Hotel occupancy rate grows 4%

Hotel occupancy rate increased four percent to 63 percent in the third quarter of 2000, intensifying upbeat moods created by the apparent growth of the Northern Marianas tourism industry in the first three months of last 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 increase in the average hotel room rate during the July-September 2000 period, from $84 in the second quarter to about $95.

The average hotel room occupancy rate of 62 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.

However, the higher number of visitor arrivals failed to pushed the average hotel room rate of $90 in the first three quarters of last year, which is still lower compared with 1999’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.

The CNMI tourism industry has manifested strong rally in the first eight months of the Fiscal Year 2000, as hotel room occupancy taxes generated by the Commonwealth government jumped 7.5 percent to $4 million from $3.7 million.

The increase suggests the recovery of the islands’ travel sector although much of the growth in the industry was spurred by the rebound of the Korean market and the entry of tourists from Taiwan.

Government finance managers explained the increase in hotel room occupancy tax is attributed to the 50 percent increase in the number of Korean visitors coming into the Northern Marianas and the entry of CNMI’s newest tourism market — travelers from Taiwan courtesy of Mandarin Airlines.

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 room occupancy tax dropped since 1997, the time when major Asian currencies like the Japanese yen, Korean won, Philippine peso, and Thailand Baht weakened against the United States dollar.

In FY1999, the level of revenue generated by the CNMI government from hotel occupancy tax dipped by $1.7 million to $6 million from year ago’s $7.7 million, representing a quarterly collection of 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.