FROM: Tourism and Infrastructure Committee, Governor’s Council of Economic Advisers
TO: Governor Ralph DLG Torres and Chairman Jerry Tan
SUBJECT: Institute a branding requirement on all future public land leases for hotel establishments
The Council found that the simultaneous goal of increasing financial resources derived of public lands and ensuring public land leases are granted to qualified and legitimate investors can be accomplished through a requirement of accompanying hotel land lease and extension proposals with an internationally recognized brand.
Research has found through a study of 21 global tourism destinations, that chain-affiliated hotels perform better than independent hotels in increasing foreign demand for the destination and that since the 1980s the branding of destination hotels has been an institutionalized practice within destinations across the world.[1]
Through amendment of the Department of Public Lands regulations regarding the acceptance of proposals for public land leases, initial requirement to demonstrate the development of an internationally recognized brand offers an added layer of confidence in the financial capabilities of the developer to complete the development and allows for the additional return to the CNMI’s international marketing efforts through the acquisition of the intangible asset developed through the international brand’s global marketing efforts.
Increasing the marketability of the CNMI’s hotel and room stock through international branding, increases the potential for higher average room rates, and expands the market of potential travelers, while enriching the overall brand of the CNMI as a world-class tourist destination. The CNMI has witnessed the marketing potential provided by international branding through the success of the Hyatt Regency Saipan and is in the process of expanding these benefits through the ongoing development of the Crown Plaza Resort Saipan.
The Council recommends the addition of an internationally recognized branding standard to be a component of the Department of Public Lands’ Underwriting Requirements contained in Title 145 § 145-70-120(a) – Qualifying Criteria, by including subsection (4) Branding, which would require evidence of an existing agreement with an internationally recognized brand.
Concurred by the Members of the Tourism and Infrastructure Committee
Governor’s Council of Economic Advisers
[1] Ribaudo, G., Moccia, S., Orero-Blat, M., & Palacios-Marqués, D. (2020). Comparing chains versus independent hotels based on international sales: an exploratory study. Economic Research-Ekonomska Istraživanja, 1–19. doi:10.1080/1331677x.2019.1710719