Korea overtakes Japan as NMI’s prime tourist market

Korea is on its way to surpassing Japan for the first time as the CNMI’s largest source of tourists by the end of fiscal year 2014, officials said yesterday as they also pointed to continued growth in visitor arrivals from China, Russia, and Taiwan. Gov. Eloy S. Inos said the CNMI may see its annual arrivals reach 700,000 once again in two to three years.

Arrivals from Korea are projected to reach more than 158,000 in 2014, compared to expected arrivals from Japan at a little over 124,000, based on data from Marianas Visitors Authority managing director Perry Tenorio.

In 2013, the CNMI received 148,423 tourists from Japan and 135,458 from Korea, MVA data shows.

“If you take a closer look, we might be able to see 470,000 tourists by the end of the year, or maybe come close to half a million. I say in about two to three years, we will back to pre-JAL [Japan Airlines] pullout [figures], which is about 700,000. That’s good,” the governor told Saipan Tribune at the MVA general membership meeting at Saipan World Resort.

This comes a few days after the governor said in his State of the Commonwealth Address that there’s some $1.3 billion in projected economic activity this year—an increase of $200 million from last year’s.

Michael Merner, chairman of AVIAREPS Marketing Garden that operates MVA’s representative offices in Japan, Korea, China, Russia, and Taiwan, said Japan is now the CNMI’s “crisis” market.

“Korea is the No. 1 source market, surpassing Japan for the first time,” Merner told MVA members and guests.

Ten years ago, in 2004, arrivals to the CNMI were at 531,584. Arrivals have since been on a decline for a host of reasons that included JAL’s pullout from the CNMI, from 529,557 in 2005 until it reached a historic low of 338,106 in 2011.

Arrivals started picking up in 2012 with 389,475, to 433,925 in 2013. The numbers are projected to reach 472,709, MVA data shows.

Merner said the Korean market is just now returning to normal after the ferry Sewol sinking in April that killed over 300 Koreans. That resulted in many Koreans canceling overseas holidays during a time of national mourning.

“All economic indicators indicate strong continued growth in outbound travel from Korea to the CNMI in the remainder of 2014,” he said.

Korea’s low-cost carrier Jeju Air will be launching daily service to the CNMI starting on Oct. 1, generating 69,000 seats. This will potentially bring in 55,000 additional Korean visitors to the CNMI and over $120 million in incremental spending from the Korean market.

This could help offset any potential revenue loss once the Korean government imposes a seven-day suspension of Asiana Airlines flights to Saipan over safety rule violation.

As the CNMI’s new tourism market leader, Korea will, however, still be challenged by a lack of hotel rooms in the CNMI.

The governor is optimistic that the construction of new hotels on Saipan, along with the development of a minimum $2 billion integrated casino resort with at least 2,000 rooms, will accommodate the growing number of tourists bound for the CNMI.

For the longest time, Japan has been the main source of tourists for the CNMI. But the country’s financial woes have resulted in a decline in total outbound market. The U.S. dollar appreciated by 32 percent versus the Japanese yen over the last two years, making travel to the CNMI effectively 32 percent more expensive for the Japanese today than it was two years ago.

Merner said Delta Air Lines has also raised its fuel surcharge on flights from Narita to Saipan this year from 7,000 yen to 8,000 yen ($78) per passenger per flight or for $320 in fuel surcharges for a family of four.

Among the challenges is the insufficient hotel rooms allocated to the Japan market, Merner said. He said it used to be that Japanese tourists were a priority for hotel rooms.

Other challenges include the use of smaller aircraft for groups from Narita, frequent suspension of Delta night flights from Narita, lack of seats from Guam to Saipan to attract passengers from United Airlines’ gateway cities in Japan, and unstable flight services from Saipan to Tinian and Rota. Merner suggested rebooting the Japan strategy.

Merner said arrivals from China are expected to reach 140,000 in 2014, from only 116,958 in 2013 and from 85,966 in 2012. China arrivals were only at 26,878 in 2008 and 29,814 in 2009.

Arrivals from Korea are eyed to reach 17,633 in 2014, an increase from 11,002 in 2013 and from only 5,611 in 2012.

Merner noted that in addition to the CNMI’s fastest growing market, Russian visitors are also the highest-spending visitors to the CNMI, spending an average of $4,129 per visit.