‘Hotels in desperation mode’

Right now, the CNMI’s hotel industry is in an absolute desperation mode, according to Hotel Association of the NMI chair Ivan Quichocho yesterday, and that the industry is bleeding cash.

“We’re fielding cash losses,” said Quichocho during a meeting among HANMI, Saipan Chamber of Commerce, and some members of the House of Representatives in the House chamber.

As it is, he said, HANMI can only hope to break even or at least incur no-cash loss.

Quichocho noted that having a group of the largest investors on the island suffering this translates to lower tax collections, a lessened employment rate, reduced work hours, and reduced car rentals, among other things.

“The entire value chain is impacted,” he added.

To the Marianas Visitors Authority’s credit, it is trying extremely hard to market the CNMI, Quichocho said, but it is also dealing with the CNMI’s source markets where their carriers are also coming out of COVID-19.

Quichocho believes one of the carriers that flew to the CNMI before the pandemic had 41 aircraft, but is now only able to operate 36 after COVID-19 because some of their pilots have retired, have not returned, or market demands or routes with significant demand are not enough to keep the aircrafts flying at the prescribed number of hours per day.

From the HANMI’s perspective, Quichocho said, Asiana Airlines’ recent suspension of flights and the reduction of flights among two other carriers have left Saipan with only three direct flights a day at a capacity of a little over 180.

With the China market, he said they go from China to Korea and into the CNMI. “So that doesn’t add anything to the pipeline,” Quichocho said.

In terms of Japan, he said, the MVA is doing everything under the sun, but with the strong dollar versus the yen, “U.S. denominated destinations…are extremely, extremely expensive.”

With a compressed or reduced pipeline, the opportunity for the hotel industry, the restaurant industry, and wholesale consumption in general, is also condensed.

“Less customers, less commerce, less consumption,” said Quichocho.

Then there’s government austerity measures as well. That compounds matters in terms of that segment of the marketplace also being compressed. That means limited funds circulating in the economy.

As it is right now, the CNMI is primarily relying on the Korea market, Quichocho said.

That narrowed capacity by the CNMI’s traditional tourism markets is prompting HANMI and the Saipan Chamber of Commerce to consider other markets.

Chamber board member Alex Sablan said as much when he said they are open to all markets and are interested in looking at the idea of Australia and have been talking with Guam about the idea of a visa waiver for the Philippines.

Sablan said the Philippines has an upper-income society that travels and has the ability to move between many different jurisdictions freely.

“And it makes sense because of the population base that we have here in the CNMI and Guam, that the Philippines would be a possible viable marketplace,” Sablan said.

He said the idea of Taiwan for tourism is also an open opportunity.

Looking at the numbers related to overall markets, Sablan said the CNMI needs all the numbers to come as quickly as possible because its primary markets—Korea and Japan—are not coming back as quickly as they’d like.

He said Japan has a currency issue and a large part of their population is traveling, but domestically.

Lately, Sablan said, Japan has not been a major traveling group into the CNMI. As to how long is it going to take for Japan to make a comeback in the CNMI, Sablan said the prediction is maybe 2025 as markets improve.

“They’re making moves within country to try to improve their economy, to try to grow their wages, and to see a marketplace that may demographically change over time,” Sablan said.

Also, the CNMI is often seen as their fathers’ and grandparents’ place of travel and is not popular among the Generation Z and millennials. Sablan said they have to change that dynamic and MVA is working on that effort.

Looking at the overall marketplace, the CNMI is really at a point of desperation for many operators, Sablan said.

He said in their conversation with the administration and discussions about the effort to draw in all markets, they looked at all the issues related to what the issue is with the Chinese market, but he pointed out that the CNMI still has the opportunity to grant discretionary parole to Chinese tourists.

“It has not been taken away,” he said.

Sablan said there are still Chinese tourists arriving in the Commonwealth. In fact, China was the CNMI’s No. 2 market over Japan last month, he added.

“We had 500 entries from Japan, a little over 1,300 to 1,400 Chinese tourists and then a whooping 180,000 Koreans, so you know they’re still coming,” he said.

Sablan said these Chinese tourists that are coming are well-to-do individuals—free independent travelers that are spending money on the ground, renting cars, going to restaurants, and taking advantage of all retail opportunities here.

“But again, everybody’s in a wait-and-see mode,” he said.