Gov. Lou Leon Guerrero made an appearance at the Guam Visitors Bureau board of directors meeting on Thursday, referencing alarming findings of a study she commissioned two years ago as well as current data from a situation report which noted that Guam’s stalled recovery had been masked.
Aside from mentioning the commissioned study by PKF hotelexperts group, the governor cited the Guam Situation Report and draft Guam Recovery Plan, formulated by a collective of local private sector tourism executives and industry professionals who have been closely watching the tourism economy since the COVID-19 pandemic.
“We’ve all had conversations for four years. In a sense, we have been working on this. We have coffee, lunch, talk about how bad things are and what could be done to fix it since COVID hit,” said Baldyga Group Chair and Chief Executive Officer Mark Baldyga, one of the many contributors to the report and plan.
At first, the conversations were “ad hoc” over the course of the four years, he said.
“But we really decided to pull together, document things, pull together sort of a summary of the situation and a path forward is sort of the most important. This was over the last month or so that we started in earnest,” Baldyga said.
The situation report found that Guam’s tourism was lagging, he said.
“Korea is nearly back to 2019 outbound levels, with 2025 expected to exceed 2019, yet Guam arrivals are down 50%. Japan is at 60% of 2019 levels, but Guam is at 30% for Japan. Guam’s recovery is among the slowest globally,” the Guam Situation Report said.
While tourism made up 60% of the island’s economy pre-pandemic, the current situation report indicated that Typhoon Mawar and a decline in the value of the Japanese yen exacerbated conditions for a “stalled recovery.”
The information contained in the report correlates with monthly arrivals data and comparisons prepared by the Guam Visitors Bureau.
At the time of this publishing, the latest arrival data GVB had available was for the month of August, which in 2024 was 66,474, a decrease from 67,325 in 2023. While the decrease seems minimal, the 2024 August arrivals represent only half of what was seen in 2019 at 158,633. That means arrivals were down 58.1% of benchmarks set pre-COVID.
It’s a pattern that has played out over the last fiscal year, with civilian visitor arrivals month after month in the negative as compared to prior fiscal year benchmarks.
The data obtained in fiscal year 2024 were signs of a tourism economy headed for crisis, unlike fiscal 2023 civilian arrivals data which showed arrivals were up as much as 869% in February 2023, when compared to fiscal 2022 and fiscal 2021 benchmarks set during and fresh out of the pandemic.
The situational report presented to board members contained excerpts of quotes from independent tourism consultants, whose collective statements noted Guam was “significantly behind the global curve.” And without a strategy to address problems head-on, “the window of opportunity for recovery” is rapidly closing.
Tourism Economics, an Oxford Economics company, noted that Guam’s current situation is creating a downward spiral for the Guam visitor economy that “will require interventions.”
“The collapse in visitor activity has suppressed air service accessibility and is causing the failure of the attractions, experiences and accommodations that underpin the industry. Action to support the visitor economy is especially vital because of its importance to the Guam economy,” Tourism Economics President Adam Sacks said in a brief on Oct. 15.
The current state of the tourism economy was enough for Leon Guerrero to call for tourism officials to step up their efforts, as she further agreed during the Thursday meeting to create a special task force.
“I applaud the efforts. I think the appointment of a task force specifically designed to lay out a short-term tactical strategy as well as develop a longer-term vision for what Guam’s tourism future should be is overdue. I’m glad we’re doing it now,” local businessman and Guam Travel and Tourism Association member David Tydingco told the Post.
“I think the united effort, and united front by all the parties, both the private sector as well as the public sector, the government leadership, I think Gov. Lou’s appearance before the board shows her commitment and I think only good things can come of that,” he added.
Tydingco is the managing director and CEO of Valley of the Latte, a local cultural attraction that’s customer base pre-COVID was 80% international visitors and 20% local and military. Valley of the Latte is one of the businesses that stayed afloat.
“With the significant drop in arrivals again for a number of reasons, we, knock on wood, were one of the few that survived. I think the draft recovery plan that was presented was a much-needed program to initiate immediately, and all of us stand ready to roll up our sleeves and do what’s necessary to restore the economic fiber of our island,” he said.
However, not all business were as fortunate.
For several local businesses that relied on tourists, the COVID-19 pandemic was a catalyst for demise, and they closed following restrictions put in place for health and safety as expenses such as payroll, rent and utilities mounted.
“We’ve seen too many businesses already closed their doors because you really can’t survive on 48% of pre-COVID numbers unless we continue to get support from our political leadership, and they have,” Tydingco said, noting the governor’s administration and GVB have “stepped up,” in the past to help keep businesses afloat.
Tydingco stressed that decisions need to be data-driven and questioned whether there is enough information about the source markets to put forward a strategy.
“I don’t think that we have enough information about the source markets themselves to tell us what those customers want,” he said. “We understand the periphery. We understand that airline service issue out of Korea and the yen weakness in Japan are part of the problems, but I think we need to dive deeper in terms of why our recovery is slower than the rest of the Asia Pacific region.”
The governor suggested during the meeting that the “Where America’s Day Begins,” marketing slogan be revived and incorporated in a plan moving forward to pique interest and remind travel markets that Guam is U.S. soil.
Meanwhile, Tydingco said understanding challenges with source markets, their desires for travel and market share will be key components to the final plan for tourism recovery.
Tydingco said the question at hand is “how our source markets are looking at Guam as a destination. We figure that out and make sure that we do what’s necessary. Again, restore our air landing fees, improve our brand and fix our product so we can again enjoy the benefits that tourism has brought to our entire community.”
In the last couple of months, the Guam Recovery Plan shared with the governor and GVB was hashed out in earnest by a collective of independent tourism executives, including members of the Guam Hotel and Restaurant Association, Guam Travel and Tourism Association, Japan Guam Tourism Association, hotel general managers and business owners, according to Baldyga.
While there have been calls for a united front, ASC Trust President and Guam Economic Development Authority board Chair David John, another collaborator in the Guam Recovery Plan, told the Post his perspective on the tourism economy has not been welcomed recently.
“I was called out by an individual in leadership to ‘stay in my lane’ this week, as I am not in the tourism industry. That is a sad comment coming from leadership, as I would hope we realized we are all in the tourism industry,” John told the Post when asked questions about the state of tourism, the alarm raised and the plan he helped put together.
Having a financial background, John noted that Guam’s gross island product, or GIP, is driven by two factors, money from exports and federal funds.
“When a tourist spends a dollar at a hotel, it doesn’t all stay in tourism. Part of it is paid to the chef in the kitchen. He takes part of his pay and buys a house with a mortgage. The bank takes part of their fee from the mortgage and pays their loan officer, who buys a car from a local dealership and gets insurance from a local agent and on and on and on,” John said.
With money made from the visitor industry comprising 40% of the island economy, John said he foresees source markets such as Japan rebounding slowly due to the weakened yen.
“But we can certainly improve our numbers from where they are with investment in marketing, social media and packaged offers. Korea is key. We lost half our seats from January of this year. We need to get them back and back them up with marketing dollars. While we are working to get the tourists back, we have to improve our product. The governor has asked GEDA to work with GVB on a new (Guam hotel occupancy tax bond) to help with this,” John said, referencing a GEDA meeting last week when he talked about tourism.
At the meeting, he noted that arrivals from Japan remain 70% below 2019 levels, while Korean arrivals are down over 50%, even though the Korean market has largely recovered.
Although the value of the yen is beyond Guam’s control, the seat capacity issue remains.
“There is potential for growth if we collaborate as an industry to develop cost-effective packages and enhance awareness of our offerings. Our primary focus should be on the Korean market. Before the COVID-19 pandemic, we had 90,000 monthly seats to Guam. At the start of this year, that number dropped to 60,000. Currently, we are down to just 30,000 monthly seats from Korea. If we can maintain our previous capacity, we could create a pathway for recovery,” John said.
He stressed that the decline in tourism has resulted in over $1 billion in lost economic activity and $100 million in forgone tax revenue resources that could have supported government services and community initiatives.
The Guam Recovery Plan included in the study and referenced by the governor provides a set of strategic goals for 2025 to 2027 to reclaim Guam’s position as a premier destination.
The study suggested that airline incentives be implemented such as landing fee reductions, route support and cooperative marketing with carriers, in addition to targeted marketing campaigns, signature events and capital improvements.
The governor recognized the importance of tourism to Guam’s bottom line and noted willingness to invest in offering incentives to airlines to increase flights to Guam, while also calling for GVB and the board to step up their efforts with the creation of a tourism recovery plan, which she felt was lacking.
This post was originally published on here
