Gloria C. Cavanagh
Hotel Association of the Northern Mariana Islands
Q: In what ways is the high rate of occupancy in the hotels affecting Saipan?
A: From 1998 to 2012 we had experienced hotel occupancy rates of 54.43% to 73.06% with a total average of 63.15%. The average annual occupancy rates for 2013 through 2016 has been 85.05%. For this calendar year through March, our average occupancy rate is above 95%. In addition to the increase of occupancy, we have thus far experienced an increase of 5% in our average room rate from 2016. Our average room rates for the years of 2013 through 2016 compared to the average of 1998 through 2012 has shown an increase of nearly 38%.
As tourism is our only economy in the CNMI, this equates to larger collections in taxes, lower unemployment and an overall healthier economy.
Of course, it is not the perfect environment. We are coming out of 15 years of recession. Our properties are much in need of renovations and upgrades in order to continue being competitive in this market. This is easier said than done. The largest hurdle is the maturing of government leases for four of our major hotels. Two of the leases expire in 2021. It is impossible for these hotels to commit the capital for the necessary improvements.
Additionally, we are suffering a lack of a viable labor pool. With the CW-1 visas being coveted by construction workers for new projects, we are threatened by losing seasoned long-term contract workers. It is difficult to maintain the current staffing levels, much less the increase of staffing necessary with the increase of the arrival numbers.
Q: Where do efforts to regulate the taxation and licensing of bed and breakfasts stand?
A: The Marianas Visitors Authority is solely funded by the increase of the Hotel Occupancy Tax that occurred in April 2013. The MVA funds not only the offshore promotions and offices, but also funds many local events and destination enhancement. We are very fortunate that the current administration sees the value of adequately funding the MVA. In previous years, the legislature had taken funding away to transfer it to other agencies. This is totally against agreements made when the HANMI had negotiated and supported the increase of HOT. It was just in the negotiations of the fiscal 2017 budget where the administration vetoed that last attempt to redirect MVA funds.
As arrivals increase by double digits, the guest houses and BnBs are necessary in order to absorb the demand. However, they have to come into compliance with the laws. Of course, it is a matter of funding for MVA, but equally as important are the safety requirements for such lodging facilities. There is a move to reduce the HOT for these types of lodging because it benefits the locals that own these facilities. This is not something the HANMI supports. The HOT is a collection of funds that is charged and remitted to the government. It does not come out of the coffers of the facilities. If we want to talk about benefits to the local community, what about the thousands of locals employed by the HANMI hotels? Does this mean we should get a break also?
A portion of the funds collected from the increase of the HOT is allocated to the Department of Finance for enforcement of the HOT. We are happy to see that this enforcement is finally being prioritized.
Q: What is on the top of HANMI’s priority list for the next 12 months?
A: Getting the leases for the four hotels taken care of. I believe that this year is crucial for some of these properties to decide whether to go on or sever their leases early in order to save the reputation of their brands.
Q: Has the tourism industry fully recovered from Typhoon Soudelor?
A: With the resilience of our people, the tourism industry is close to being 100% recovered. However, because of the increase in investors, we are having problems with housing of our staff, both contract and local. Many apartments are being purchased for lodging facilities, which displaces many employees.
Q: What were the reactions of HANMI members to the Horwath HTL feasibility and sustainability study published in January?
A: Over the past year or so, it has been the concern of the HANMI that there are too many approved projects. We have always promoted controlled growth. There are many issues, such as airport lines, infrastructure, housing and staffing, that have to be considered when approving projects. We are already seeing the strains due to new developments. We are in support of most of the findings of the report.
Q: Which findings from the Horwath study will the tourism industry be supporting?
A: All of it. Of course, [one finding is] the need for the improvement of our products. This is tied directly to the government land leases. This has to be addressed and soon. As with the last question, we see that the long waits at the airport are crucial. This is the first “welcome” that our guest experience. We need to decide what kind of destination we want to be. This means controlled growth.
Q: What has been the local reaction to the FBI raiding of local businesses over visa violations?
A: With the difficulties that we are having with our CW-1 caps, we are horrified by the blatant abuse. This is a good thing for the local businesses. We hope that U.S. Citizenship and Immigration Services will be willing to work with the local agencies to ensure that approvals of these visas are prioritized to avoid hoarding of these slots.
Q: How encouraged are you and the community over Gov. Ralph Torres’ visit with President Donald J. Trump?
A: It is very much an honor for us to have Gov. Torres meet with our new president. I trust that the governor was able to present our concerns regarding the parole in place for the China market. Currently, the CNMI is enjoying hotel occupancy rates of over 90% in the last four months. Without this market, we would be expecting occupancy rates in the 60% range. It was not too long ago that we saw these kinds of numbers. From 2007 through 2011 we had visitor arrivals of less than 400,000 annually. It is just recently that our arrivals hit over half a million. During [low occupancy] times we experienced closures of many businesses and an exodus of many of our people that had to leave in order to find work elsewhere. The importance for the growth and survival of our only economy, tourism, is reliant on the continuation of this program.