OPA: Tourist Attraction Fund Balance Falls 7% Due to Capital Projects

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Guam – The Tourist Attraction Fund (TAF) ended fiscal year (FY) 2013 with a significant decrease of $4.4M million (M) in the fund balance or 7% from $66.1M in FY 2012 to $61.7M in FY 2013.

The decrease is primarily attributed to the $6.8M in the capital projects fun.

READ the OPA’s Highlights of the TAF Audit HERE   

Total revenues of $29.3M increased by $3.2M or 12% from $26.1M in FY 2012 and the total expenditures of $33.7M also increased by $1.7M or 5% from $32M in FY 2012. FY 2013’s revenue of $29.3M was the highest level of Hotel Occupancy Tax (HOT) revenues in over a decade.

Independent Auditors Deloitte & Touche, LLP rendered an unmodified (clean) opinion for TAF’s financial audit.

The auditors identified a material weakness on TAF’s internal control over financial reporting and compliance related to the Department of Revenue & Taxation (DRT) has an inadequate document retrieval system. There was an understatement of $1.5M in hotel occupancy taxes which became an audit adjustment. Additionally, due to the poor document retrieval system, 28 tax returns have yet to be located.

In the management letter, two findings were identified, that affected the capital projects fund, the understatement of encumbrances of $1.2M and unrecorded liabilities of $644 thousand (K).

READ the Management letter HERE

TAF Operation Revenues
TAF’s revenues are derived from 11% hotel occupancy taxes levied and imposed on occupants of hotels and similar facilities on Guam. TAF was established to fund various recreational projects and visitor industry activities and is the major source of funding for the Guam Visitors Bureau (GVB).

The TAF’s 12% or $3.2M increase in FY 2013 was mainly due to the 10% increase in hotel room rates and visitors’ arrivals by 5% for a total of 1.3M visitors.

This was primarily due to the 49% spike in arrivals from Korea with a record setting 233K visitors resulting from the increase in the additional seat capacity provided by Jeju Air which started flights from Incheon in September 2012 and Korean Air flying regularly out of Busan in October 2012.

Additionally, Russian travelers more than doubled from 2,933 in FY 2012 to 5,903 in FY 2013. Japan remains Guam’s largest visitor market with a total of 908K travelers followed by Korea of 233K and third by Taiwan of 48K. China markets brought in 10K visitors. According to Guam Visitors Bureau the positive trend is expected to continue in 2014.