April-March were worst months for CNMI hotels

* Both months post lowest occupancy this year
* Average room rates remain higher than 2005’s

The CNMI’s hotel industry bore the full brunt of Japan Airlines’ pullout in March and April this year, registering the lowest hotel occupancy figures since January this year, and April itself posting a 12.67 percentage point drop compared with last year’s number.

The average monthly room rate, however, remains slightly higher than last year’s levels, with January starting off at $105.62—$15 higher than the $89.96 posted in January 2005.

HANMI chairwoman Lynn Knight said that, although the JAL pullout happened in October 2005, its full effects are only beginning to be felt now because December, January and February had holiday periods.

“They’re normally peak periods and there are a number of chartered flights, so we didn’t feel the full brunt of the JAL pullout until March, where we dropped like a stone,” Knight said.

The situation was further exacerbated by the historically poor performance of April in terms of visitor arrivals.

“April was particularly bad this year because of the loss of flights,” Knight said. “Unfortunately, it’s not just a profitable level. Anytime we hit occupancy that low is not profitable for anyone. Hotel business is a seasonal business and we’ve come to expect that but this year is particularly hard.”

By the numbers

Statistics gathered by the Hotel Association of the NMI showed that, from a 69.67 percent monthly occupancy average in January and a respectable 73.43 percent in February, the numbers plunged to 59.77 percent in March and further dove to 56.48 percent in April.

April’s occupancy rate was the steepest plunge, about 12 percentage points lower when compared with the 69.15 percent posted during the same period last year.

Even March’s occupancy rate is a 10.63 percentage point drop compared with the 70.4 percent recorded in March 2005.

Visitor arrivals itself plummeted by 17.02 percent in April, with the Marianas Visitors Authority reporting a total of only 32,981 visitors coming in that month, compared with the 39,748 posted during the same period last year. This trend has been holding true since the start of the fiscal year in October 2005, with arrivals persistently on the negative end of the spectrum, with drops that range from -11.55 percent (October 2005) to a high of -21.42 percent (January 2006).

“Last year, we were somewhat on the road to recovery. The rates were starting to go up, which is a healthy sign. Hotels have been making a lot of improvements. Our members have invested about $50 million in renovations and improvements, which is very good for the destination. Unfortunately, we’ve lost the [JAL] air service,” Knight said.

Better days ahead

The HANMI official, however, is optimistic, expressing belief that April’s performance may be the turn for the better. “I would imagine that March and April are going to be the worst months that we’ll see and that will start to pick back up again in May.”

She cited the additional flights from Tokyo by Northwest Airlines, which started in May, as well as the Golden Week, traditionally one of the busiest travel holidays in Asia. “Golden Week here was not that strong but it did go up a little bit, so May should be better than April.”

At the same time, she said that June is traditionally a group month, with several groups coming in, plus the upcoming Micronesian Games, which is also expected to bolster arrival numbers. Also, the Korean soap opera is set to begin filming in the CNMI that month, with about a hundred people coming in.

Room rates

On the other hand, room rates have actually gone up, when compared with the rates last year. January’s average room rate of $105.62 is $15 higher than the $89.96 posted in January 2005. February’s average room rate was $89.26 (last year’s was $80.90), March’s was at $91.17 (last year’s, $82.27), while April’s was at $85.40 (last year’s, $82.76).

“It’s just a little bit surprising but this is just a reflection of having a better product to sell because of all the renovations. Every month this year, the prices were up compared to last year but this time last year, there were hotels that were undergoing renovations,” explained Knight. “These prices are a good sign and what we’re trying to do is gradually bring the destination to a good mid-price destination.”

HANMI is composed of 14 hotels on the island. April figures show that it employed 2,017 workers, with about 599 local employees and 1,418 contract workers.

HANMI’s statistics are gathered for it by accounting firm Deloitte and Touche.

Starting in January 2006, HANMI has been computing its occupancy rate in a slightly different way than how it used to compute the numbers. “We’re doing weighted average. …It takes all the rooms that are available in the market at each rate and comes up with a weighted average. This is a bit more scientific,” said Knight.