Guam’s tourism industry continues to be the foundation of our island economy. In the 55 years since its inception, it has never evolved as rapidly as it has over the past several years. With the continued diversification of our visitor market mix coupled with the rise of low costs carriers, we have seen record numbers year over year for the island. Preliminary numbers for fiscal 2018 indicate Guam welcomed 1.52 million visitors from around the world. While this establishes 2018 as the second highest year in visitor arrivals, it also marks the first overall decline for the industry since 2009. Although many factors contributed to this regression, the North Korean rhetoric with the United States back in August 2017 combined with the recent natural disasters, have all but shaken our very delicate industry.
Hope on the horizon
Although fiscal 2018 recorded a 2.3% decrease compared to 2017, arrivals for 2019 are anticipated to make a full recovery, with initial projections targeting 1.60 million visitors, a 5.5% increase compared to 2018. This growth originates from the news of increased seat capacity and additional flights from our airline partners.
- Jeju Air launched its inaugural daily flight service between Japan’s Kansai International Airport and Guam on July 21, adding 5,700 seats a month to Osaka.
- United Airlines is resuming its twice-daily Boeing 777 service between Guam and Narita beginning October 28, an 80% increase in available seats.
- United Airlines is restoring four weekly flights between Guam and Nagoya from December 2, adding 1,000 seats per week.
- Japan Airlines will be extending its second daily flight service from Narita to Guam through March 30, 2019.
As a direct result of the increased demand from our Japanese market, the island will also welcome around 626 chartered flights in 2019, representing a 30.1% increase over the 481 flights in 2018. These flights will bring around 119,000 new seats to our island, boosting Japanese arrivals to around 600,000 for 2019 — growth we have not seen since fiscal 2013.
Korean growth continues
With the decline seen in the Japan market over the last several years, the Korea market has continued to drive record breaking tourism arrivals. Korean arrivals have experienced an annual average increase of around 26.6% year over year since 2013. This unprecedented growth is expected to continue into next year, however in a more conservative trend. 2019 is expected to welcome around 770,000 Korean visitors, representing a modest 2.5% increase over 2018, as seats from Korea may soon reach capacity.
Visitors from Korea continue to be the most radically changing market in recent years. While diversifying our primary markets has boosted overall arrivals, the diversification within our Korean visitors in the past year is expected to continue into 2019. A major shift in the number of repeat visitors indicates the developing maturity of the market. In fiscal 2017, only 17% of Korea visitors had been to Guam more than once. As of June 2018, that number has grown to 42% showing the continued demand from our islands current top market. With efforts to further diversify the Korean market by attracting educational groups; meetings, incentives, conferences and exhibitions; and ecotourism visitors we can expect to see this market remain a mainstay for the upcoming years.
Rise of the secondary markets
Although Japan and Korea make up 84% of the total visitors to Guam, the rise of the secondary markets is crucial for the sustainable growth of our main economic driver. For fiscal 2018, the growth in smaller markets like the United States, the Northern Mariana Islands and Russia have helped stabilize the declining arrivals from our other Asian markets. This past year Taiwan experienced a 24.1% decline and China recorded a 26.9% drop as well. These declines were mitigated by the healthy growth of 14%, 11.4% and 27.2% from the United States, the NMI and Russia, respectively. In addition, growing interest from other Asian markets like Malaysia and Singapore offer new potential growth for our island.
Challenges for the road ahead
Based on our Tourism 2020 plan GVB anticipated visitor arrivals to reach heights of around 1.75 million by 2020. This goal was contingent upon our ability to provide additional rooms and incentivize reinvestment into our existing properties. As local partnerships were formed to bring new hotel investments with the Special Hotel Qualifying Certificate Program, the issues with our H-2 labor force has left investors contemplating the viability and timelines of their projects. With only the Tsubaki Tower currently in development, the goal of reaching 10,000 rooms in the next two years has proven to be a more difficult task than anticipated. As of 2018 there are around 8,883 available rooms for our visitors. In addition, occupancy rates are currently averaging around 85% indicating our hotels are reaching their limits in accommodations.
Another significant challenge our island must consider is the declining infrastructure and overall quality of our “product.” With the rise of social media playing a more primary role in visitors experiences, the need to reinvest in our parks, roads, hotels and overall infrastructure is crucial in establishing a sustainable visitor industry. As visitors seek more spectacles and sights for unique experiences, we must provide updated and easily accessible settings for them to discover.
Tourism and beyond…
For tourism to continue its success, we need strong Japan and Korea markets. The Guam Visitors Bureau is focused on recovering Japan market share by ensuring enough seat capacity to meet the demand for travel to our island paradise. In Korea, we continue our in-market diversification strategy to stimulate demand and encourage repeat visits.
As Guam’s tourism industry continues to diversify and evolve, it faces new challenges in the coming years. The rise of the Korean market combined with growing numbers from our secondary markets have all played a key role in keeping our visitor industry thriving. However, the volatile nature of the travel industry only strengthens the importance of continuing to invest into our main economic driver in order to ensure manageable and sustainable growth for our island residents.