Economy affects Palms upgrade

Plans for renovations to upgrade Palms Resort Saipan into a five-star international hotel are still underway, but the timeframe for completing the project will need to be extended.

Palms has been in negotiations with large chains, such as Hilton and Sheraton, to take over management, but before that can be done, several renovations need to be completed. Due to the rapid changes in the global economy, the project is going to take longer than expected, said Hiroyuki Saito, chief financial officer for United Micronesia Development Association Inc. UMDA owns the hotel.

Saito said he could not disclose what hotel chain they are in negotiations with, although it is rumored to be Hilton. There is a memorandum of understanding between the two parties that lists the renovations Palms needs to complete before the new partner will take over management and promotion, Saito said. UMDA will retain control of the hotel.

“We have a list of renovations requirements to satisfy such big hotels,” Saito said. “However, a dramatic thing, everybody knows, just happened in the international economical situation. We are not afraid of the situation, and we don’t have any idea right now to suspend or give up the project. We need to be really careful in how to approach the market. Obviously the market demand has been changing.”

The prospective hotel management company listed the requirements before the worldwide economy changed, and even the management company is changing some of the things they submitted, Saito said.

“For that reason, I think the initial plan of a timeframe has become a little bit longer than we expected, in order to find the right marketing tools and components to address the right clientele,” he said.

The plan is to wait until there is a more clear-cut picture of the economic impact, and then begin construction and renovations to the rooms, Saito added. For the nameplate to actually change and the new management to take over, he anticipates it to take two years.

But, Saito stressed, this does not mean the company is giving up or reducing their plans.

In fact, he said, changes to the hotel continue on a daily basis. The hotel’s Japanese lunch buffet re-opened last week and the fitness center has undergone renovations, including the addition of Pilates equipment. The hotel plans to have the biggest Pilates studio in Micronesia and offer instructor certification for Japanese Pilates teachers. The Teppanyaki Restaurant is also being renovated to offer a bigger grill center with a patio to make it attractive to tourists and locals alike, he said.

In November, it was reported that the LaoLao Bay Golf Resort project was being scaled down due to the economy and the drastic depreciation of the Korean won.