By Frank Whitman
At its peak seven years ago, Tumon Sands Plaza housed 21 shops offering Guam visitors the opportunity to purchase high-end designer products from some of the world’s most prestigious luxury brands. Today, shop spaces at TSP are vacant with the exception of four restaurants and one store that sells “pre-owned” luxury designer merchandise.
For nearly 50 years, TSP – located in the heart of Guam’s Tumon tourist district – had been catering to the purchasers of the high-priced products bought more for the lavish shopping experience and the status they bring to the wearer than for their usefulness.
As with the rest of Guam’s visitor industry, the luxury-brand segment of the tourism economy has yet to recover from the impact of the global pandemic.
While the pandemic has had the most severe impact on Guam’s luxury tourism, it is not the only cause of the downturn, according to Monte Mesa, general manager of Tumon Sands Plaza and Guam Premier Outlets.
The success of the Guam luxury business before the pandemic had been largely due to the availability of brands such as Louis Vuitton, Gucci, Chanel and Hermés in Guam that had not been available in Korea or Japan. “That was a trend that grew the luxury business on Guam,” Mesa said. “Gradually, tourism started to expand more and (the brands) started to enter into Japan and Korea. Then Guam’s attraction for the luxury business started to slow down.”
The brands that continued to be exclusive to Guam kept the island’s luxury business alive, he said. “That is what made the attraction for luxury business to come to Guam, for the Japanese and the Koreans to say ‘That is a style that is only available (in Guam) and it was not offered in their country.’”
George Chiu, executive vice president of Tan Holdings Group, assessed the state of Guam’s luxury-brand business right now as “terrible.”
Chiu gave a straightforward reason for the poor state of the industry: “We don’t have any tourists,” he said. “We’re a travel retail destination and we don’t have any tourists. Tourism was doing quite well prior to the pandemic. The pandemic wiped tourism out.”
In addition to a wide array of business interests throughout Asia and the Pacific, Tan Holdings is a franchisee in Guam of seven luxury product lines: Balenciaga, Chloé, Givenchy, Kenzo, Lacoste, LeSportsac and Marc Jacobs. Tan Holdings acquired the franchises in September 2014 when it bought a controlling interest in Gemkell Corp. Chiu is also chairman of the Guam Visitors Bureau’s board of directors.
In addition to the pandemic-related ban on travel, Chiu said the Japanese yen has been particularly weak since the start of the pandemic. The exchange rate is a little more than 150 yen to the dollar at this writing. This increases the cost of a vacation in the U.S. by a prohibitive 34 percent for Japanese visitors. Japan and Korea continue to be Guam’s key tourist markets.
The number of tourists arriving in Guam in January 2023 was about 56 percent of the number of pre-pandemic January 2019 arrivals, according to the GVB visitor arrival statistics. Of those, Japanese visitors comprised 23 percent of the January 2024 total and Koreans comprised 57 percent.
Another pre-pandemic change in the luxury industry was the effect of mainland Chinese travelers, according to Mesa. Sales to Chinese visitors prior to the pandemic “really exploded,” he said. “When the Chinese started to travel, everywhere they went, including Guam, the luxury business grew. But then we have the geopolitical situation that lessened direct flights from China.”
Chiu agreed about the effect of the Chinese shoppers’ lavish spending but also offered another reason it is unlikely to recur. “Those days are gone because the Chinese government has made it so that they can buy luxury goods duty-free at Hainan Island and bring them back into China,” he said.
As a result of poor sales, some luxury-brand companies have shut stores and moved out of Guam, others with more than one location in Guam have consolidated and kept only one store in operation. An example is Balenciaga. Tan Holdings operated two Balenciaga locations: one at Tumon Sands and one down the street at Plaza. Shortly after the pandemic lockdown began, Tan Holdings closed the TSP location and continues to operate at Plaza, Chiu said.
Tan Holdings used to have the franchise for Longchamp in Guam, but has closed the store.
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Some of the more exclusive brands have reduced the availability of their products as a strategy. These include Chanel and Christian Dior. “These brands left and you can’t buy them in Guam anymore,” Chiu said. “That really hurts the travel business here in Guam. These brands have decided on a different marketing style; they’re going to limit distribution and make it harder to get and make it more exclusive.”
Another development in the luxury design business is the opening of stores selling used or “pre-owned” merchandise.
“People bought the brands, but they end up not really using them and then they resell,” Mesa said. “(Entrepreneurs) saw that there was interest in the merchandise as long as it was authenticated. People are looking for deals and that’s what’s attractive now.”
D&C Luxury Boutique in Tumon Sands Plaza opened in 2021 and sells pre-owned designer handbags and ready-to-wear. It is the first such store in Guam, according to its website.
Rolex was among the last luxury brands at Tumon Sands Plaza that closed shop last year. “It's purely because of the mall condition. All the tenants left so we couldn’t stay with only ourselves there,” said Joel Chabanne, general manager at DKSH, the distributor of Rolex and other high-end watch brands.
Without foot traffic, keeping the Rolex Center open at Tumon Sands Plaza would not be sustainable, Chabanne said. DKSH still has three outlets on Guam, one at The Plaza, another at Dusit Resort and still another at Guam Premium Outlets.
“We have a local customer base, but we also need tourists. I know Covid is already years behind but recovery has been slow. Only 30 percent of the tourists are back,” Chabanne said.
He said DKSH lost some of its regular local customers who have moved to the states but has gained new customers from the military sector. Chabanne said the retail industry cannot rely on just one market base. “I know right now everybody is betting on the military build-up and construction. It's great but for us retailers, that's not enough. The Guam market needs a combination of residents, military and tourists. One cannot make up for the loss of the other.”
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Despite the challenges, those in the business are looking toward a positive future. “Gemkell is gung-ho on the luxury goods business,” Chiu said. “We’re not quitting. We think travel retail is an integral part of bringing tourists to Guam; it’s part of the tourism business. We need to give our tourists something to do other than eating, optional tours and shopping.”
Chiu said he believes Guam tourism will return by the end of 2025 and with it, a prospering luxury-design business.
On March 13, the Guam Visitors Bureau and Visa signed a memorandum of understanding initiating joint data-driven marketing projects that will boost travel to Guam and create the infrastructure to drive on-island spending and enhance the payment experience for Visa card holders.
“Visa’s mission is to connect the world through the most innovative, reliable, and secure network enabling individuals, businesses, and economies to thrive,” Seung Hyun Kim, head of Cross-Border Payment for Visa Korea & Mongolia, said in his presentation to the GVB board in March. “We seek collaboration with merchants to achieve our goal. Numerous strategies exist to promote offers in Guam to Korean travelers, an area where our Visa teams are highly interested in collaborating with GVB and all their partners.”
Part of the MOU is aimed at the joint effort to build a Visa-exclusive rewards program for Guam to attract more repeat visitors and loyal customers. GVB plans to utilize Visa’s communication channels to promote Guam to Korean travelers and accelerate on-island spending through Visa card transactions.
“It would be a great accomplishment to work with such a huge corporate brand and their network to promote Guam as a destination and enhance the spending experience for our visitors,” said Carl Gutierrez, GVB president and CEO. (With additional reports from Mar-Vic Cagurangan)
