Guam's ‘road to recovery’ marked with challenges

GHRA: Mary Rhodes, president of the Guam Hotel and Restaurant Association, gives the state of the hotel and restaurant segment of the For Guam 2022 Tourism Forum held Tuesday. Norman M. Taruc/The Guam Daily Post

Although some believe the worst of the COVID-19 pandemic is behind us, tourism, Guam’s main economic industry, has yet to bounce back to pre-pandemic levels.

About 80 people on Tuesday attended the For Guam 2022 Tourism Forum, which shared information about the ongoing efforts and challenges to recovering the 1.6 million annual visitors the island achieved before the pandemic derailed international travel.

Members and partners present included the Guam Hotel & Restaurant Association and the Guam Travel & Tourism Association, as well as some elected officials. Speakers included officials from the University of Guam, the Guam Economic Development Authority, GHRA, GTTA, United Airlines, Korean Air and Japan Airlines.

Panelists discussed the economic impact of the COVID-19 pandemic and the “road to recovery” experienced by the public and private sector as it relates to the tourism industry, which was described as the “market leader” of Guam’s industries by Mary Rhodes, president of GHRA.

While panelists shared insights, the main takeaway from the forum was that stakeholders from the public and private sector need to work together to discover solutions to return the market to pre-pandemic conditions. However, as panelists pointed out, there are a few things that are not within “our control.”

Some of these conditions include the currency exchanges of the Japanese yen and Korean won, which are not as strong as they once were. The weakened currencies essentially make an American vacation, including to Guam, more expensive.

Economic impacts, aid

One of the panelists at the forum was John Rivera, Ph.D., former director and co-founder of the Regional Center for Public Policy and program director of the Master’s in Public Administration program at the University of Guam, who is now director of human resources and corporate development for Citadel Pacific Ltd.

Rivera presented a study conducted by the University of Guam which detailed the impact of COVID on the community for recipients of the Local Employers Assistance Program.

According to Rivera, 57% of LEAP recipients reported that pre-COVID, 60% of their customers were visitors. It was also reported that some 93% of businesses remain operational because of LEAP aid.

In addition, the same 57% of LEAP recipients reported they had been in business for more than 10 years. A majority of the aid recipients were small enterprises who had fewer than 20 employees and who were able to maintain staff. This was observed as an important aspect of the program. Some 74% of recipients had to suspend or cease operations, and the lack of visitors and cash flow were the greatest impacts to their businesses.

Recipients also said they did not feel optimistic about projected annual revenue over the next 12 months and, finally, 79% reported they would apply for the program again due to need.

LEAP was created to assist small businesses affected by the COVID-19 pandemic, by providing either grants or loans to qualified businesses. More than $60 million was pumped into the program, a combination of federal relief funding and local money.

Rivera quoted Roseann Jones, a professor of economics at the School of Business and Public Administration at UOG, who could not attend the forum.

Jones said, “It was our intent to explore the impact of the LEAP program on business and seek their view on what lies ahead. With this, it is our hope to be able to assist our leaders in the best decisions we can - charting our way forward.”

Melanie Mendiola, administrator of GEDA, said, “GEDA sees recovery underway, but we do also see that there is still a vulnerable section within the tourism industry.”

She noted that, at this point, LEAP is an active program.

“If you received under $50,000, it's treated as a grant, if you received over $50,000, it was treated as a loan. About 225 businesses received loans,” she said.

Only 34 LEAP recipients have sought loan forgiveness thus far, Mendiola said.

“It is inconclusive as to whether this is the appropriate way forward. The things remaining challenged businesses face include the rising cost of doing business, which is not always reflected in business privilege tax, she said. “I recommended follow-up discussions to really understand how to best address any remaining struggles in the economy.”

Mendiola said a follow-up with members of GHRA and GTTA on the matter is planned for Friday.

“We always used BPT filings as the documentation ‘gold standard’ because the volume of applicants was so large compared to the small team at GEDA processing the applications. However, now that we are dealing with a smaller population of businesses, I think we can get creative,” she said

At the forum, Rhodes said one of the challenges faced by the industry is that, although there are visitors and travelers from the U.S., some of whom are military members, the revenue numbers aren’t as high as those produced by leisure travelers. “They (military) have a flat rate, which is decided by Congress, and they do not pay more than $159 per night for rooms and they have per diem rates. That has affected the total revenues.”

Rhodes said Guam's focus "should remain our Asian travelers, our leisure market.”

According to the GHRA president, the tourism industry employs 34,000 people on Guam.

“We have to look at the whole picture and not specifically one sector. We're made up of many sectors and we also influenced finance, insurance, all other types of industries."

Rhodes said although the job market increased, it doesn’t mean there were tremendous gains made for tourism jobs.

“The 2,200 jobs were not in our industry. The government grew by over 1,000 jobs and construction has grown. Construction and government, that's it. Our tourism industry has not seen growth. It's depressed by 70% since 2019,” she said.

Rhodes said while key source markets have reopened, recovery has been slow. In her forum presentation, she noted there are challenges with air capacity and load factor as well as challenges with domestic travel promotions and currency.

While arrival numbers are on an upward trend, Rhodes said, there has been minimal impact on the industry and the local market is behind by 91.93% in the global leisure market.

Rhodes touted a positive outlook for 2023 due to an increase in collaboration and efforts and she recommended a focus on the leisure market’s short- and long-term strategies.

"The data and insights presented at the tourism forum highlight the challenges that have riddled the industry during the reopening in 2021 and (year-to-date) 2022," Rhodes told The Guam Daily Post after the forum concluded. "Throughout the value chain, the stakeholders ... have continued to remain flexible and resilient through these challenging times, but (government aid) programs ... definitely make an impact and position these establishments for long-term sustainability as we work on rebuilding the travel and tourism industry."

Tuesday's forum was held at the Rihga Royal Laguna Guam Resort.

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