$9.1M in lost economic revenue due to coronavirus outbreak, no clear timeline for recovery

Although Guam hasn't had a single case of coronavirus, the island has lost more than $9.1 million in revenue due to the illness so far, and businesses must be prepared for continued downturn.

Tourists cancellations were at 15,139 as of Tuesday, according to the Guam Visitors Bureau. This has resulted in a loss of more than $9.1 million from February through April, said Pilar Laguaña, bureau CEO and president.

Meanwhile, a delay in the minimum wage increase set for March, requested by the Guam Chamber of Commerce, is not an option. The chamber cited concerns regarding businesses' revenues due to the outbreak.

No executive order can trump the law, according to Adelup spokeswoman Krystal Paco-San Agustin.

"Thankfully, Guam remains coronavirus free," Laguaña said. "This is a very uncertain time for travelers... Our concern and our priority is the health and safety of our island."

Unclear timeline, decreased revenues

There is no timeline for recovery, and there is no blueprint for businesses seeking a return to normalcy.

"The only way we're going to know is by how many people are infected," said Linda Unpingco DeNorcey, director of the Department of Public Health and Social Services. "It's really unknown at this point."

The airport is tracking 11,000 canceled seats through February so far, said Tom Ada, executive manager of the Guam International Airport Authority. Outbound passengers have dropped significantly as well, he said. A month ago, the airport saw 3,200 daily departures between 1 and 4 p.m. That number has dropped to about 2,400 departing passengers.

"We are feeling a little bit of the impact from the cancellations," Ada said. "There has been a decrease in revenues."

Some of this negative impact is somewhat mitigated due to an unexpectedly prosperous January. However, the airport will need to defer capital improvement projects due to the losses in revenue so far, Ada said.

'Prepare for a downturn'

Mary Rhodes, president of the Guam Hotel and Restaurant Association, stressed that businesses should be prepared for a sustained downturn for several months.

"It is not a short-term thing," Rhodes said. "People in general are going to choose not to travel, which is what's recommended anyway."

The majority of Guam's GDP comes from tourism, and 35% of the island's employment is in the tourism industry, Rhodes said.

"We are all going to be impacted one way or another," she said. "You need to prepare for a downturn."

There's no way to put a timeline on when the outbreak will subside, allowing the industry and its businesses to bounce back, she said. Instead, businesses need to focus on preparing their employees and management for the downturn, and to increase internal efficiency in the meantime.

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While the financial impacts may be severe, Rhodes stresses that businesses should look at all avenues to weather the downturn before looking at lay-offs or decreased hours.

"It's going to be tight, there are going to be decisions made," Rhodes said. "Projections for the next three months aren't great. We have to be realistic on what we can manage."

Uncertainty for businesses

In the meantime, businesses in the tourism industry remain in limbo as they grapple with decreased visitors for an unknown period of time.

"It is extremely concerning," said Jay Merrill, president of Market Research and Development on Guam.

If the outbreak is prolonged and cancellations continue to grow, this can ultimately mean lay-offs, reduction in hours and a general degradation in quality, Merrill said.

"We're a long way from that problem right now, but if this continues for a year, it's going to be very serious," he said. "The uncertainty is the issue for businesses."

"One wonders, this is a not so serious virus but has caused a lot of concern, so the economic impact will be greater than the health impact," Merrill said.

Minimum wage increase

The Guam Chamber of Commerce, in response to the growing cancellations and concern for business, wrote a letter to the governor requesting a moratorium on the implementation date of Public Law 35-68, which increases the minimum wage on March 1. It wants to push back the increase until Sept. 1, citing businesses' decreased revenues.

"By (Sept. 1), this virus issue should hopefully be behind us and allow the industry to rebound as well as give businesses the ability to continue supporting its employees without as drastic a cut in hours or pay," the letter stated.

The Guam Hotel and Restaurant Association has not taken a formal stance on delaying the minimum wage increase, Rhodes said. Last year, 60.8% of the association's members were against the minimum wage increase.

The governor is obligated to follow the law that has been established regarding minimum wage, Paco said.

The Guam Visitors Bureau hosted the packed informational briefing regarding the coronavirus and tourism industry on Tuesday at the Lotte Hotel Guam. Officials from the Department of Public Health and Social Services, Guam Hotel and Restaurant Association, Guam Customs and Quarantine, the governor's office and businesses were in attendance.

Tourist cancellations as of Tuesday, according to the Guam Visitor Bureau, are as follows:

Japan: 481

Korea:14,414

Taiwan: 63

Hong Kong: 6

U.S.: 175

Most cancellations entail packages for flights, hotels and optional tours. Travel agents have been re-booking cancellations from Korea in the latter part of spring and the summer, according to Laguaña.

According to the World Health Organization, as of Monday, there were 71,429 confirmed cases globally, with the majority in China and 794 confirmed cases in 25 other countries.

Reporter Anumita Kaur covers military, business and tourism on Guam. Follow her on Twitter @anumitakaur. Reach her at akaur@guampdn.com.