MVA: Other markets can’t offset loss of Russian visitors

The Marianas Visitors Authority will be hard-pressed to replace tourists from Russia once the CNMI’s control of immigration is federalized by June 1, 2009.

In a presentation to the Legislature last week, the Commonwealth’s tourism agency disclosed that a single Russian tourist is equal to an average of 3.7 visitors from other markets.

MVA said this is because Russian visitors typically spend more and stay much longer than packaged tourists from the other markets.

Extrapolating on these numbers, MVA said the estimated Fiscal Year 2009 arrivals of 9,267 Russian tourists is the economic equivalent of about 34,288 package tourists from Japan, Korea and China.

Due to the expected decline in air services from Korea, Japan, and the exclusion of Russia and China markets from the U.S. visa waiver program, MVA’s estimates a drop of 25,956 in visitor arrivals this fiscal year, resulting in a decline of $2.8 million in hotel revenue and a drop of $8.2 million in total financial impact on the island.

MVA officials also estimated that arrivals in FY 2009 will total 330,068 from all markets. These include Japan with 203,663, Korea with 85,870; China with 31,267; and Russia with 9,267.

The total arrivals will bring hotel revenue up to $57 million as well as $229 million for island expenditure, which revs up the total fiscal impact to $939 million.

Compared to actual FY 2008 arrivals of 356,024 from the same markets, hotel revenue recorded by these tourists was $59.9 million; $229 million for island expenditures; and total fiscal impact amounting to $948.2 million.

In the last fiscal year, MVA recorded 202,041 arrivals from Japan, 116,710 from Korea, 31,095 from China, and 6,178 tourists from Russia.

MVA officials disclosed that estimated annual seats from Japan with no cancellation will total 320,804, based on thrice weekly flights for 24 weeks per year as currently scheduled.

However due to the pending cancellation of air seats from Osaka and the downgrade of aircraft from A330 to B757, MVA estimate that only 238,076 seats remain for the CNMI on an annual basis. MVA reported that a total of 82,728 seats will be lost due to these decisions.

The CNMI has two flights from Osaka, two from Narita, and one from Nagoya.

Based on a load factor of 75 percent, the direct economic impact of lost seats from Japan will amount to $51.3 million in FY 2009, or $108.7 million on an annual basis.

The indirect economic impact, however, will total $168.1 million in FY 2009 and $356 million on an annual basis.

Asiana Airlines’ downgrading of the aircraft it uses for flights to Saipan—from 298-seat capacity to only 182 seats—will also mean a direct economic impact loss of $17.3 million this fiscal year while indirect impact will amount to $56.8 million annually.

The Russians’ exclusion from the visa waiver program, meanwhile, is projected to incur a loss of about $49 million in direct economic impact in FY 2009 or $78.7 million on an annual basis, while indirect impact is seen to clock in at $108.9 million this fiscal year, or $184.5 million annually.

MVA said the overall negative economic impact this fiscal year is $117.7 million directly and $333.8 million indirectly.

On an annual basis, the overall direct economic effect is at $204.7 million and $597.4 million indirectly.

MVA officials also disclosed the anticipated loss of air seats and air service from various destinations will have a greater impact on the jobs of people both in public and private sectors.

The agency estimated that a total of 5,078 jobs may be lost—2,398 in public and 2,680 in the private sector—due to the decline in tourist arrivals.