‘Harsh realities’
THE CNMI’s post-pandemic tourism arrival numbers have remained so low — if not at rock-bottom levels — that reasonable people expect some significant improvements this year. After all, the islands’ primary market, Korea, continues to recover, and Hong Kong Airlines has just resumed its flight service to Saipan. But the two other major markets — China and Japan — are barely showing any signs of life. And with hotel occupancy rates down to 36%, there are not enough tourists for all the hotels on island — even if a hotel is a well-known international brand like the Hyatt.
As pointed out by HANMI, the decision to shut down the hotel indicates a loss of confidence in the short- or long-term prospects of the CNMI’s tourism industry. The Japanese-owned Saipan Portopia Corporation, which runs the Hyatt, has stuck with the Commonwealth during the Asian currency crisis, 9/11, the Avian Flu, SARS, the typhoons and the pandemic restrictions, but it says the current “challenges” are just too “harsh.”
Meanwhile, many other businesses are either shutting down or downsizing, which involves reducing work hours or laying off employees — or both. A quick look at certain buy and sell pages on Facebook will give us an idea of the number of residents leaving the island or planning to do so.
For several months now, HANMI and the Saipan Chamber of Commerce have been alerting the CNMI’s elected officials about the dismal state of the tourism-based local economy. In Nov. 2023, HANMI and the chamber said the tourism industry was in a “desperate mode.” In Feb. 2024, a hotel official told lawmakers that prior to the pandemic, “Hyatt, at any given point, 70% of their occupancy was Chinese.” But arrivals from China — and Japan — have remained alarmingly low. There are still not enough tourists for the remaining hotels on island. How long can they — and other businesses — endure financial losses?
Politics in command
HANMI has repeatedly stated that the CNMI’s high dependence on only one source market — Korea — and the absence of a large secondary source market of visitors are the reasons for the low occupancy rates.
But for many elected officials on Capital Hill, the bottom-line is not the economy, but their political survival. To obtain revenue that the faltering tourism industry can no longer generate, the administration has proposed tax/fee hikes, which its political allies in the House promptly passed without public hearings. The goal, one of them publicly acknowledged, is to save…government jobs.
Fortunately for hard-pressed taxpayers, the Senate has refused to be another administration rubber-stamp. Senators have conducted public hearings on the tax/fee hike measures on all three main islands, and allowed members of the community to publicly speak out against these ill-advised bills.
To be sure, the governor can insist on the wisdom of his “pivot” pronouncement, and his undying belief that military and other federal projects would, any minute now, save the day. But in the meantime, he must figure out how this bloated government can live within its means because its actual revenue collection is likely to decrease further.
One door closes, another one opens…at the airport
THE governor said he is looking for “solutions.” OK. But there is no need to form another “team” to “see what are the possibilities.” HANMI has already drawn a list of “key actions” that could help save what’s left of the tourism industry. These include the reinstatement of Annex VI of the U.S.-China Air Transport Agreement of July 9, 2007; more MVA promotions in other markets, including China; the implementation of the CNMI Economic Vitality & Security Travel Authorization Program; and an eventual rollback of CPA’s landing and terminal rental fees to pre-pandemic levels.
According to HANMI, several CNMI government officials — the U.S. delegate and CNMI lawmakers among them — have already expressed support for the reinstatement of Annex VI, but not the administration or the CPA board. The governor said his administration is looking at “everything that we need to do.” Well, look no further sir.
