Hotel occupancy drops but room rates slightly improve

The CNMI’s hotel occupancy rate averaged 70.16 percent in 2005—a figure that the Hotel Association of the Northern Mariana Islands claims as not profitable for most local hotels—even as the average monthly room rate for the year improved to $84.54.

HANMI statistics showed the occupancy rate drop slightly from the 2004 average of 71.75 percent. Except for the 2004 average, the 2005 figure appeared to be the highest average occupancy rate for the past seven years, but it settled way below record highs of 85.57 and 81.35 percent in 1996 and 1997, respectively.

HANMI chairperson Lynn Knight said the 2005 occupancy rate fell below the targeted average of 80-some percent. She said that, even as the average room rate slightly increased from 2004’s $80.42 average, the 2005 rate settled at almost $52 below the record high of $136.06 in 1997. In 1996, the average room rate for the year was $127.73.

“The industry has still a long way to go to get back up to a healthy, profitable position wherein investors are getting a return on the business,” Knight said in an interview Friday.

Knight further noted that many hotels have been embarking on improvements of their respective establishments, saying that some $40 million have been spent so far for hotel improvements in the past two years.

Knight added, though, that the improvements would benefit the CNMI as a destination, as other competing destinations like Guam, Hawaii, the Philippines’ Cebu and Japan’s Okinawa witness similar development. She said it is best to make improvements now that business has slowed down.

The 2005 average room rate, though, has been the highest since 2002, but lower than the annual average from 1992 to 2001, when the average reached $89.27 even after the 911 attacks impacted global travel during the last quarter of that year.

December 2005’s average room rate reached $90.66, slightly improving from December 2004’s $87.21, but much lower than the peak December average of $143.52 in 1996.

The year’s peak average monthly room rate reached $99.08 in August, even higher than 2004’s $91.95 for the same month, but way below the $162.96 average in 1996.

Occupancy rate for December 2005 dropped to 63.20 percent compared to December 2004’s 71.59 percent. Hotel occupancy for December reached its peak of 83.51 percent in 1995.

The highest monthly occupancy average in 2005 reached 79.65 percent, slightly higher than December 2004’s 79.33 percent, just before Japan Airlines pulled out its regular flights to Saipan in October.