annually from direct or indirect operation of Managaha, a protected area under the NMI Constitution, and whose commercial development, according to a new law, should be awarded preferably to locally-owned corporations.

Six companies have submitted proposals to the Board of Public Lands to run Managaha, including Tasi Tours, a Japanese-owned travel agency which has been holding Managaha’s exclusive concession rights for the last eight years. Tasi has sought the board’s approval to operate Managaha for at least five years more and promised to pay the concession fees in advance.

The five others are Marianas Marine Management, Inc., Managaha Island Trust Corporation, Saipan Marine Tours, Inc., Robert J. Emmett, and Pacific Development Inc. Marianas Marine Management and Saipan Marine Tours are owned by indigenous businessmen.

The enactment of Public Law 11-48 has put this tiny island resort at the center of controversy that is not only threatening to drive a wedge between the Executive Branch and the Legislature, but a serious rift between local and foreign investors.

How much is at stake?

With the closure of a big number of business establishments catering to various tourist-related activities, Managaha is virtually left as the only place in the Northern Marianas with tourism potential. Over the years, the popular tourist destination has been a gold mine for franchise holders.

According to Tasi Tours, about 163,334 Japanese tourists trooped to the island last year who accounted for about 42 percent of the total number of travelers from Japan to Saipan. This translates to revenues of at least $9.7 million at $58 day trip fee charged per tourist. The amount includes roundtrip transportation from hotel to Managaha and a plate of lunch.

Of the $9.7 million, around $7.19 million went into the coffers of Tasi Tours while $2.29 million in commission at $14 per tourist were paid to tour agents who sold tickets, according to independent estimates.

Based on the estimates prepared by the Managaha Island Trust Corporation, which is led by businessman Anthony Pellegrino, Managaha can generate a total revenues of $18.75 million annually from landing fees and tour package.

Every year, an average of 250,000 tourists flock to the island resort spending at least $70 per individual or a total of $17.5 million, according to MITC. Landing fees represent $1.25 million at $5 per tourist.

The proposals

One of the companies seeking concession rights is MMMI, a corporation established by local and influential businessmen that include JM Guerrero, a key supporter of Gov. Pedro P. Tenorio in the 1997 elections; Michael Tenorio, the governor’s son; CDA Chairman Juan S. Tenorio, a political ally of former Gov. Froilan C. Tenorio; and former Lt. Gov. Jesus C. Borja.

The group has been accused of masterminding a controversial legislation favoring companies and individuals of NMI descent to develop Managaha for commercial use.

In its proposal to the board, MMMI is requesting a four-year franchise deal at $8.2 million plus 75 percent of landing fees to be collected annually from tourists. In the first two years of operations, the local investors plan to earmark 65 percent of its profits to projects initiated by the public lands’ division and 10 percent to the Marianas Visitors Authority, along with other sweeteners such as scholarship grants and assistance to Manamko Center, Agurubw Foundation, Indigenous Affairs and the Carolian Affairs Office.

It also pledges to broaden local participation by offering 50,000 shares worth $5 million at $10 per share.

MITC, a non-profit organization formed by Pellegrino, Louis Benavente and Manny Blaz, is asking a five-year lease contract which it said could provide at least $12.5 million in annual revenues for the financially-troubled government. The company claims the amount was four times higher than what CNMI receives from Tasi Tours.

The corporation pledges at least $4.75 million of the total estimated revenues to the Division of Public Lands to finance its operations and program on homestead development.

The proposal promises to farm out sub-concessions to companies at least 51 percent owned by locals, rental fees equivalent to 10 percent of their gross revenues, and assistance to the Public School System.

Tasi Tours, which have brought over 1.6 million visitors to Managaha in the past years, is banking on its experience in managing the island resort, ready access to marketing, a network of agents, and a large client base.

“A new company without a framework will have a difficult time selling Managaha packages in a depressed economy…As a result, the potential value of one of the Commonwealth’s best assets will not be realized,” said Koki Narita, president of Tasi Tours, one of CNMI’s oldest tour companies.

Tasi Tours is part of the Japan Travel Bureau, one of the world’s largest travel agencies with gross sales of over $3.2 billion.

Another Japanese-owned company, PDI, withheld proposal on the amount for the lease contract pending actual bidding process. It offered to ease restriction on local use and limitation on transportation to Managaha, create more job opportunities for the locals, and provide more programs and activities that will promote NMI culture.

Juan N. San Nicholas, president of Saipan Marine Tours, said in a one-page letter to BPL Chairman Tomas B. Aldan his company is interested in running Managaha but did not provide a detailed proposal. San Nicholas, however, assured the board he will eliminate the quota imposed by Tasi Tours that has kept out other travel agents from the business venture.