‘Hotels losing up to $10M a month’

The Hyatt Regency Saipan in Garapan. (BEA CABRERA)

The CNMI is on its eighth month under the state of emergency due to COVID-19 and local hotels are hemorrhaging at an estimated combined amount of $10 million a month. The situation is so dire that member-hotels of the Hotel Association of the Northern Marianas Islands are being forced to make hard choices these days to stay afloat. That includes the termination of many employees, including many of their foreign workers, called CW-1 workers.

HANMI chair Gloria Cavanagh said the association, which represents 12 hotels in the CNMI, is losing “millions and millions of dollars every month in this industry amongst the 12 of us. I don’t really know everyone’s numbers but I would guess we are losing from $3 million to $10 million a month.

“This is also a tremendous loss to the CNMI economy as the government is not collecting CNMI business taxes like [business gross revenue tax] and there is no hotel occupancy tax,” she added.

Another hard decision that HANMI hotels have had to do—“something we don’t like doing and we didn’t think we would be doing”—is the early terminations of many CW-1 workers. She said many member-hotels have already notified their staff that they are being let go as this is the only way they could sustain and maintain operations.

“How many have currently applied for unemployment? Both U.S. citizens and then you have 12,000 CWs? That is a lot,” she added.

CW-1 workers are being displaced by early terminations or expiration of their CW permit under Public Law 115-218, which requires them to exit the CNMI for 30 consecutive days at the expiration of the second renewal. A CW permit holder would not be eligible for a renewal until after the employee exits the CNMI. Only then can an employer submit a renewal petition for that worker. This is called the “ touchback provision”—which requires foreign workers to touch back to their home countries.

Cavanagh, who is also the general manager of Pacific Island Club Saipan, said that management has been doing a few early CW terminations. “I do not foresee and I don’t think anyone has the crystal ball to find out when we are actually going to be open again. Hotels cannot reopen until we have regular flights.

The foreign workers that PIC is renewing work in its engineering department, which is a skills position. She said they would like to keep some culinary personnel “but a lot of them are being capped so they have to do touchback.”

To date, four out 12 HANMI members are in operation: Hyatt Regency Saipan, Surf Rider in Chalan Kanoa, Kensington Hotel, and Aqua Resort Club.

HANMI member Hyatt Regency Saipan never ceased operations. For a time, they were the only hotel in the CNMI receiving Federal Emergency Management Agency officers, health care workers, and federal contract workers. In April, they furloughed some employees and laid off others as a means to ensure financial stability.

Last week, CW workers at the Hyatt were informed of the inevitable. “We are giving them over a month’s notice of non-renewal. …We didn’t terminate anyone effective immediately. We met with our CWs on Friday and they were all informed that due to the business outlook, the impact of COVID-19, and the uncertainties of having our lease renewed, we won’t be renewing contracts this coming Sept. 30, 2020,” said Hyatt Human Resources director Josephine Mesta

“We advised employees that United Airlines flights to the Philippines are scheduled for Sept. 14 and Sept. 21, and we would like to get them on those flights, so they do not overstay and jeopardize any future employment opportunities,” Mesta said.

Fiesta Resort & Spa in Garapan has laid off almost 100 CW workers and some culinary staff at Kensington Hotel in San Roque need to touch back to their home countries by next month.

To jumpstart the tourism industry, Canavanagh said that there have been talks about having temporary flights to come to Saipan last week. “But two flights [are] twice a week with 170 seats and we have 12 hotels; it just doesn’t work. So, even if it was for those special flights in, [PIC] wouldn’t open. E-Land has three properties or hotels and it makes no sense fighting amongst everyone for such a small market.

“We are not getting back the Chinese tourists soon because there is a national ban, Japan flights are suspended until October already so we don’t know what is happening there. The first country that has the possibility of opening is Korea, but then that’s just two flights in one week, not a big plane. [It] doesn’t make any sense for all the three of us to open,” Cavanagh added.

She pointed out that zero tourists for many months now has pushed the majority of hotels in the CNMI to stop operating, which also affects everything like schools and how much money they get, power, water, Medicare—”just every single thing” because everything comes from the tourism economy.

“The hotels are shut down, so the CNMI economy is shut down. We all have to work together because the tourism economy is everyone’s business.

“If you want proof, look at the situation that we are in today. We don’t know when we are going to get out of this pandemic and, once we get out, I hope the community understands how important it is that we have investors that are willing to go through times like this and still look at the possibility of opening in order to make the economy start running,” Cavanagh added.