Reopening has begun: What happens next is anyone’s guess
The Covid-19 pandemic has thrust the global economy into full-stop mode overnight. It definitely won’t restart that way. Guam has cracked the door open to peek out and check if the coast is clear.
The expanded Covid-19 tests on Guam have rendered relatively soothing results—between zero and one per day—throughout the month of May, indicating that the island has passed its coronavirus peak. For the government and the business community, the apparent ebb of contagion justifies vigilant optimism. A gradual reboot offers a compromise between caution against the lingering threat of Covid-19 and the need to reopen the economy.
As of the last week of May, Guam remained in Pandemic Condition of Readiness 2. Gov. Lou Leon Guerrero has extended the public health emergency declaration through June 30. With some restrictions remaining in place, restaurants on Guam resumed dine-in services on May 29, two weeks after the Mother’s Day reopening of shopping malls that jumpstarted the stalled economy. Guam is officially in recovery mode.
While doors have been unlocked, local residents are in no rush to resume their pre-coronavirus appetite for consumption. Besides the warning of a possible second wave of the contagion, consumer confidence is constrained by the own economic uncertainty due to widespread job cuts and furloughs.
Government offices have resumed operations and quarantine requirements for arriving passengers have been loosened as the government prepares for the gradual reopening of tourism on July 1.
“We wanted our industry to be prepared and we wanted to signal this to them so that they can begin preparations to again bring back our tourism industry. I am informed that in the market, it takes anywhere from 30 to 45 days of lead time in order for us to start again booking business and visits to Guam,” the governor said at a press conference on May 27.
Although the Covid-19 pandemic has paralyzed tourism, the governor said its economic impact was not as severe as initially projected. “I don’t see a big, big, big loss in our revenues,” she said. The Consolidated Revenue Expenditure Report at the end of this fiscal year indicated “a negative four-point-some-million dollars,” the governor said.
At least for some industries, uninterrupted government spending has kept the business going. The government of Guam has awarded contracts for services and supplies needed to respond to the pandemic. These included hotels, which housed thousands of sailors from the coronavirus-stricken USS Theodore Roosevelt as well as the arriving passengers who were required to be placed in quarantine; and food vendors, who catered meals for those in quarantine.
Military investments continued as well. Millions in defense contracts were awarded in recent months while most construction sites have remained busy even at the height of the pandemic.
And although Covid-19 brought Guam’s tourism-based economy to a standstill, the island has caught a windfall from the federal government’s $2.2 trillion stimulus program authorized by the Coronavirus Aid Relief and Economic Security Act, also known as the CARES Act.
Besides the $134 million in stimulus funds from the CARES Act, Guam has also received its first allotment of $276 million from the U.S. Department of Labor for pandemic unemployment benefit, according to the Joint Information Center. This initial allotment is part of the $924 million supplemental budget request USDOL approved for Guam’s pandemic unemployment benefits. These funds remitted to the government of Guam are on top of the forgivable loans provided by the U.S. Small Business Administration to nearly 2,000 small businesses that availed of the Payroll Protection Program and Economic Injury Disaster Loans.
The federal stimulus packages will last through Dec. 31. But Guam’s economic sustainability is largely dependent on tourism, the island’s main industry, which is at the mercy of the markets’ state of affairs. During the pandemic, every traveler’s plan is contingent upon government policies and flight availability.
“Until the airport is open and there is no quarantine for tourists coming into Guam and going back into their home country, nobody gets to fly,” said Richard Hawes, managing director of Gemkell, which sells luxury brands.
Based on recommendations from public health and economic advisory groups, the governor said she has agreed to the conditional reopening of Guam’s tourism markets from South Korea and Japan effective July 1. “Japan removed their health emergency earlier this week. South Korea has been able to contain further transmission,” she said.
Japan Airlines has continued its flight suspension through June 30. Korean Air is resuming its operations on some routes, but Guam is on the list of “suspended/reduced flights.”
But even with the lifting of government restrictions and the resumption of flights, the safety of target destinations is another factor that a traveler considers.
“We have to be safe for people to come here,” Hawes said. “We have to have to have medical approvals to allow that to happen. We must not panic. Too many people are panicking. We need to adapt and follow the guidance—the safe distancing and wearing of face masks until the pandemic is completely under control.”
Monte Mesa, general manager of Tumon Sands Plaza and Guam Premier Outlet, said it is imperative for the government of Guam to put Covid-19 under control. “Then communicate with the Korean and Japanese governments to coordinate the lifting of the mandatory 14-day quarantine policy at the same time with Korea and Japan once they each respectively have their Covid-19 situation under control in their country, as well,” he said.
Mesa emphasized that GovGuam needs to lift the 14-day quarantine. “We cannot survive without tourists coming back to our island soon,” he said.
Mesa acknowledges that Covid-19 remains a threat to public health. “However,” he added, “with proper social distancing protocols in place and hopefully a Covid-19 vaccine becoming available soon, we can continue to live and enjoy life under the ‘new normal’ with everyone taking proper precaution washing their hands and practicing proper social distancing.”
He said the Guam Visitor’s Bureau, the Guam Hotel and Restaurant Association and other industry stakeholders need to establish safety protocols in order to start regaining visitors’ confidence. In the meantime, Mesa advised tourist-oriented retailers to adjust their operations and redirect their focus on the local market. Even with the reopening of shopping malls in Tumon, Mesa said, “not all may be able to participate due to their respective businesses strictly for Korean or Japanese customers. This is reality for some businesses in our tourism industry.”
At Tumon Sands Plaza, he said, “retail luxury tenants need to adapt and adjust their merchandising and marketing strategy to include our local market. Our local market may just surprise the luxury brands post-Covid-19 in representing a larger percentage than they have experienced pre-Covid-19. These will be the new opportunities. It should not be mandatory, but it should be up to each business to consider making their option available to local customers.”
It may be ideal, but not quite achievable, according to Hawes. “To be honest,” he said, “the local market represents about 10 percent of our business.”
Gemkell is the local distributor of high-end brands including Givenchy, Chloe, Balenciaga, Marc Jacobs, Kenzo, Bottega Veneta, LeSportsac, Longchamp and Lacoste.
“We cannot sustain a profitable business by relying on the local market,” Hawes said. “That doesn’t mean that we do not want to show the world that Guam is open for business.”
If anything, Hawes said, tapping the local market offers an opportunity “to show that Guam is open and safe and that they can enjoy shopping.”
At any rate, Hawes and Mesa are confident Guam tourism will eventually pick up.
Mesa predicts it will take about 12 months to regrow the visitor numbers from Japan and Korea. “We expect good arrival numbers, but this will depend on Guam's ability to have airline seat capacity and hotel room inventory being reopened fully like pre-Covid-19 period numbers,” he added.
Hawes anticipates airlines to start bringing in customers to Guam. “We believe, by the end of the year, we will have 20 percent of normal tourism and we are hoping that by the third quarter of 2021 we can get 60 percent back.”
All things considered, Mesa said Guam has inherent attributes that make for an attractive destination. “I believe that our beautiful island paradise with clean air, our daily radiant sunshine and moonlight, our bountiful marine life and most of all, our warm wonderful local people practicing the ‘Hafa Adai spirit’ daily to all our neighbors and visitors will keep them coming back. And they will be back post-Covid-19 even more excited to revisit soon.”