Occupancy rates are up!

While our hoteliers have seen occupancy rates sliding below the 60 percent level, I’m pleased to note that two other occupancy rates are actually climbing. These are (1) the occupancy rate for the jail, which seems to be doing a banner business now, and (2) the occupancy rate for government offices, which are being filled with the ranks of almost 700 new hires.

Oh, I love it. This really is an elegant combination of factors. This is poetry.

After all the businesses flee, our entire population will either be in the hoosegow or in government offices. It reminds me of some of the meaner parts of the Caribbean’s Puerto Rico.

The Commonwealth hasn’t seemingly considered the down side it faces. The economic tooth fairy might disappear, and take with her those shiny new T-100’s. Actually, she doesn’t have to take them; they’ll fall into disrepair soon enough. She’ll just refuse to cut any checks for new ones.

As the free and easy money gets less free and not so easy, things here are gonna get nasty. Or, should I say, nastier. Either way, you ain’t seen nothing yet, friends. The competition for this money will be held largely in powerful government circles as the game of financial musical chairs drones on. And it’s going to be heated, because, eventually, there won’t be enough dinero to go around. The economic pie in shrinking, while expected entitlements to it are ballooning.

In the meantime, I’m waiting for the last milepost on the financial highway to Hell: will a major hotel here throw in the towel? That’s the question in my mind. If a major hotel falls, and airlines justifiably cut back on their service, we’ll be up against what economists call a contraction in supply. Don’t try to explain this to the intellectuals at the MVA, they’re too busy thinking about what they want for lunch. But, believe me, if you corner someone with a three digit IQ in the private sector, you’ll find they’re not willing to take the survival of the local tourism industry as a given.

Which puts our eyes back on the hotel issue. With occupancy rates sliding below 60 percent, I’d love to glance at the cash flow statements for some of the larger operations. At what point will money flowing out exceed money flowing in? That’s the issue. Never mind the murkier realms of profit and loss, of return on investment, and all that stuff. The point to ponder is the threshold at which it would be better cash management to just shut the bugger down than to keep operating and to keep bleeding money.

And don’t lose sight of ancillary socio-economic factors. If Garapan becomes a semi-ghetto, populated with mean thugs, purse snatchers, pushy pimps, and scurvy hookers, the demand for tourism here will continue to fall.

So here’s my ingenious proposal: If and when a major hotel closes its doors, let’s convert it into a prison. Believe me, we’ll need the space.

Stephens is an economist with Stephens Corporation, a professional organization in the NMI. His column appears three times a week: Wednesday, Thursday and Friday. Mr. Stephens can be contacted via the following e-mail address: ed4Saipan@yahoo.com.