Guam hoteliers and tourism heads look at the viability of expanding Guam’s non-leisure tourism and cruise ship markets
By Thomas Johnson
As the island’s hospitality industry pushes diversification of the visitor market to meet their 2020 arrival goal, previously undeveloped segments of the market are also being explored to supplement revenue during the off-peak seasons. Most notable among these segments are the fledgling cruise ship market and the aggressively developing Meetings, Incentives, Conferences and Exhibitions, or MICE, non-leisure market.
The MICE market, in particular, has been one of the primary objectives in the Guam Visitors Bureau’s 2020 plan, and is expected to maximize efficiency by bringing in visitors during traditionally slower periods in the fiscal year. GVB acknowledges that unfortunately, Guam may not be well-suited for traditional grand-scale conventions, as limited airlift, limited hotel inventory, a lack of infrastructure and major regional competition are all factors working against the island in these early stages of its MICE development.
However, according to the 2020 plan, Guam does have the facilities to encourage MICE growth, and may be very well-suited for meetings and conferences of groups of up to 2,500, with the possibility for larger numbers in the future. And with an average travel group consisting of 30 to 70 high-yield visitors with substantial disposable income, the MICE demographic promises to be both a manageable and lucrative revenue stream once properly tapped.
“When we talk about MICE, the grand picture is thousands of people coming to a single destination, but Guam is a very intimate and unique destination,” says Brian Borja, GVB’s acting marketing manager. “So our focus is on some of the smaller groups as we continue to grow infrastructure and support here on island. We have the Dusit Thani opening up soon with its convention center, and the bureau is also working closely with other agencies, like the Guam Economic Development Authority, to promote investment so we can continue to grow our capacity.”
Mark S. Baldyga, president of the Baldyga Group and chairman of the GVB board of directors, adds that the Bureau will also be focusing on driving sales, since many of the groups are small enough to be accommodated at numerous hotels in addition to the Dusit Thani.
“Guam is not at all suited for [large] conventions in terms of airlift, room capacity, or support services,” he says. “We can’t compete with Hong Kong or Singapore. But we are perfect for conferences of 100 to 1,500, and that’s what the Dusit and our other properties are designed for.”
Baldyga says that GVB is being very aggressive across all markets and has recently created a MICE sales kit, started an agent study tour focused on MICE and hired Japan staff to focus on promoting Guam as a destination for MICE events, which he says will be critical for filling in the island’s slow periods.
Borja adds that future familiarization tours will welcome travel agents who focus on MICE in order to introduce the destination and help them to better pitch the island’s MICE program. He says that GVB has already acquired several leads and meets regularly with agents at travel shows like the Hana Tour International Travel Show in South Korea, the Japan Association of Travel Agents show, and the Philippine Travel Agencies Association’s Travel Tour Expo show to push the MICE program forward.
However, marketing is only one half of the coin, since one of the largest challenges the MICE segment faces is room capacity and availability. According to Borja, the main problem is not a lack of room inventory so much as an issue of timing.
“People say we don’t have enough rooms,” he says. “The fact is we do, but we sell out during certain peak periods. So we really have to consider how the inventory can be divided into the different markets when we want to pursue multiple segments, which is why we want to focus on promoting MICE for the off-seasons so we can also allocate more resources and attention to those events.”
Baldyga adds that increasing the aesthetic appeal of Tumon would also help the MICE market and tourism in general. “The government simply needs to support GVB with funding from the Tourist Attraction Fund and support use of the TAF to improve Tumon’s appearance, roads, sidewalks and safety,” he says. “Raising quality and safety is critical for growing a more affluent customer base. The only thing that would hinder growth [of the MICE market] is if we don’t make the effort to improve the appearance of Tumon. It’s tired and hasn’t had investment for nearly 20 years.”
According to GVB, several large conference groups have already visited the island over the past year, including a 1,000-pax group brought in from Korea by Amway and a 2,000-pax group hosted on behalf of Suzuki from Japan. Top markets in the MICE arena for Guam are Japan, Korea, and the Philippines, with the segment leaning heavily toward the incentive portion of MICE at the moment. However, Borja says that Amway and other companies based out of Korea have hosted several of their conferences here on Guam, and success has also been found with student groups and other non-leisure groups out of Korea and Japan. In the next few months, the bureau expects to host a World Health Organization conference, as well as a Pacific-Asia Travel Assocation conference, both of which will yield about 600 attendees.
In addition to primary revenue, growth in the MICE arena is expected to generate job growth in multiple secondary fields, as the large-scale events will require advanced coordination, handling, audiovisual expertise, planning, higher-end transportation, and simultaneous multi-language translation.
“I can already tell you that some of the agents here are upgrading from 17 to 18 passenger vans to full air-conditioned buses with wireless Internet capabilities,” Borja says. “So it’s growing as we speak, and I definitely think there are secondary industries that will grow along with it.”
Dean Huntsman, general manager of the Dusit Thani Guam Resort, which will house the Guam Convention Center, says that while Guam does have strong potential in the MICE market, the island’s establishment as a MICE destination won’t be immediate.
“As home to the island’s first convention center, set to open later this year, we feel there is strong potential for the MICE market here…[but] developing the island as a MICE destination isn’t going to happen overnight” he says. “A collaborative effort with the Guam Visitors Bureau and other stakeholders is key to successfully driving the market forward.”
According to Huntsman, there is a high level of MICE traffic from the Japanese and Korean markets being funneled toward other destinations, but Dusit International’s surveys in those markets have indicated that Guam has a very good chance of tapping into that traffic.
“We have had a number of inquiries already from groups both on and off island, and several groups have already been confirmed for the latter part of the year,” he says. “We’re also working with Dusit International’s regional sales offices and our network of MICE contacts to promote the island and the Guam Convention Center.”
The maximum capacity for the Guam Convention Center is expected to be more than 1,500 with at least 800 parking spaces at the venue to accommodate guests. Huntsman says that several familiarization trips from MICE specialists and vendors will be conducted by Dusit in the near future, allowing industry professionals to experience the center and the island firsthand.
In addition to the investment effort put forth by Dusit Thani, other hotels have also been laying down groundwork for the relatively new MICE segment to take hold. Hiroyuki Miyata, former president and CEO of Leo Palace Resort, says that the resort has been shifting away from its former golf and sports tourism-based model toward newer, non-leisure segments like educational tourism, medical tourism and MICE in particular.
“We hosted around 10 companies last year, ranging in size from 50 or 60 people to as large as 150 to 300,” Miyata says. “Some companies come to reward their salespeople and management teams or to give awards to their employees, and others come to exchange information on how to improve sales results and efficiency. The interesting thing is that some international companies who have branches all over Asia and the United States get together and have their board meetings here. In some cases, they could do a video conference call, but that type of communication is limited. If they need 10 or 15 branches to convene, they can meet together here. Right now, Japan is very active about that, and I think Korea and China are going to adopt that style as well. I really think that kind of thing is going to increase in the future.”
Miyata says the biggest event hosted at the resort, in his opinion, was for the Oceania Olympic Committee. “I believe it was around 18 countries coming together for a meeting hosted by the Guam Olympic Committee,” he says. “It was only 180 people, but the duration was about 10 days. The biggest one for a company was about 400 people, but with those bigger ones, they only last about three or four days at most.”
While the MICE segment of the 2020 plan seems to be getting the green light across the board, the lesser-known cruise ship segment has been steadily working to gain traction over the past several years. However, as the market shifts toward diversification, the cruise ship segment could be gaining significant momentum in the near future. As one of the fastest-growing tourism segments in the world, the global cruise industry has gone from four million passengers in 1990 to more than 20 million by 2011, the majority of which are considered higher-end passengers.
Given that the segment is still in its infancy, however, there are some that advise cautious realism to ensure that investment in the segment does not exceed the limited direct return on investment from cruise passengers and their on-island spend.
“It is certainly a nice market to consider and we are investing appropriately by planting seeds and attending trade shows to grow our knowledge base and increase awareness of Guam,” Baldyga says. “But we are also mindful of the fact that perhaps the maximum realistic attendance would be, say, one 1500-passenger ship every two weeks, which equates to 36,000 pax per year, or about 2% of arrivals. And since they only stay one or two days and have meals on the ship and don’t pay occupancy tax, the maximum net economic impact is probably equivalent to less than 1% of arrivals and more realistically less than half of 1%, even with monthly arrivals. So it is nice, and interesting. But our focus needs to be on things like MICE that can have economic impact of $100 million or more if we can build up our slow seasons.”
To increase Guam’s benefit from this market and capture revenue that might otherwise be lost, Micronesian Cruise Association President Gerald S.A. Perez says that he is particularly interested in developing the industry to the point where Guam and the NMI can homeport cruise ships locally.
“We need to start a regional capacity for cruising inter-island because the kind of business we get now is haphazard and not very well-organized as a region,” he says. “Now there is increasing interest in Guam and the CNMI to work together to start possibly homeporting a small vessel here that would go from Guam to Rota, Tinian, Saipan and Pagan on short two-day to four-day cruises. We would fly in customers, have them take the cruise and fly them back out, much like Hawaii does with their viable inter-island cruise business.”
Perez adds that a homeported vessel would generate value where foreign ships would not, giving the added economic benefits of increased employment, additional supply chain and contribution to local taxes. While visiting cruise ships do help the economy through docking fees, transportation fees and one to two days of high-end visitor shopping, he agrees with Baldyga that they are also sporadic and deprive the island of hotel occupancy taxes and other auxiliary sources of visitor revenue.
Many other proponents of the cruise ship industry — such as Sen. Tina Muña Barnes, legislative secretary for the 33rd Guam Legislature and chairwoman of the Committee on Municipal Affairs, Tourism, Housing and Historic Preservation, and Telo T. Taitague, deputy general manager of GVB — continue to court outside cruise companies as a way to generate additional visitor income without any significant mass market impact or additional burden to the island’s infrastructure, but agree with Perez’s assessment that a homeported vessel would be far more efficient and consistent in terms of revenue generation.
“The only real way to take advantage of the industry would be to have a Guam-based ship that does a Marianas cruise,” says Taitague, adding that the establishment of a proper marina and cruise docking station has been proposed for Hagåtña as part of the ongoing restoration project.
“To my understanding, we’ve gone as far as mapping out the destinations for the Micronesian islands, but one of the main problems is that you need a big enough boat. They did have a boat that they tested at around 300 capacity, but everyone was getting sick because the waters were so rough. So we need a larger vessel, for sure, and we also need to get the other stakeholders involved because some of the smaller islands don’t have ports big enough to accommodate something of that scale.”
Barnes adds that cruise lines have also suggested that the island address the length of time required to clear passengers through Customs and Immigration. “This is something the various agencies are working on and processing times are improving,” she says, “but a dedicated terminal would certainly enhance the experience and this is something we’re working on.”
The corridor of the Dusit Thani Guam Resort’s ballroom, which will have a capacity for MICE events of 2,000 people for cocktail setups and 1,600 for a theatre setup.
Telo Taitague, deputy general manager of the Guam Visitors Bureau, and Sen. Tina Muña Barnes, legislative secretary for the 33rd Guam Legislature and chairwoman of the Committee on Municipal Affairs, Tourism, Housing and Historic Preservation, attended the Sea Trade Cruise Ship Convention from March 16 to 19 in Miami.