Gov’t reports all-time low in hotel occupancy tax collection

A strong manifestation that the islands’ tourism industry is at its lowest point, the CNMI government has reported a record-low in the amount of revenues collected from hotel occupancy taxes since 1996.

Government records disclosed hotel occupancy taxes averaged $2.8 million in the first half of the financial year 2000, which translates into about six percent fall from the year ago’s semestral average of $3 million.

Figures from the finance department, listed in the Quarterly Economic Review prepared by the Central Statistics Division, revealed hotel occupancy taxes contributed $6 million into the overall revenues generated by the CNMI government in Fiscal Year 1999.

A review of official government figures will show that the first half of FY 2000 was the first time since the financial year 1996 when semestral hotel occupancy revenues dipped below the $3 million-mark.

In 1996, per semester average amounted $4.95 million, or when more than 700,000 tourists visited the Northern Marianas for the whole year, helping hotels achieve an occupancy rate of 85.6 percent.

While the rate suffered a modest fall in 1997, dropping to 81.4 percent, hotel occupancy revenues soared $10.8 million or an average of about $5.4 million per six-month period.

The figure fell to a per semester average of $3.85 million, or $7.7 million for the entire 1998, when the Northern Marianas started feeling the pinch of financial upheavals in major Asian countries like Japan and Korea.

During the same year, visitor arrivals dropped by close to 30 percent to about 490,200 from the previous year’s 694,900 tourists. Arrival statistics slightly improved in 1999, reaching 501,800 travelers to the Northern Marianas.

Hotel occupancy rate fell seven percent to 58.9 percent in the second quarter of 2000, dampening moods brought about by the apparent growth manifested by the Northern Marianas tourism industry in the first three months of the year.

Analysts said this only shows the volatility of the travel sector and how easily can the rally of neighboring Asian economies affect economic and business conditions on the islands.

Preliminary statistics obtained from the commerce department also revealed a significant drop in the average hotel room rate during the April-June 2000 period, from $91.13 in the first quarter of the year to only about $83.52.

However, the average hotel room occupancy rate of 61 percent for the year is still higher than the median rate recorded in 1999 and 1998 at 60.4 percent and 58.1 percent respectively.

Hotel occupancy rate during the pre-Asian crisis period was 81.4 percent, which was spurred by the demand from close to 700,000 tourists from Japan, Korea, mainland United States and Guam in 1997.

At the same time, low visitor arrivals pulled down the average hotel room rate of $87.325 in the first semester of the year, compared with the previous year’s $99 and $117.23 in 1998.

In 1997, or when visitor arrivals to the Northern Marianas were still high, average hotel room rate on the islands was $136.07.

Aside from the significant drop in the volume of tourists coming into the CNMI, other factors like the elimination by Continental Micronesia of all its direct flights between Saipan and major cities in Japan aggravated the situation, officials said.

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.