Hotels post record highs, lows in 2004

Saipan’s hotel room occupancy last year was the highest in seven years, while the average room rate was at an all-time low since the Hotel Association of the Northern Mariana Islands started collecting statistics in 1992.

Despite this, the organization is upbeat about investments being made in the hotel industry and future potential for the market.

Data compiled by HANMI showed that room occupancy in 2004 was 71.75 percent. In 2003, which was a difficult tourism year due to SARS, the occupancy was only 64.88 percent. The average daily room rate in 2004 was $80.42, down from 2003’s average of $82.11.

According to HANMI, the increased occupancy with reduced room rates generally means that hotels brought their prices down to attract visitors. This doesn’t translate to good business because it strains resources—manpower, utilities and other operational expenses.

Many hotels are still struggling to bring their earnings up to an acceptable level and some businesses are still in cost-cutting mode, said HANMI chairwoman and Century Hotel general manager Lynn A. Knight.

“As for Century, we enjoyed the highest occupancy in the hotel’s history, but it was still difficult to make money. With the low rate, the cost of basic utilities weighed especially heavy on our budget. In 2005, much of our focus will be on internal improvements and investments to be as energy efficient as possible,” she said.

Yutaka Fujita, Hotel Nikko Saipan general manager, agreed that the increase in room occupancy was not enough to indicate a general improvement in the visitor industry.

“2004 was slightly better than 2003, but we cannot say if the whole tourism industry is doing good,” said Fujita, who also noted that most visitors were first-timer travelers on a tight budget—another factor why the average daily room rate had not increased.

Michael von Siebenthal, Hyatt Regency Saipan general manager, said that while hotel room occupancy was moving in the right direction, rates are far too low.

This was echoed by Aquarius Beach Towers general manager William Hunter, who expressed optimism that 2005 looks like it is going to be a better year.

“The 2004 occupancy was good, but the average daily room rate dropped. We’d like to see the average rate go up a little bit and continue to have the same occupancy,” said Hunter.

Yoshiro Kishimoto, general manager of Coral Ocean Point, also said he saw improvements last year compared to the last few years. The year 2004, said Kishimoto, has been most favorable compared with 2003.

Kieran Daly, Pacific Islands Club general manager, said that 2004 was a very good year for his hotel. “I am happy to say that all measures have been surpassed; overall we improved on last year. Our auxiliary markets such as Russia and China are getting stronger.”

Daly recommended that with the opening of the China market, the CNMI should promote the islands as a boutique destination for high-end travelers to see better outcome in the long-term.

“The objective should be to build up this new market on high yield business over the next few years. The current infrastructure of Saipan can never handle volume and we should not want to,” he said. “There is a top-end market in China, but we have currently placed ourselves as a low-end destination with the current rates and packages being quoted in these early stages. The high yielding guests will not take a vacation in the same destination as low-end guests and that’s something we have to be careful of.”

The Dai-ichi Hotel Saipan Beach also described 2004 room rates as stagnant, but noted their hotel was looking forward to 2005 and new investments that would strengthen their business, as well as the destination as a whole.

“2005 will be a year of development and change as various properties renovate and begin to reposition themselves within the market,” said Dai-ichi general manager Mark Swinton, whose hotel will begin a complete room renovation in March.

HANMI is a professional organization composed of 15 of Saipan hotels representing a total of over 2,600 rooms. Several HANMI members noted that they had already begun—or would be making—major investments in renovations and improvements to their properties in 2005.