Post on 24-Aug-2020
Guam Future Hotel Supply Requirements
Presented By: Damien Little, Horwath HTL
Outline
• Current Strengths/Weaknesses of Guam
• Seasonal Tourism Performance
• Tourism Growth Projections
• Future Hotel Supply Requirements
CURRENT STRENGTHS & WEAKNESSES
Weaknesses
• Aging Hotel Supply relative to many other Asian
destinations
• Historically dominated by one source market
• Dominance of wholesale agents
• Lack of a strong local cultural appeal to market
• A current lack of hotel rooms during peak
periods
Weaknesses
• Aging Hotel Supply relative to many other Asian
destinations
– Average age of the leading hotels is 27 years
– Most recent leading hotel, Outrigger, is 15 years old
– Declining hotel supply from market peak
Historical Hotel Supply
0
2,000
4,000
6,000
8,000
10,000
12,0001
99
11
99
21
99
31
99
41
99
51
99
61
99
71
99
81
99
92
00
02
00
12
00
22
00
32
00
42
00
52
00
62
00
72
00
82
00
92
01
02
01
12
01
22
01
32
01
4
Growing Market
Declining / Stagnant Market
Weaknesses
• Aging Hotel Supply relative to many other Asian
destinations
– Average age of the leading hotels is 27 years
– Most recent leading hotel, Outrigger, is 15 years old
– A number of hotels have undergone renovations in
recent times with more renovation plans underway.
– Supply that has closed has re-opened
– New hotel construction finally underway
Weaknesses
• Historically dominated by one source market
– Japan has historically accounted for 70% to 80% of
total visitor arrivals
– This market is very quick to react to adverse market
incidents
– Korean arrivals again on the rise increasing diversity
of demand source.
– China represents huge demand potential, while
Russia can add some higher yielding long stay
demand
Japanese Share of Total Arrivals
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Japanese Share 67%
Korean Share 18%
Weaknesses
• Dominance of wholesale agents
– Agents control market through control of seats and
room allocations in market
– Wholesale business can limit rate growth potential of
the market
– The way Guam is packaged has a big influence on
the perception of the destination
– Dominance unlikely to change in short to mid term but
more FIT travelers are emerging
– Marketing of the destination’s image important
Weaknesses
• Lack of a strong local cultural appeal to market
– Colonial history of the islands resulted in much local
culture being lost = lack of authentic cultural
experiences to be had/seen in daily life (food)
– There is a real emphasis to re-build local cultural
traditions and practices in Guam. This will benefit the
tourism experience.
– Tourists also like to experience a western culture
close to home.
Weaknesses
• A current lack of hotel rooms during peak
periods
– With hotel supply below historical peaks and tourist
arrivals back close to historical highs, room supply is
extremely limited in peak periods and is restricting
tourism growth
– New hotel supply is coming
– This presents a development opportunity
Strengths
• Proximity to major demand sources / short travel
time allows for an easy short-break holiday
• Quality of beaches/water/environment
• USA Territory
• A good range of activities
Strengths
• Proximity to major demand sources / short travel
time allows for an easy short-break holiday
– Short flight time reduces travel costs and increases
feasibility for short-break holidays
– A good first time destination and easy for young
families
– May limit perception of destination to being short-stay
Strengths
• Quality of beaches/water/environment
– #1 attraction is the warm weather, good quality
beaches, clean water and clean environment
– A good range of water activities for tourists from
beginners/young children to experienced divers and
thrill-seekers
– Development to date has not spoilt the natural
environment (over-development is fast becoming a
problem in many other Asian destinations)
Strengths
• USA Territory
– US Culture is appealing
– International shopping experience
– Educational exchanges
– Tourism visa challenges
Strengths
• A good range of activities
– In addition to water activities, there are a range of
other activities / entertainment options to keep guests
busy during their stay.
– However, perhaps currently nothing that would extend
the length of stay
SEASONAL TOURISM PERFORMANCE
Monthly Arrivals To Guam (‘12 &’13)
0
20
40
60
80
100
120
140
160
Jan
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
Oct
No
v
Dec Jan
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
Oct
No
v
Dec
00
0s
of
Arr
iva
ls
Seasonality of Arrivals
(0.30)
(0.20)
(0.10)
-
0.10
0.20
0.30
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Seasonality: Guam v Other Destinations
0
5
10
15
20
25
30
Sanya Bali Danang Phuket Guam Okinawa KohSamui
Cebu
Guam Monthly Hotel Occupancy (‘12 & ‘13)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Monthly Occupancy Variance (‘12 & ‘13)
-0.20
-0.15
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
Jan
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
Oct
No
v
Dec Jan
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
Oct
No
v
Dec
Monthly Occupancy & Growth Implications
• There are a number of months per year when
market-wide occupancy is very high – this is
even more so in the leading 10 to 15 hotels in
the market
• Anecdotal evidence suggests that a lot of
demand is being lost to the market during these
months
• Without new supply, arrivals growth will be
constrained
TOURISM GROWTH PROJECTIONS
Tourism Arrival Projections
• Take into account 2020 Vision
• Historical growth rates and current trends
• Expected increases in air capacity of each major
source market
• Seasonality of tourism arrivals and limits on
hotel room supply
• New hotel openings
• Quality and availability of potential future hotel
developments
Unconstrained Tourism Growth Est.
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
2.02 million
Room Night Demand Assumptions
• Room nights generated per visitor arrival
– Looked at historical ratios
– Reduced slightly over time to be conservative
• Monthly arrival seasonality was largely
maintained moving forward
• Did not allow for any significant change in guest
behaviours
– Conservative approach that ALOS and DOF remain
more or less the same
Room Night Demand Assumptions
• Capped occupancy performance
– Market-wide occupancy capped at 90% on a monthly
basis – beyond this level – demand was kicked out.
– New supply requirements aimed to keep occupancy
around 80% on a an annual basis – this allows for
high occupancy in leading hotels but recognizes the
under-performance of other properties in the market
– Demand growth for following year was based on
capped arrivals and not underlying growth numbers
Estimated Tourism Growth to Guam
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
2.02 million
1.86 million
FUTURE HOTEL SUPPLY
REQUIREMENTS
Future Hotel Supply Requirements
0
2,000
4,000
6,000
8,000
10,000
12,000
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
Actual Under Construction New Supply
Future Hotel Supply Requirements
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Actual Under Construction New Supply
111 523
640 350
750 950 1,150
1,350 1,550
2,190
Guam Market Performance Outlook
0
50
100
150
200
250
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Occ % ADR
$108
$141
$229
THANK YOU!