The Guam Economic Development Authority will contact grant program recipients in an effort to track the economic recovery of small businesses. GEDA is requesting business privilege tax filing data from July 2021 through July 2022. Representatives will contact grant recipients by phone or mail with instructions to participate, according to a statement from the agency.
COVID-19 saw tourism, the island’s main industry, collapse at the height of the pandemic. Today, with the advent of vaccines and the opening of the economy, many eyes are on the progress of the recovery.
Government assistance to local businesses has taken the form of several programs over the past two years, including the Small Business Pandemic Assistance Grants and, more recently, the Local Employer Assistance Program.
More than $60 million had been injected into LEAP through a combination of federal relief funds and local money. While LEAP loans or grants have helped businesses stay afloat in an economy that may still be a year or more away from fully recovering, the pandemic has affected some businesses more than others. Companies such as Hafa Adai Shooting Gallery are struggling to keep their doors open and their employees employed.
GEDA has spent just about all of the LEAP funding and probably doesn’t have enough money for a second round, according to GEDA administrator and CEO Melanie Mendiola. She spoke to the Guam Daily Post last month about wanting data to gauge the progress of the recovery.
“Our first-ever pandemic relief grant program reached over 2,500 businesses. And (LEAP) we had 900 eligible. I think if you go from 2,500 who need help to 900, …hopefully we’re at the point where less than 900 need help. We just need to figure out how many businesses there are and where we can go from here,” Mendiola told the era.
There’s been some good news for Guam over the past few months, at least. Unemployment in March fell to around 5%, even lower than the unemployment rate in December 2019. But this reflects not only an increase in employment, but also people leaving the labor market and no longer looking for work .
Job growth in March was largely driven by construction, with H-2B workers also counted in the payroll survey. Meanwhile, workers in the service sector only increased by 4.7% between December 2020 and March 2022.
Visitor arrivals began to take off around April. The Guam Visitors’ Bureau said arrivals in July were up 16% over forecast, indicating strong growth going forward. About half of all visitors to Guam are expected to come from South Korea.
However, the air service changes in September could be a sign of some turbulence to come.
Flight Schedule Adjustments
At an August 30 meeting of the board of directors of AB Won Pat International Airport Authority, it was reported that T’Way Air would reduce its Incheon service from daily flights to four weekly flights. That would be for most of September, according to the month’s flight network. Air Seoul would also reduce its Incheon service, from twice a day to four times a week, with two additional sections on September 9 and 12. Jeju Air would change from twice a day to a single day with additional sections from September 1 to 12. Jin Air would also reduce its flights to Busan from five times a week to three times a week.
Additionally, Japan Airlines is expected to suspend Narita flights from October to December.
Monte Mesa, co-founder of the Guam Travel & Tourism Association, said the LEAP funding was issued earlier this year on the belief that tourism would begin to rebound this summer.
“However, as we have seen, we had a slight uptick in July and August, but in September we started to see a change again on a downward trend in terms of air seat capacities from from Korea as well as Japan,” Mesa said, later attributing the reduction for Korea to a high COVID-19 infection rate “sort of” dampening travel demand.
The September GVB industry update noted that for Korea, a recent drop in new cases in August had raised some optimism that the latest wave of COVID-19 may have peaked, although authorities remain on alert.
Mesa said he hoped all LEAP recipients would respond to GEDA so the data could be compiled, adding that they knew not everyone was suffering yet, but some people still needed to recover because they depended on the visitors.
“And we’re not even at 50% of what we used to get. It’s still, at best, 30% of our arrival numbers in 2019 (Korea). So we’re definitely missing him a big chunk. And it was nice to see the rise in July and August of the Korean market, but now it’s simmering again,” Mesa said.
Another factor highlighted by Mesa is the value of currencies in Japan and Korea which have weakened against the dollar, making travel and accommodation more expensive.
“However, there are still overseas travelers who have a bit more disposable income. … So the question now is, if tourism is really that engine that drives the local economy, then we need to reinvest part of the surpluses that the government claims it has or part of the federal funds still available … giving GVB additional funds to set up effective marketing programs in Korea and Japan,” Mesa said, adding that the key is to promote Guam as a safe travel destination.
“We have to say we are safe and we have documents to prove it. This is where the government has to work with (Department of Public Health and Human Services) because we have tested thousands of people who are came in July and August and none or maybe a very small percentage, if anyone, tested positive leaving Guam….I didn’t get the stats…to see what percentage of positives. It has never been answered. It needs to be answered and if it’s very low, we have to shout it in Korea and Japan,” Mesa said.
Ebb and flow
Gerry Perez, interim president and CEO of GVB, said there was “nothing new” in airlines adjusting flight schedules and that it was a operational function at the request of an individual carrier.
“However, in terms of the island’s overall seat capacity, we are on a positive trajectory compared to last year, up 27%,” Perez said.
Weekly seat capacity is currently just over 23,000. This is significantly higher than at the start of this year, but weekly capacity is about 4,000 short of weekly capacity in August.
Perez added that he was also not concerned about the suspension of JAL flights from October to December, noting that GVB had always anticipated a slower return for the Japanese market. Perez added that JAL is also a proven Guam legacy carrier, a relationship he expects to endure.
“We also need to keep in mind that Guam is just one of many destinations that are being marketed in Korea and Japan. While the free COVID testing program has helped us attract visitors to the island, it becomes more competitive as more destinations open. The summer travel season is ending and new travel trends will emerge in the fall. It’s just the ebb and flow of travel,” Perez said. .
He said GVB appreciated Mesa’s support of the agency, referring to calls for more marketing investment, but also noted that many factors go into GVB’s budget and operations.
“Our enabling legislation requires partnership with local businesses and also encourages product development. Additional funding is welcome as it would go into programs that could increase arrivals and speed recovery, such as supporting the travel trade on our source markets,” Perez said.
GVB and airport officials traveled to Japan in early August to promote Guam. Perez said the strategy was simple: meet with foreign carriers to encourage new routes to Guam and work to get direct service from Haneda Airport.
“These are important because they will drive competition and demand in Guam, while allowing us and our visitors to travel at more affordable fares,” Perez added.
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