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Bleak hope: An economy in panic mode 

Updated: Jun 12

CNMI tourism stakeholders target 500K visitors a year


By Bryan Manabat

 

Saipan— The Northern Marianas’ tourism stakeholders celebrated the resumption of Hong Kong Airlines’ Saipan service, which was touted to reinvigorate the China market. But the optimism it brought was quickly doused by Hyatt Regency Saipan’s announcement of its permanent shutdown on June 30, ending its 43 years of operation on the island.


“Despite our best efforts and after months of careful consideration and exploring many avenues, the harsh realities of the current landscape have forced us to make the difficult decision to close this special place,” said Hitoshi Nakauchi, president of Saipan Portopia Corp., which owns Hyatt Regency Saipan.


The announcement of Hyatt's closure came barely a few months after Saipan Portopia negotiated a new 40-year public land lease. “As we navigate this challenging transition, our thoughts are with all those affected by this and we are committed to ensure that they are supported,” Nakauchi said.


The small amount of optimism left is now gone, and the business sector can no longer deny what it has long suspected. "We’re now seeing signs that the economy is collapsing, people are leaving, and our population and workforce are declining,” said Joshua Wise, vice president of the Saipan Chamber of Commerce.


“Legacy companies are closing their doors and unless anything changes, more businesses will close. We can’t take any of these signs lightly and we need to act quickly and make the right decisions," he added.


The CNMI’s economy has been erratic in the past two decades, what with its reliance on volatile markets and experimental industries such as the ill-fated casino gaming that fell flat on its face. According to the World Bank, the CNMI’s GPD has shrunk from $1.18 billion in 2019 to $858 million in 2024.

 

“Businesses have survived the darkest times in our economic history from the end of the garment industry in 2008, to super typhoons, then with Covid, but we’re still struggling. We have no positive outlook," Wise said at the 2nd Annual Economic Forum held May 16 at the Saipan World Resort. " It’s not the target for a thriving economy.”


Facing a bleak economic outlook, stakeholders have put forward an aggressive strategic plan. The Saipan Chamber of Commerce, HANMI and the Marianas Visitor Authority last month launched "Operation 500K," setting a goal to bring the number of visitor arrivals to a minimum of 500,000 a year.


"500K arrivals is what we need to break even and stop the bleeding in our economy,” Wise said.


Back in 2017, the CNMI had over 653,000 visitors and 5,600 flights. "Chinese visitors, in particular, are known for purchasing luxury goods, high-end hotel stays, high-end dining, and going on optional tours," Wise said.


In 2017, there were 16 weekly flights from China to Saipan compared to zero in 2023. In 2019, before the Covid-19 pandemic, tourist arrivals were recorded at 487,008.


The CNMI was awarded “Most Popular Booth” at the 39th Seoul International Travel Fair held on May 9-12, 2024, at CODEX in Seoul, South Korea.  Photo courtesy of MVA

The CNMI has lost 97 percent of its second-largest tourism market, China. Wise said the CNMI must reconfigure its market and adjust its targets. He said the industry should aim for 250,000 arrivals from Korea, 170,000 from China and 30,000 from Japan.


Wise did the math. To support the Asian tourism market, he said the industry needs seven daily flights from Korea, four daily flights from China and one daily flight from Japan.


 Wise reiterated the business sector’s call for the reinstatement of Annex VI, an exemption from the U.S. Department of Transportation’s order to limit the number of roundtrip flight services between the U.S. and China, as an immediate action plan for the CNMI.


He also reiterated the business sector’s call for the implementation of the CNMI Economic Vitality & Security Travel Authorization Program or EVS-TAP, an increase in MVA's budget to promote the China market, and the reduction of landing and terminal fees at the airport.


Gloria Cavanagh, chair of the MVA board, said there is a strong need to develop two more stable markets. "The Japan market requires currency exchange improvement, improved sentiment for overseas travel safety, an improved United Airlines flight schedule and new marketing campaign."


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She noted MVA’s efforts to increase travel demand from Malaysia, Singapore, Taiwan, Australia and other countries listed under the Guam-CNMI visa waiver program. As part of "Operation 500K," Cavanagh said the tourism industry needs to target 593,000 air seats a year, eight flights a day, with an average 85 percent load factor.


To hit these goals, Cavanagh acknowledged that the CNMI government must do its homework such as developing authentic heritage experiences that connect visitors with culture and history.


The laundry list is long. "We need to improve blighted properties, enforce the anti-litter law, keep visitors safe at major sites through police presence and security guards, open and maintain public restrooms, improve interisland connectivity by an increase in air seats for Rota and online booking availability for Tinian, and improve scenic sites at Marpi," Cavanagh said.


Following the administration's request to give airlines some relief, the Commonwealth Ports Authority gave airlines discounts on landing and terminal rental fees.


CPA Executive Director Leo B. Tudela announced a fee rollback for the first quarter of the current fiscal year. The airlines can pay CPA the old rates that were in effect from Oct. 1, 2023 to Dec. 31, 2023."For the Jan. 1, 2024 to March 31, 2024 period, the airlines will get a 50 percent discount on the new rates, and from April 1, 2024 to Dec. 31, 2024, they will receive a 25 percent discount, provided that there is a 10 percent increase in the number of their passengers," Tudela added.


 CPA recently approved Jeju and Hongkong Airlines’ request for permission to land additional flights at the Francisco C. Ada/Saipan International Airport.





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