Regal Carnation Hotel Case

Topics: Guam, Hotel, Star Pages: 11 (3812 words) Published: December 1, 2011
Regal Carnation Hotel (Guam)
Case Analysis

Case Introduction
The island of Guam is an unincorporated territory of the United States located in the Philippine Sea. Ruled by the Spanish until 1898, Guam was ceded to the United States and briefly occupied by Japan between 1941 and 1944. Of strategic significance during the Second World War, more than 18,000 Japanese and 1,800 U.S. marines died in the U.S. retaking of the island. Following the war, the Guam Organic Act of 1950 provided for U.S. citizenship among residents and legitimized a continuous U.S. military presence on the island. Currently Guam is home to 140,000 civilians and 7,000 military personnel that live on and around several U.S. Naval, Coast Guard, and Air Force bases. Not surprisingly, Guam’s economy depends heavily on these Department of Defense installations as well as tourism and locally owned businesses. In addition, similar to a state, Guam receives U.S. government aid. Looking forward, Guam, along with the rest of the Mariana Islands, is being prepared to be the westernmost military training range for the U.S. and key military hub that will further allow U.S. military power to be projected via air, land, sea and undersea. In addition to new force upgrades, relocation of U.S. Marines from Okinawa, Japan, slated to have begun this year, will further expand the military population of the island. As such, the amounts of total land that the military will control or tenant may grow to or surpass 40% of the entire landmass of Guam. This astounding percentage does not include private land ownership by military personnel and support services.

Beyond the U.S. presence, tourism takes center stage in Guam. With the climate on Guam maintaining a tropical 80-90ºF throughout the year, and numerous resorts and hotels propagated along the beachfront, it is no surprise that it has gained the reputation as Japan’s Miami Beach. Guam’s tourism industry can be traced to 1962 when travel restrictions to the island were lifted and 1967, when the first commercial jet landed on Guam, carrying 109 Japanese visitors. Three jet-hours away from the Asian capitals of Tokyo, Taipei and Manila, it welcomes more than one million Asian tourists per year. Although 80% of the tourists originate from Japan, Guam receives a sizable number of tourists from South Korea (10%), as well China, Taiwan, and Hong Kong, with a few from the United States. The average Japanese tourist stays on the island for three to four days and spends approximately $585 during their stay. Comparatively, the average Korean tourist spends an average of $506 during their stay. For most for these tourists, it was their first overseas trip, and the first and only time they would set foot on U.S. soil. Repeat Japanese visitors made up approximately one-third of total arrivals. There are approximately 30 to 35 hotels in the one-star to five-star range on Guam, including branded hotels like the Sheraton, Hilton, Marriott, Hyatt Regency, and Westin. Average hotel occupancy rates on the island hover around 60-65%, with beachfront properties realizing 80-85% occupancy. The majority of hotel properties on Guam are in the four- to five-star range, with three-star hotels differentiated primarily on beachfront access. In addition, Guam has numerous one-star hotels, and just a single two-star limited service hotel. Seaside resort hotels with their own beachfront comprised the most-sought category of hotel in Guam. Market research showed that duty-free shopping and sampling “Americana” were the other reasons for visiting Guam. Duty-free designer shopping outlets, and the American-style malls: Micronesia Mall, Guam Premier Outlets, the Agana Shopping Center, as well as the world's largest Kmart make for a plethora of shopping options. In addition, Guam has seven public golf courses accommodating over a million tourists per year. Finally, beyond serving as a purely vacation destination, the U.S. territorial...
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