Hotel occupancy in ’08 only at 61.89 percent—HANMI

Average hotel occupancy stood only at 61.89 percent in 2008, way below the average profitability threshold of 70 percent, latest data from the 14-strong Hotel Association of the Northern Mariana Islands shows.

This, however, marked a 3 percentage-point increase over the 2007 average hotel occupancy of 58.89 percent due to an increase in tourist arrivals, but still lower than the 63.43 percent recorded in 2006.

“2008 was slightly better in terms of tourist arrivals but because of the power/fuel costs skyrocketing for several months and the two months of power outages, not to mention the cloud of uncertainty over the passage of the federalization bill, I don’t know if anyone could say that this was a good year,” HANMI chair Lynn Knight said.

The weighted hotel average occupancy is the sum of room nights sold divided by the total number of room nights available for sale by reporting hotels.

In 2008, there were 637,559 room nights sold of the 1,030,467 room nights available for sale.

The average profitability threshold is in the 70 percent range, but because the CNMI’s occupancy averaged only in the 60 percent range, “hotels are still not making healthy profits,” Knight added.

Hotels, just like other businesses, also had to increase the minimum wage by 50 cents last year, which affected many hotel employees. This summer, the current $4.05 hourly minimum wage will be increased by another 50 cents to $4.55.

“The wage increase was not done because we had more money coming in. It was mandated by U.S. Congress that had no CNMI representation at the time. All in all, we have a lot of challenges and uncertainty ahead of us in 2009 and beyond,” said Knight.

The December 2008 average occupancy stood at 62.24 percent, slightly up from the previous December’s 61.21 percent.

Average room rates rose by 5.62 percent points—from $92.12 in 2007 to $97.74 in 2008.

In December alone, the average room rate reached $109.70 compared to the same month the previous year.

Hotels paid a gross receipts tax of $3.132 million in 2008, a 10-percent increase over the $2.838 million paid the previous year.

Room occupancy tax paid totaled $6.264 million last year compared to the previous year’s $5.677 million.

HANMI also recorded 397,274 arrivals in 2008, a 2-percent increase from 389,345 in 2007. Most of them came from Japan (213,299), Korea (111,116), China (26,878), Guam (19,273), U.S. (11,793), Russia (6,814), the Philippines (1,780), Taiwan (284), and other countries (6,037).

HANMI was established in 1985, after hotel executives came together and saw the need to form an organization representing the hospitality industry in the CNMI.