The Guam Economic Development Authority and several local businesses are voicing concerns about the dire state of the tourism industry.
GEDA Administrator Mel Mendiola sent a letter to Guam Visitors Bureau President Carl Gutierrez on Friday sharing the agency’s concerns as well as letters from local businesses.
The letters came after GEDA board Chairman David John wrote an article that resonated with various local businesses, she said.
She said GEDA’s leadership is very concerned about the economy from what they have heard from local businesses.
“Further, reported comments from your management team that they do not think things are as bad as we are stating are especially troubling. To fix a problem, we first need to recognize we have a problem,” Mendiola said.
Businesses are reporting considerable operational and financial stress, leading to economic strain, job losses, and an uncertain future for the community, she said.
She said the Department of Defense windfall is muting the “terminal distress of an industry that took half a century to build.”
Mendiola said both GEDA and GVB can agree that the tourism industry is the lifeblood of Guam’s economy, supporting thousands of jobs and driving local businesses.
She said the impacts of currency devaluation against the dollar and global inflation are out of their control.
“What is in our control, however, is our ability to collaborate and direct our collective resources towards lasting recovery and sustainability of this industry,” Mendiola said.
Revitalizing the tourism industry will require both short-term relief measures and long-term strategies, she said.
“We stand ready, willing, and able to assist. We have already begun the process of another Hotel Occupancy Bond, but this is a mere Band-Aid on a hemorrhage if we do not get along as government agencies,” Mendiola said.
She said Gutierrez is an iconic figure in Guam’s community, most especially for the island’s most vulnerable. Along with Gov. Lou Leon Guerrero, Mendiola said she can’t think of a more powerful team to steward the industry that employs those same individuals Gutierrez has spent his career protecting and lifting up.
“Thank you for considering this appeal. Chairman John, the rest of the board, and the GEDA team are here to assist,” she ended the letter to Gutierrez.
The letter comes after Gov. Lou Leon Guerrero last week made a rare appearance during a GVB board meeting urging the agency to come up with a plan to address the crisis.
Letters
In response to an article the GEDA chairman wrote in Guam Business Magazine in September, several local businesses sent letters to John sharing their concerns about the tourism industry.
Darren Talai, president of Seafood Masters Inc. doing business as Beachin’ Shrimp, said over the past few months the situation has become increasingly dire.
The decline in tourism activity has left the business to grapple with difficult decisions, including the possibility of permanently closing its doors, temporarily shutting down until demand returns, reducing work hours or laying off a significant portion of the workforce, he said.
“These choices are heart-wrenching, especially considering the impact they have on our dedicated employees and the local economy,” Talai said.
He said the crisis is not limited to tourist-centric businesses in Tumon and has significantly affected businesses throughout the island.
He urged John to consider the development of targeted financial assistance programs that can provide immediate relief to businesses.
“By doing so, we can preserve jobs, support our local economy, and ultimately work towards revitalizing Guam’s tourism sector,” Talai said.
Jerry Pastones, managing partner for California Pizza Kitchen Guam, said their business is also facing heartbreaking decisions like whether to close permanently, temporarily suspend operations, cut employee hours, or lay off employees.
“These choices weigh heavily on me, especially considering the impact on our dedicated workforce and the broader local economy,” he said.
The economic strain on businesses puts the livelihoods of many residents at risk, Pastones said. Families are making tough decision, from cutting back on necessities to facing the possibility of job loss, he said.
He also urged GEDA to create targeted financial assistance programs to offer crucial support to businesses and subsidy programs for the tourism industry.
“This kind of help would safeguard jobs, bolster our local economy, and aid in revitalizing Guam’s tourism industry,” Pastones said.
GRT
Frank Kenny, president and co-owner of Jamaican Grill Restaurants, said the government of Guam should reconsider bring back the Gross Receipts Tax or GRT to 4% instead of the current 5%. He said the business community was led to believe the increase years ago was only temporary, but it seems to be more permanent in nature.
“If GRT was ever brought back to the original 4% it would provide much needed economic relief to the sector that pays GovGuam taxes,” he said.
Kenny shared that the third quarter of 2024 the company saw uncharacteristic sales declines across all four of its branches, Tumon being the worst. He said the slowdown seems more significant than that of past years. The company is celebrating 30 years of business in Guam.
“Maybe is it the slow recovery of Guam’s tourism sector and how that is now playing out in the horizontal integration of Guam’s community?” Kenny said.
Richard Hart, president of Apple Pacific Restaurant Group, which owns and operates Applebee’s, IHOP, Pieology, Olive Garden, Longhorn Steakhouse and Maui Tacos, wrote to John out of deep concern for the future of tourism and the economic future of Guam as a whole.
He shared he came to Guam in 1999 as a server for Outback Steakhouse and has worked his way to the largest restaurant employers in Guam. He has seen many economic setbacks throughout those years, but he said he has never seen things as bleak as they are now.
“The main reason is there is little to no recognition that there is a problem that needs to be solved,” Hart said.
He said he has traveled to other places and says the economic downturn is a Guam problem and not shared by other tourist markets.
Hart said while it’s nice the federal government is pumping tens of millions into the economy for the military buildup, it is only temporary. He said the tourism market will not survive that long and is in danger and needs life support now.
He said “we are watching the once bustling Tumon area deteriorate right before our eyes” with hotels not able to fill rooms or seats at restaurants leading to fewer work hours and smaller operating hours.
Speaking for Apple Pacific Restaurant Group, pre-COVID the company employed more than 425 people now they employ less than 225 people.
“This year we closed two restaurants and will be lucky to cross half of our pre-COVID revenue. That means less GRT, less payroll tax, less purchasing of food and goods and most off less money earned for people to go spend in other places,” Hart said.
He said to say they are struggling is an understatement and to say the tourism industry is struggling to survive as a whole is the biggest understatement one could make.
“Guam needs to prioritize tourism recovery or we will be just one large military base,” he said.
This post was originally published on here
