Korean won weakens, hits NMI tourism

The international fallout of America’s financial crisis has hit the CNMI’s tourism market through a drastic decline in the value of the Korean won, a trend that has diminished the buying power Korean tourists have when vacationing in the Commonwealth.

There is some optimism, however, that the weakened won will benefit the CNMI as Korean travelers choose to spend their vacations in destinations that are low-cost and closer to home.

The value of Korea’s currency, the won, on Thursday fell to 1,425 won per U.S. dollar, its lowest level in a decade. It rebounded slightly to 1,417 after intervention by the Bank of Korea. Wall Street analysts have linked the won’s decline to the ongoing financial crisis in the American mainland, coupled with turmoil in the Asian economy.

Koreans are a crucial demographic for Saipan’s tourism industry, accounting for roughly a quarter of the travelers that have come to the CNMI in the last year.

The effects of the won’s decline on tourism are already evident at some hotels in the CNMI, with some proprietors saying revenues are showing a slight drop as Korean visitors have tightened their purse strings.

At the Pacific Island’s Club, general manager Kieran Daly said the waning won has prompted a 2- to 3-percent decrease in revenues for the resort.

However, the Korean tourism market remains strong in the CNMI, he said, because the islands are a short-term and comparatively low-cost destination for Korean travelers. Destinations further from Korea, such as Hawaii, are more likely to see a significant tourism impact, he said.

“There has been a slight side-effect,” said Daly, adding that the “overall spend” by Korean travelers in the CNMI is down. “But it’s a market that can rebound very quickly as well. It can come back very strongly and it has done that historically.”

That optimism is reflected in the recent decision by Asiana Airlines to increase its number of direct flights to Saipan beginning Oct. 3, with Kumho Asiana, the airline’s parent company, promising to develop its golf market.

The won’s decline appears to have taken a heavier toll at other resorts on Saipan. One hotel proprietor, speaking anonymously, said it has forced some tour operators to raise prices on the package deals sold to Korean travelers and slowed the tourism market.

“It’s a very obvious fact that when the won gains strength, tourism here benefits,” he said. “When the won gets weak, it really makes everything a lot more expensive.”

Meanwhile, the values of Japanese yen and Chinese yuan have remained relatively stable in recent months. But with the won reaching decade-long lows, Marianas Visitors Authority managing director Perry Tenorio said in an interview Thursday that the local tourism sector should take notice.

“This concerns us greatly,” Tenorio said. “Obviously, the buying power for Korean tourists has weakened.”