‘Extending leases will encourage re-investment’

The Marianas Visitors Authority supports legislation that would extend public land leases to 55 years in order to encourage hotels to improve their facilities.

A bill that is currently in the House of Representatives would set the initial lease agreement at a maximum of 40 years, with an option of extending it for another 15 years. Senate Bill 20-35 was introduced by Senate President Arnold I. Palacios (R-Saipan).

The current land lease law only allows an initial lease of 25 years and an option for another 15 for a maximum of 40 years. S.B. 20-35 aims to increase that to a total of 55 years,

MVA managing director Chris Concepcion said the agency’s board hasn’t discussed the expiring leases for hotels on public lands “but we have come out publicly in support of [S.B. 20-35].”

Extending the lease would allow hotel investors to re-invest in their properties to keep up with the demand, he said. “If we want high-end tourists, we need high-end hotels. And right now, the CNMI just doesn’t have it, with maybe the exception of Kensington Hotel.”

He added that the CNMI needs Hyatt Regency Saipan, which has an expiring land lease in December 2021. “We need hotels like the Hyatt Regency in particular to upgrade their facilities to meet customer expectations as a Hyatt branded property.”

“We cannot expect them to do that without guaranteeing a solid return on investment by allowing for an extension on their lease. It just makes no economic sense to blow millions of dollars in renovation, only to have it potentially disappear in three years.”

Concepcion said Hyatt is one of the remaining Japanese-backed properties in the CNMI. “Everyone preaches about Japan. If you want Japanese tourists, we must protect and keep Japanese anchor investments like the Hyatt Regency.”

Hyatt general manager Nick Nishikawa had already expressed their corporation’s desire to remain on Saipan. Grandvrio and Aqua Resort Club are also owned by Japanese companies.

The CNMI saw a significant decline in the Japanese tourism market due to the pullout of Japan Airlines and the lack of direct flights. Delta Air Lines, a few years later, started Japan-Saipan flights but ended their service this month.
The land leases of Coral Ocean Point Golf Resort and Pacific Islands Club Saipan, under the E-Land Group, and TanHoldings’ Fiesta Resort & Spa Saipan and Kanoa Resort are also expiring.

United front

Hotel Association of the Northern Mariana Islands president Gloria Cavanagh, PIC’s current general manager, also supports Concepcion and the MVA’s stand on the land lease issue.

“HANMI, the Saipan Chamber [of Commerce], and MVA requested and were granted a meeting with the House last month to do a presentation regarding S.B. 2035. Without this bill, the continued growth to a sustainable economy is not possible,” she said.

“MVA had gone through findings from their Feasibility and Sustainability Study done last year. SCC presented statistics on the position of the economy, which included the collection of taxes.”

She added that HANMI also presented data on tourism in the CNMI in the last 26 years, plus the hotel properties that are up for renewal from their expiring land leases.

“Basically, three companies are affected—Hyatt, E-Land (PIC and COP), and TanHoldings (Fiesta and Kanoa). All three companies are very generous and responsible corporate citizens. They are a sure thing,” said Cavanagh.