Arrivals up, spending down

December 12, 2018

 

 

While Guam’s tourism reflects an increase in visitor arrivals in 2017, data show a decline in average tourist spending, according to Siska Hutapea, president and chief appraiser of Cornerstone Valuation Guam.

 

Citing the Bureau of Economic Analysis (BEA)’s 2017 GDP report for Guam, Hutapea said exports of services, which consists primarily of tourists’ spending, decreased after increasing for three years.

 

A Guam Visitors Bureau report showed a slight increase in tourist arrivals in 2017. During that fiscal year, Guam received 1.54 million visitors compared to 1.53 million in 2016.

 

This year, Guam dipped a little bit with 1.52 million arrivals.

 

Hutapea said the changes in the visitor market captured her interest. Two decades ago, around 4 percent of Guam’s tourists come from South Korea while around 80 percent come from Japan.

 

Annualized figures for October 2018 for visitor arrivals show an increase in South Korean tourists at 50.5 percent in comparison to Japan figures of around 35.9 percent.

 

 “This is important to know, especially for small businesses, cause you have to know your consumer, right?”  said Hutapea, who was the keynote speaker at the 5th anniversary of the Guam Women's Chamber of Commerce on Dec. 6.

 

Japanese and South Korean visitors spend differently, according to Hutapea. Japanese tourists like prepackaged tours while the South Korean visitor are more into free, individual traveling.

 

While tourist arrival numbers just slightly decreased by -1.4 this year, hotel occupancy rates dipped in 2017 and slightly picked up in 2018, according to data from the data from the Guam Hotel and Restaurant Association.

 

 “One thing that I always check as a pulse of the economy is the occupancy average room rate and revenue per available room,” Hutapea said.

 

In 2017, the average room rate is $168 per night. During the first three months of 2018, the average room rate increased to about $188 per night, according to Hutapea.


Occupancy rates reached 75 percent in 2016. Last year’s rates reflect a 10 percent decrease at 65 percent. During the first three months of 2018, the rates slightly increased by 1 percent.

 

Reflecting on this trend, Hutapea advised said it is important to ensure that Airbnb providers are licensed and the government is collecting GRT and occupancy tax.


Hutapea’s presentation on Guam’s Economic Outlook also covered real estate investments and other drivers of the local economy.

 

Hutapea also reported on the other aspects of the current BEA report. She said the report estimates show that Guam’s real GDP increased by 0.2 percent in 2017 after increasing 0.3 percent in 2016. For comparison, real GDP for the United States increased by 2.2 percent in 2017 after increasing 1.6 percent in 2016.


She said the growth in the Guam economy reflected an increase in consumer spending, which rose for the seventh  year in a row. The increase in consumer spending largely reflected growth in retail trade activity.

 

“Overall, investment spending contributed negatively to the economy. Although GovGuam spending on construction and equipment increased, this growth was offset by a decline in construction activity on defense and private sector projects,” she said citing the BEA report.

 

 

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The decline in construction is the result of the federal clampdown on H2 visa for Guam.

 


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