Plight of 260 Hyatt employees depends on lease renewal

Posted on Aug 19 2019

Kobe Portopia Hotel Corp. president and owner Hitoshi Nakauchi was on Saipan last week to continue negotiations with the Department of Public Lands about the renewal of Hyatt Regency Saipan’s lease.(DONNA RIVERA)

Hyatt Regency Saipan, still the only international brand hotel in the Northern Marianas after almost 38 years, has a public land lease that’s expiring in December 2021. Yet with only a little over two years to go, its lease renewal remains up in the air.

For Kobe Portopia Hotel Corp. president and owner Hitoshi Nakauchi, whose company owns Hyatt Regency Saipan, one of his biggest concerns is the future of Hyatt’s over 260 employees, who are local residents.

Nakauchi, who was on Saipan last week to meet with the Department of Public Lands and start the ball rolling on the lease renewal, pointed out that more than 80% of Hyatt employees are CNMI residents.

“When my company started operations, 60% of our staff were Filipinos. Now, we have evolved and have more than 80% local people are working at the Hyatt,” he said. “They are my concern and having a majority of local residents in our workforce has made a big contribution to the economy.”

Hyatt Regency Saipan general manager Nick Nishikawa echoed this concern. “Two-hundred sixty employees will be affected by the result of the lease renewal agreement and, including their families, it would go up to 1,000 people,” he said.

The lease of public lands in the CNMI is governed by law. Last December, the CNMI government enacted a law that authorizes certain existing public land lease terms to be extended up to 55 years and authorizes DPL to negotiate new public leases with certain existing public land lessees under new terms and considerations without publishing an RFP.

In his visit last week, Nakauchi called on DPL Secretary Marianne Teregeyo. “We talked about the land lease extension, whether it is possible or not or what kind of conditions should be met ….DPL will come back to us with their set of conditions for the renewal.”

On the side of Hyatt, Nakauchi said they don’t have specific numbers and conditions just yet. “[DPL] will come back to us and we will work on the conditions,” he said.

The original lease for the Hyatt property was inked 30 years ago, so Nakauchi expects the fees to go up.

“But as far as how much it [would go up] and how much we can bear, that we have not discussed yet,” he added.

According to Nakauchi, prior to his meeting with Teregeyo last week, DPL came up with a set of new lease conditions that were first shown to the Hotel Association of the Northern Mariana Islands and the Saipan Chamber of Commerce for review as the Hyatt is a member of both organizations.

He said the new conditions were found to be “difficult” and “prohibitive for us to continue.” HANMI reportedly complained that the new lease conditions were too “high” for a hotel to continue business operations.

“We gave it back to DPL and is currently under negotiations. …We hope to hear from them within this year or early next year. Otherwise, we don’t have time to prepare. Japan’s fiscal year ends in March and so, if our lease expires in December 2021, that will leave us one year and nine months to prepare and that is not enough,” he said.

DPL is also asking Hyatt for a list of how it plans to improve the property, the community, and the economy, Nakauchi said. He assured that Hyatt has such plans.

“First off, [we plan] to acquire basic equipment and replacements such as chiller equipment, reverse osmosis (filter systems), which makes distilled water from seawater and those kinds of thing cost a huge amount,” he said. “We plan to upgrade the guest rooms to be more modern, comfortable, functional design-wise, and suitable for this resort island. We also need to update the design of the restaurants,” he said.

Hyatt has indeed been doing many minor improvements over the years, he said, but if the lease is renewed, they are eager to do more.

Hyatt has also made an impact on the CNMI, according to Nishikawa. One of the recent Hyatt community outreach was the annual Hyatt Charity Golf Classic that was held last July, where they raised a total of $68,000 for five beneficiaries involved in education, preserving culture, sports, and job placements.

Hyatt also did not close its eyes to the community after Super Typhoon Yutu. “Many residents took refuge at the Hyatt Regency Saipan before and after the typhoon. …People came to the hotel looking for power outlets to charge their phones, cook their food and we…let them do it. After Yutu, we were prepared for our guests and the community,” he said.

Groups like the Northern Marianas Descent Corp. have been vocal about their desire to renegotiate the leases on public lands.

In an earlier interview, NMDC president John Gonzales said that NMDs were not in favor of the law that allowed lease extensions, saying NMDs do not benefit from the current land lease agreements.

“The over-arching position was that to keep the 40 years [lease] because, if they’re all expiring, let’s sit down again and negotiate the next 40 years. …We believe the current arrangement of 40 years under-represents us…and under-benefits us because the money doesn’t directly benefit us,” he said.

Nakauchi said he understands people’s feelings about public lands. “It’s their land so they want to make a good use of it. We should not get all the benefit from this land, we have to be able to share the benefit of the land. In that context, DPL and Hyatt can find a mutually aggregable position so that we can proceed.”

“…My father, Tsutomu Nakauchi, started this business 28 years ago, after acquiring it from EIE Co. (which had been operating Hyatt for 10 years prior to acquisition). …With those many years invested, we are ready to cooperate,” he added.

Nishikawa believes that Hyatt’s greatest impact in the CNMI is making the Marianas known worldwide, since they have 800-plus hotels all over the world and every hotel is an agent. “Each hotel has its own customers and if these customers want to travel to the Pacific, they usually recommend the Hyatt Regency Saipan. …Everything at Hyatt is connected like a chain.”

“People all over the world trust the Hyatt brand… For the CNMI, where tourism is the only industry on the island, those connections are very important,” he added.

Bea Cabrera
Bea Cabrera, who holds a law degree, also has a bachelor's degree in mass communications. She has been exposed to multiple aspects of mass media, doing sales, marketing, copywriting, and photography.
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