Despite increases in visitor arrivals the hotel industry is not seeing an increase in occupancy. GHRA president Mary Rhodes says this is because some tourists are now staying in unlicensed short term rental units and bed and breakfasts.
Guam – GHRA President Mary Rhodes says that although Guam is seeing a higher number of visitors overall the hotel industry’s occupancy rate has remained the same. Why? According to Rhodes this is because many travelers are now staying in short term rental units or bed and breakfasts some of which are unlicensed and therefore not paying taxes.
Guam’s tourism market has been seeing a shift from Japanese visitors to Korean visitors. “There are a lot of reasons why the Japan outbound market has been dropping for the last several years and it’s been other key destinations that are tourist destinations as well. A lot of the Japanese outbound numbers that we’ve been seeing is that they travel more domestically within Japan especially like to Okinawa now,” said Rhodes.
So instead Guam has seen an increase in other visitor markets particularly the Korean market. “Last two months our Korean numbers has really exceeded our Japan numbers. Total outbound from Japan has been down but we’ve known that for the last four years,”
The Korean market has more than made up for the loss of Japanese visitors. In fact, Guam has been receiving record breaking visitor arrivals. More visitors are coming to Guam but more of them are from Korea and Korean travelers spend less on Guam than Japanese travelers. In addition to spending less they spend differently. Many Korean tourists are what is referred to as the F.I.T. market or Free Independent Tourists who don’t travel in package tours put together by tour companies. F.I.T. travelers book their flights and accommodations online.
This has led to another problem altogether. “Even with the growth in arrivals our occupancy numbers have really remained stagnant over the years,” said Rhodes.
Rhodes says this is because some Korean travelers are staying in unlicensed short-term rental units. They are essentially giving their money to a black market. This also means that GovGuam is losing out on revenue. “We worked with the legislature two years ago to really push language to get our short-term vacation rentals licensed on Guam,” said Rhodes.
A bill was eventually passed creating a category at Rev&Tax for short term rentals. However, Rhodes says there is still a problem with regulating the industry. Particularly with air bed and breakfasts.