MVA: Budget cut will negatively impact marketing

Marianas Visitors Authority, the sole tourism promoter for the CNMI, is looking at cutting down on its marketing due to a drop in its fiscal year 2015 budget.

According to MVA managing director Perry Tenorio, the tourism agency’s proposed budget for fiscal year 2015 was $2.6 million, but the approved budget reallocated $1.16 million to the Public School System’s budget.

MVA had already developed a plan on how to spend its original fiscal year 2015 budget. The board, however, was put on notice that the Legislature has reduced MVA’s budget, leaving the agency fully dependent on the revenue from the hotel occupancy tax.

MVA board members, executives, and stakeholders present at the Sept. 23 public hearing mulled reducing the agency’s expenditure plan for fiscal year 2015 from $13.881 million down to $12.720 million.

“Our board had to reduce the expenditure plan. Leading up to the board meeting we had developed another expenditure plan on how to spend the funds we have and initially we were a little bit conservative,” Tenorio said.

He said they understand the value of PSS and they also understand that other government agencies would prefer to see an increase in their operating budgets.

Tenorio said the impact of the cut will be on the promotional efforts.

“We are hoping that we can maintain the level of tourism we have from prior years. So that our projected revenue is relatively on target but if it is cut then it will hinder the projected revenue for fiscal year 2015,” he said.

MVA is now predominantly funded by Public Law 18-1, the hotel occupancy tax, for 2015. P.L. 18-1 came into law in April 2013. For fiscal year 2013, half of P.L. 18-1 was implemented. Tenorio said that fiscal year 2014 was the first year ever that MVA fully benefited from the hotel occupancy tax.

Another funding source is through a share of the container tax, which is about $150,000 annually.

‘Cut on marketing efforts’

Tenorio said they might cut the offshore budget and that they have already informed their offshore offices about the recent reduction in budget.

With the recent decline in the Japan market and a likely drastic drop in the Russian market, marketing efforts are greatly needed.

About 20 percent of MVA’s budget goes to personnel and promotional efforts, while 80 percent goes to marketing. Tenorio said that 80 percent of the marketing will be impacted by the reduced budget because there is no way “to trim anywhere else.”

House Tourism Committee chair Ralph Yumul (Ind-Saipan) earlier said that MVA didn’t mind the budget cut. Tenorio said it is not that they didn’t mind the cut; they understood why it was needed.

“The tourism industry is the sole generating entity in the CNMI and marketing efforts is the main responsibility of MVA, to promote the CNMI product,” he said.