Hotel occupancy taxes dip by $1.7-M

The level of revenue generated by the CNMI government from tourism-related businesses continue to fall, with hotel occupancy tax dipping by $1.7 million in 1999 from year ago, government records disclosed.

An official report obtained from the Department of Finance showed tax collection from hotel occupancy dropped to $6 million during the last Fiscal Year, compared with the figure recorded in 1998 at $7.7 million.

Quarterly collection of hotel occupancy tax fluctuated since the first three months of the Fiscal Year 1999 but was reported to have averaged at only $1.5 million in a three-month period.

Hotel occupancy tax started spiraling down in 1998 when government collection reached only $7.7 million from the previous year’s $10.8 million.

The Commonwealth generated $9.9 million in total revenue from the duty category in 1996.

Hotel owners in the Northern Marianas have consistently complained about declining hotel occupancy, with the lowest in eight years having been recorded in February 2000 at 69.32 percent.

During the same period, large hotels reported 70.62 occupancy rate while small hotels had only 63.33 percent. Average room rate for large hotels was $90.61, dropping by $3 this year, while their smaller counterparts have an average room rate of $76.93.

While primarily pointing the finger on the economic downturn in major Asian countries, the Hotel Association also blames the government’s apparent apathy on the business community’s concerns.

In a previous statement, HANMI president Ron Sablan said mounting pressures on the business community are making the Commonwealth a difficult place to do business, shooing away potential foreign investors.

The dwindling hotel occupancy rate may also be blamed on the declining volume of passengers disembarking at the Saipan International Airport as aircraft traffic on the island continues to see major reduction.

The persistent decline in visitor arrivals, which started slowly picking up only during the second half of 1999, gave birth to gloomy predictions on the developments in the local economy since this is generally intertwined with the economic activities in the neighboring Asian region.

Economic forecasts in Japan has indicated that the yen may sink further to between 150 and 180 against the US dollar. The Japanese yen has weakened from Y118 in August 1998 to Y144 during the same period last year, hitting an eight-year low against the U.S. dollar.

Japan overseas travelers, who are CNMI’s major market, have stayed home in record numbers, with only 7.425 million Japanese taking a trip out of the country from January to June last year, representing an 8.3 percent decline.

However, international traffic count for January disclosed an increase in enplanement by 0.23 percent and a one percent improvement in the total number of people who disembarked at the Saipan International Airport during the same period.

This, even as aircraft traffic from foreign destinations to Saipan declined by 19 percent during the period under review from the January 1999 level.