Hotels brace for decline in arrivals

As Japan Airlines’ last regular flight from Saipan took off yesterday, some local hotels are now bracing for the expected decline in tourist arrivals from the CNMI’s premier tourist market through reduced work hours of their employees and other cost-cutting measures.

“We’re prepared to go to reduced work hours,” said Hyatt Regency Saipan general manager Michael von Siebenthal. “The key thing is reduction in work hours, plus of course expense control as much as possible.”

Siebenthal, however, projects the decline to have a bigger impact on next year’s occupancy rate. He disclosed that the average occupancy rate for the first nine months of this year reached about 85 percent. With reduced airline seats from Japan, Siebenthal anticipates the hotel’s average occupancy rate to drop to 62 percent next year.

“We have to try to get as big a market share of the few tourists that are still coming in. That’s what we can do,” he said.

With the cost of fuel factored into the equation, Siebenthal stressed the need to cut the hotel’s expenses. Next year, he said the hotel’s fuel expenses would be about $1 million higher than where it was some four years ago.

Aqua Resort Club has already begun reducing employees’ work hours. ARC sales and marketing manager Dory Gabutero said that employees normally work 40 hours plus overtime weekly. Now, it is down to 36 to 40 hours per week.

Gabutero said the hotel remains positive that it would meet its projection of 60 percent average occupancy rate this year, as well as next year. Its concern, however, is the possibility of reduced room rates.

Gabutero said ARC had an average occupancy of 72 percent, with its average room rate reaching $153. The hotel, which caters mainly to high-end clients, expects the average room rate to drop to $137, and occupancy rate, to 55 percent in October and November.

“We’ll continue with our normal operations. We just have to minimize cost,” Gabutero said.

She said the hotel has been working with various travel agents for increased occupancy. She said the ARC has been tapping into other tourist markets, such as Russia, China and Korea.

For a smaller establishment like Century Hotel, cutting expenses is also a must. Century general manager Lynn Knight said the hotel is not ruling out the possibility of reducing work hours for its employees. Knight said, though, that the matter has not been decided yet. She also disclosed that the hotel has reduced its staff from 14 to 13.

Knight said a decline in occupancy is expected after the pullout of JAL, noting that a Japanese tour agent has already been experiencing difficulty in getting flights for guests. But she said the slowdown of business activity could be a good opportunity to work on internal improvements.

Knight said she has met with her staff to give them a better picture of the tourism industry and the impact of an airline pullout, asking them to make efficiency and cost-saving a team effort.

Knight, who is also the Hotel Association of the Northern Mariana Islands’ chair, said the group has been apprising the Strategic Economic Development Council on what has been happening in the hotel sector. She said the CNMI needs to diversify its tourist market by focusing not only on Japan, but also on China, Korea, Russia and Taiwan, among others.

Despite the anticipated decline in Japanese visitors, Pacific Islands Club general manager Kieran Daly expects the hotel to maintain high occupancy levels.

“The unfortunate situation that happened in Bali has actually generated some extra business for us—for instance, business that comes mainly from the Korean market,” Daly said.

He expressed optimism that other airline companies would fill in the void left by JAL, noting that Saipan is a safer destination than others.

PIC’s average occupancy rate in September reached 70-plus percent, according to Daly, who projected this month’s average rate to settle at 75 percent.

Daly said the impact of JAL’s pullout might be felt during the holidays, but PIC projects to maintain a high occupancy of 90 percent. He said the hotel has other strong markets other than Japan, such as Russia and Korea.