‘Govt not doing everything for tourism’

Almost three weeks after Asiana Airlines cut its two daily flights to just one, the Hotel Association of Northern Mariana Islands is not convinced that the government is doing everything it can to help the CNMI’s tourism industry, which is currently the Commonwealth’s only economic driver.

“Of course HANMI is concerned about the decrease of flights of Asiana that started May 28. We understand this to be an assets redistribution issue. We are especially concerned of the reduction of flights from Delta Air Lines at the end of the year,” HANMI president Gloria Cavanagh said in an email to Saipan Tribune.

As the sun slips below the horizon, this floating platform decorated with plants is an added attraction to the Saipan lagoon for tourists and joggers. Hotel Association of Northern Mariana Islands said it doesn’t believe the government is doing everything to help the tourism industry following the reduction of flights from legacy airlines such as Asiana Airlines and Delta Air Lines. (Ferdie de la Torre)

This comes after Marianas Visitors Authority managing director Perry Tenorio said that Asiana’s decision to reduce flights to the CNMI to only once a day is projected to hamstring the CNMI tourism industry, and will likely cost the local economy $55 million.

For the balance of the fiscal year, the Korea market will be looking at a reduction of 31,250 seats to the CNMI from May 28 to the end of September. This is a decrease of 26,724 persons.

MVA’s projected revenue for the tourism industry was $1.22 billion as of March 2015. With the loss of $55 million, this will go down to $1.17 billion, a 4.6-percent reduction.

Despite Asiana Airlines and MVA stating earlier that CNMI’s largest source market—Korea—is not dwindling, the unexpected outbreak of Middle East Respiratory Syndrome in South Korea recently might become another factor that may possibly lower travel of Korean tourist to the CNMI.

“With the decrease of flights from Asiana and now MERS, we are expecting slightly lower occupancy rates. We also have to remember that a large number of our Chinese visitors transit through Incheon Airport [Korea] and take both Asiana as well as Jeju Air,” said Cavanagh, who is the general manager of Mariana Resort & Spa.

According to the MVA, arrivals from Korea went up 79 percent in May to 16,237 visitors. However, this only data from May and MVA’s data for June is expected next month.

Delta’s pullout this winter

The CNMI has three large source markets—China, Korea, and Japan. Russia’s market fell to 128 arrivals as of May, while Japan decreased by 9 percent last month.

The Japan market is expected to go down further, as Delta Air Lines will reduce its flights to Saipan this winter.

Delta’s corporate communications office earlier stated that six of its B747-400s will be retired by the end of 2015, and the overall seat capacity next year will be reduced and frequencies on flights to Honolulu and Saipan will be cut during the winter due to continued devaluation of the yen and average fare decline with lower fuel surcharge.

MVA and other tourism stakeholders are aware of this, and are “trying” to pick the market back up.

“Our once safe market, Japan, is not in crisis anymore but in critical condition. We believed that MVA would be throwing all available resources to try to save this market, but we are not convinced that everything that can be done is being done,” Cavanagh said.

Cavanagh also said that when the CNMI starts losing seats from legacy airlines, it leaves an ominous business climate.

“We are becoming a destination that is reliant on charter flights and low-cost airlines. What does that say about our destination?” Cavanagh said.

China safe or not?

Last November, Delegate Gregorio Kilili C. Sablan (Ind-MP) welcomed the signing of reciprocal visa validity arrangement that extends visas from Chinese visitors to the U.S for up to 10 years and vice versa for American tourists visiting China.

However, since 2009, tourists from China have been allowed to visit the CNMI without a U.S visa pursuant to the Department of Homeland Security use of parole authority.

DHS could possibly take this away leaving harder challenges for Chinese tourist entering the CNMI, because many of those who come to Saipan solely for birth tourism do so by boarding a signatory airline such as Asiana and not through charter tour flights.

“Although some would call it naïve to speak about the potential danger of losing the visa waiver, as the major stakeholders of this economy, we must always look at this possibility,” Cavanagh said.

New investors

The CNMI is also expecting new developments from Best Sunshine Int. Ltd., Honest Profit, the opening of Kensington Hotel [former Palms Resort], including other hotels, despite another possible decline on tourism.

Saipan Chamber of Commerce president Alex Sablan told Saipan Tribune that what can’t be resolved is the overall effect of 10,000 rooms in the Commonwealth.

Sablan said that CNMI has to think about how many people do 80 percent occupancy and 10,000 rooms come to?

Sablan said, a worst-case scenario would be that if 10,000 rooms is multiplied by 365 days a year it would go up to 3,650,000 rooms with a 3.5 days average stay for visitors times two guests per room totaling to 2,085,714 tourists at near 100 capacity “but let’s take the norm today at 80 percent capacity that’s still 1,668,571 for the year.”

Cavanagh said that their stats reported on April for average monthly occupancy this year was 87.86 percent. The occupancy rate on May of this year is at 82 percent, an 8-percent increase.

“Year to date the average occupancy rate is 83.65 percent with a year to date average room rate of $119.26. For the same time last year, the occupancy rate was 73.67 percent with a year to date room rate of $113.35. So far this week the overall average occupancy rate was about 81 percent on Monday,” she said.

She also said that HANMI feels that they are being set aside in favor of prospective investors. “Will these prospective investors stay through times like after Japan Airline pulled out? Or will they leave scars in the CNMI like La Fiesta.”

“Of course we want growth and support new investors, but the CNMI cannot ignore the contributions that our HANMI hotel members have given to them. Increases in the tourism economy just started less than three years ago after dismal occupancy rates since 1998,” she said.