HANMI frets over fate of hotels with expiring leases

The Hyatt Regency Saipan and four other hotels on island are faced with possibly losing their lease to new bidders. (Bea Cabrera)

The lease of five landmark hotels on Saipan is set to expire in four years, and the continued uncertainty over the fate of these leases worries the Hotel Association of the Northern Mariana Islands.

And in the years that the question has been up in the air, what used to be a sure shot at another lease is no longer true, with many new players in the field that have changed the picture substantially.

For the record, the resorts that have expiring leases are Hyatt Regency Saipan, Fiesta Resort & Spa, Kanoa Resort, Pacific Islands Club Saipan, and Coral Ocean Point Resort Club.

HANMI chair Gloria Cavanagh said the issue will have a great impact not only on the CNMI’s hotel industry but also on its lone economic driver, the tourism industry.

“These five hotels approached the government years ago and we have been doing so up to now. We were sent a letter in 2013 promising a new lease…but everything was still up in the air. And now things have changed. New players are now on board and the promise of lease is no longer a promise,” she said.

In March 2016, former Public Lands secretary Pedro A. Tenorio came out with two “alternative” lease agreements, which should undergo legislative approvals. First, by allowing the hotels to get an extension on a portion of public land that is currently being leased. Second, to allow the hotels to terminate their respective leases and apply for another long-term lease.

To date, DPL has enforced the request for proposal provision, which means DPL is now soliciting proposals for public lands upon expiration of existing leases in the CNMI. That’s what it did with the Mariana Resort & Spa property.

DPL’s position is to award leases based on competitive proposals received and evaluated by DPL and proposing the highest value to DPL.

Cavanagh characterized this as: “Even though an individual or business has been here for 35 years and someone bids say, $100 more, the latter wins. …When you look back to what these businesses have done or contributed to the economy, that should mean something.”

She pointed out that one hotel has stopped its renovation plans because of uncertainties with DPL.

“One of the major hotels already has a plan to do a $25-million renovation in their property but because of the issues with DPL, they halted because there was no assurance that they will still get the lease and earn their money back,” she said.

Mariana Resort & Spa lost its lease after DPL issued a letter of intent to award the new lease to Imperial Pacific International Holdings.

“We have a product that is averaging 100 percent occupancy so far this year and right now we have been improving facilities. We are changing floors even if we have less than a year in our lease. We have to make improvements. Anytime, either DPL or IPI can say ‘we are moving in; and we are changing floors.’ …Hotels were here even when the economy was so low everyone was losing money left and right but we tend to forget the help that has happened prior to today.”

Unlike the CW-1 issue, which is a federal government issue, Cavanagh said the lease of public lands is a local government issue.

“If nothing is done soon, four years is practically tomorrow. Four years is very short in terms of planning and developing for these hotels,” she said.