Bad news and bright spots: Guam’s tourism industry in 2024

BY OYA NGIRAIRIKL
Journal Staff

While consensus on how exactly Guam’s tourism industry is faring and what’s needed to improve it may change based on perspective, there’s one thing everyone seems to agree on: tourism numbers are not where we want it to be.

That’s not all that most everyone agrees on. Industry leaders said the tourism industry can be strengthened using data to study the current situation and what’s working based on the needs of today’s travelers, and most importantly, work together to implement solutions. 

According to Guam Visitor Bureau statistics, the month of May had 51,284 visitors and June had 51,499 visitors. These numbers bring Guam short of the 2019 numbers by more than 50%. Korean tourists make up over 51% of the total numbers and Japan comes in at over 21%. Visitors from the U.S. mainland and Hawaii make up another 16% of Guam’s inbound travelers.

Typhoon Mawar pushed back recovery efforts that were underway following the COVID-19 pandemic, which slowed tourism to a near standstill. But there have been other challenges.

First, there was the “slow trajectory for recovery post-pandemic from our major markets due to weakened yen and won currencies,” according to Gerald S.A. Perez, vice president of GVB. In 2019, the Japan yen to USD exchange rate was 105.28 compared to today’s 149.77 rate. Similarly, the Korean won, in 2019, was 1,218.14 compared to today’s 1,369 rate. In short, it costs more to vacation in Guam where U.S. currency is used.

Second, Japan’s domestic tourism has been outpacing international travel with the help of financial incentives from the Japan government, Perez said. Local governments were offering incentives that include discounted travel and hotel stays, subsidized by the government.

Guam’s third challenge is the lack of human resources in the industry, Perez said. Labor has been a growing issue since COVID-19 when the hotel industry came near to a standstill as Guam and most of the world slowed for fear of spreading the virus.

Mark Baldyga, owner of Baldyga Group, is among those who share the concern.

“We had over 400 team members pre-COVID and currently have around 150,” Baldyga said. “The pace of recovery is challenging but I’m very proud of our hard-working team.”
Perez and Baldyga pointed out some bright spots in the tourism industry.

Perez said aside from leisure travel markets it was personnel from the military and military-related businesses and organizations that helped fill hotel rooms during the pandemic and that continued after the Typhoon Mawar.

Mary P. Rhodes, president of the Guam Hotel & Restaurant Association, in May 2023 shared with senators during a hearing at the Guam Legislature that military arrivals numbers are not always reflected in GVB figures if they arrive at Andersen Air Force Base.

She said the figures totaled 1,183,853 room nights, $187.8 million in room revenue, $20.6 million in hotel occupancy tax and $9.39 million in gross receipts tax. When GHRA provides updated figures, the Journal will publish them. Figures provided to senators in May showed the following from the military market:

2022 (October to April)
Total room nights: 190,108
Total room revenue: $30 million
Total hotel occupancy tax: $3.3 million

2021
Total room nights:  491,136
Total room revenue: $78 million
Total hotel occupancy tax: 4.7 million

2020
Total room nights: 267,751
Total room revenue: $42.5 million
Total hotel occupancy tax: 4.7 million

2019
Total room nights: 234,858
Total room revenue: $37.3 million
Total hotel occupancy tax: $4.1 million

Looking forward, Perez said GVB is “making significant progress in the Guam-only visa waiver as evident in the recent legislative action in the Philippines and the renewed communication with the Department of Defense.”

In addition, GVB’s Destination Management team is working on product development. 

“When we market Guam and invite people to come here, we create expectations that we want to deliver on, such as the quality of physical facilities and service culture,” he said. “It is a challenge to get the value chain in the industry to step up their game in service. For example, cashless transactions — Guam is so far behind on this.”

Baldyga said hotel stays were boosted “by military business and the length of stay, which was three nights in 2019 and four nights now.”

“This has helped to prop up the TAF and mask the real impact on jobs and the economy,” he said. “Everyone in the industry is having a hard time from hotels to optional tours, retailers, transportation, restaurants and small local businesses.”

Baldyga added that local customers have also helped the industry.

“We really appreciate the local support for our shows, club and restaurants.  It helps tremendously,” Baldyga said.

A recent GVB campaign was a bright spot for the industry. David Tydingco, managing director and CEO of Valley of the Latte Adventure Park, said the partnership between GVB and United in providing a discounted fare did its job of enticing family and friends who’ve moved to the U.S. mainland to return home for the huge 80th commemoration of the island’s liberation. 

“The helped tremendously to boost our hospitality industry,” Tydingco said.

GVB is also contemplating an additional option of “airline incentives to maintain existing airlift capacity,” Perez said.

Seat capacity dropped during the pandemic and hasn’t yet picked up. One challenge was the increase in airport fees for airlines. The Guam International Airport Authority is required to establish rents and fee sufficient to cover its operating costs, which have increased with the inflated cost of supplies, fuel and other essentials.

What signature airlines used to pay for terminal building rates in fiscal 2021 at $51.94 is now $59.64. A $5.79 departure fee is now $6.57. Arrival fees in 2021 were $5.35 and are now $5.55, and landing fees used to be 20c per 1,000 pounds of gross takeoff weight and are now $4.91.

One labor issue that Guam employers saw in 2020 was the shift of employees from hotel and hospitality jobs to construction and other higher-paying jobs, particularly those related to the military buildup.

According to Department of Labor statistics, the number of employees in construction grew:

• December 2019: 7,350
• December 2023: 12,450

Meanwhile, employee numbers in hospitality-related jobs dropped:

• December 2019: 18,890
• December 2023: 16,370

Retail employment numbers also dropped:

• December 2019: 14,160
• December 2023: 12,330

William Nault is the president and CEO of Nautech Guam Corp. since 2018 and has seen labor challenges over the years. Nautech focuses on successful growth of business including transportations, online activities, restaurant, car rental and other travel-related services. Prior to that, he was the director and general manager of Rakuten Travel, managing a team of salespeople to work with and consult for hotels in increasing and maintaining their sales and other functions.

He said Nautech used to have 13 employees with 18 on-call. Since 2018, the number of employees has increased. The company needed more on-call drivers with chauffer’s licenses because it added more vehicles to its fleet. But also, and in large part, Nautech needed more employees to accommodate those that have at least one other job.

“Nowadays, many of them have so many jobs,” he said. Nault said having more employees on call has its challenges, but it helps employees manage their jobs and offers another way for the company to find and retain employees.

Nault agreed with other industry leaders that they need to work together with GVB and the community to find and implement solutions. He said other destinations that compete with Guam, such as Vietnam, are aggressively marketing to Asian markets like Japan and Korea.

Guam is conveniently located near Japan, Korea, Taiwan and the Philippines with cultural activities and parks and other things that visitors enjoy, he said.

He said there’s been discussion that more needs to be done considering that the COVID pandemic led to the closure of some popular stores as well as various attractions and activities. It didn’t help that as the island was getting back on its feet Typhoon Mawar struck.

“We have lost some of our products that people come to our island for, such as shopping, attractions, activities and so forth,” he said. “So, within the industry, we’re talking about increasing activities, things to do, places to eat so that there are more things for people to enjoy.”

Talk also includes using this slow time to fix facilities and infrastructure at parks and roads leading to parks and other natural and cultural attractions to also help.

“People want to visit beach resort destinations, which we are in Guam. They want to visit the beach and be able to create memories. Guam has all of that. We have the space to create more activities to help tourists have happy experiences,” Nault said.

Budgets to market in Japan and Korea have increased. For Korea there was a $3.5 million budget in fiscal 2023 which increased to $5 million in 2024. For Japan there was a $2.98 million budget that came to $3.2 million with the rollover from fiscal 2022. In 2024 that increased to $3.8 million.

Perez said GVB has had some recent successes which it hopes will grow Guam’s tourism numbers, including “establishing a direct flight to Haneda airport, which is convenient for the Kanto area market in Japan.”

The bureau also continues to work with travel trade partners in Korea and are “generating non-traditional markets such as those from Taiwan, China, and the Philippines,” he said.

Baldyga, a former GVB chairman and author of Guam’s Tourism 2020 strategic plan said he appreciates the efforts of GVB and other partners in the tourism industry. 

“Guam has faced a perfect storm with the impact of COVID-19, a slow regional recovery, the weakest yen in 40 years, and a typhoon. Additionally, the tourism landscape has shifted, with increased competition, fewer traditional package tourists, and a new consumer profile,” he said. “Amidst these challenges lies an opportunity to bring a fresh approach and rebrand and reposition our destination.”

He added that Guam has proven to be “a resilient community” with “island leaders who genuinely care.”

“I would love to see us seize this moment to bring together GovGuam, GVB and the private sector, much like former Governor Gutierrez did so successfully with Vision 2000. Our island's great resources and prime location give us a unique advantage. I’m confident that with shared effort and collaboration, we can accelerate the recovery and achieve a bright future for Guam tourism, better than ever, as ‘Guam 2.0.’” mbj