COLUMN ONE : Tiny Guam Captures Its Old Foe : Japanese tourists and investors love this U.S. island territory, bitterly fought over in World War II. They bring billions to the local economy.
This is a U.S. territory, but the Japanese have adopted it.
Japanese tourists are pouring in, and the developers are scrambling to provide them a place to sleep. Hotel Okura and Fujita Hotel are adding rooms. Hotel Nikko and the Palace Hotel are just now taking shape, adding to the skyline of steel rising above the blue waters of Tumon Bay.
Of course, this wouldn’t be a proper Japanese tourist spot without golf courses. A dozen are on the way. At Mangilao on the opposite end of the island, workmen use dynamite to clear the rugged tropical terrain for a new course.
When added up, Japanese investment in Guam’s 212 square miles is estimated at several billion dollars. Guam has become sort of Japan’s version of a Caribbean vacation because of its tropical weather, affordability and the fact that it’s a U.S. destination located only three air hours from Japan.
The Japanese presence is so pervasive that some local stores accept yen as commonly as dollars. The Hilton hotel company is spending $25,000 a year to teach employees Japanese.
There is plenty of irony in the onslaught of Japanese tourists, developers and investors.
Only hours after Japan bombed Pearl Harbor, Guam was attacked. Within two days, confronted with a Japanese invasion force of nearly 6,000 troops, the tiny U.S. military force surrendered.
Nearly 500 Americans--missionaries, military personnel, government officials and others--were sent to prison in Japan.
The native Chamorros were required to learn and use Japanese, although few made it their regular means of communication. Treatment of the Chamorros at the hands of the Japanese became increasingly harsh as American forces moved across the Pacific in 1944. They were forced to work in the fields, providing food for Japanese troops, and were enlisted to build defense fortifications. When Americans began to bombard the western coastline in July, 1944, the Chamorros were sent to concentration camps on the eastern side.
On July 21, 1944, after two weeks of heavy pre-invasion naval bombardment, Marines landed on Guam. By nightfall, two beachheads were secured, but it wasn’t until Aug. 10 that the entire island was declared secure. Recapturing Guam cost 2,124 American lives.
Now, the Japanese are back, but as tourists. Again, the Japanese are supplanting the U.S. military.
For years, the economic fortunes of Guamanians rested solely on the U.S. military at Andersen Air Force Base, the U.S. Naval Station and the Naval Air Station. Last month, the last of the B-52s left Andersen. The local government wants to take over the Naval Air Station, located next to Guam’s International Airport, to accommodate more flights from Japan.
The economy is “still lopsided,” notes businessman Mark V. Pangilinan. “First it was all military, now it’s all Japanese tourists.”
Guamanians generally seem to welcome the shift. For one thing, tourism appears to be more lucrative. Guam’s general fund surplus last year was the first in more than a decade.
Guam collected $11.6 million in hotel occupancy taxes in 1989, up 32% from the year before. Gross business receipts jumped 20% in 1989 to more than $3 billion.
Today, tourism is the fastest growing and biggest industry, accounting for 39% of the private sector jobs. Tourism helped push unemployment down to 2.1% in 1989, the lowest in the United States. “The economy has improved dramatically in the last six years. There is no word to describe it,” said Joseph P. Bradley, a government economist in Guam.
But the money, visitors and construction have brought problems of their own. Guam faces a severe labor shortage. Housing is in short supply, too, and real estate prices have soared. The overall inflation rate is 10% and likely to get worse.
Many residents fear that the hodgepodge of development will turn their tropical island into an environmental nightmare or a concrete jungle like Hawaii’s Waikiki beach. Already, the rapid pace of development is straining Guam’s public facilities and services. Power outages are not uncommon. Water is scarce in some areas.
“It’s a boom for a chosen few, a handful of selected locals who have first-hand knowledge of what’s going on in tourism,” grumbled Ben Domingo, a local TV cameraman who was accompanying a Japanese tour group.
There is also concern that Japanese firms are dominating the tourism business. They handle most new construction on the island and own all the major hotels on Guam except the British-owned Hilton. Locals say they find it hard to crack the close-knit network.
The flow of Japanese tourists to Guam started haltingly. The first 109 visitors from Japan stepped off Pan American World Airways’ inaugural flight to Guam in May, 1967. But the fledgling tourist business came to a standstill in the early 1970s with the energy crisis.
Guam’s economy fell into a 10-year slump until the mid-1980s when oil prices plunged and the Japanese returned. In 1989, 83% of the 668,748 who visited Guam were from Japan.
So the island caters to its Japanese visitors. Signs and advertisements at Guam International Airport are in Japanese. So are maps and shopping guides. The Kentucky Fried Chicken outlet tucked on San Vitores Road where several big hotels are going up looks out of place amid Japanese restaurants and noodle houses.
Japanese tourists spend about $700 million to $800 million annually on the island. The Guam Visitors Industry Education Council estimates Japanese visitors spend an average $1,200 in gifts, car rentals and other expenses in addition to their tour packages.
Their lavish spending has resulted in some two-tier pricing. The fare for the ferry to Cocos Island off the southern tip of Guam costs $5 for locals and $20 for tourists. Fred Guzman, a vendor at Two Lovers Point, a popular tourist attraction, sells his coconuts for $5 apiece to thirsty Japanese tourists. Locals can buy them for a buck.
Haruna Tanaka, 20, and Reiko Kizaki, 21 recently paid $930 each to spend their spring break from college in Guam. Chikao and Tomoko Nakamura yielded to their 15-year-old son and 12-year-old daughter who wanted to visit Guam after hearing about it on TV. They spent $4,459 on their four-day visit from Osaka.
Having arrived in the middle of the night, Tanaka, Kizaki and the Nakamuras appeared bleary-eyed the next morning when they showed up for a 5-hour island tour--two hours of sightseeing and three of shopping. Riding along was Charlie Quitugua, a cameraman from Guam TV Productions, who videotaped the tour. He offered the videos for sale at $100 each over lunch at Fujita Hotel.
Accommodations are so scarce that when visitors check out of hotels in the middle of the night, maids work feverishly to prepare for new arrivals at dawn--as many as 2,000 a day during peak travel months of April and August.
“The market right now is absolutely stifled by the lack of hotel accommodations,” explained Dan Purse, general manager of Continental/Air Micronesia, which operates 47 flights weekly from Japan to Guam. “We started an Australia-to-Guam service recently, but tour operators are not able to book rooms.”
Japanese developers are rushing to meet the demand. In 1982, construction on the island was valued at $50 million. “This year, that much is spent in a month,” observed Alfonso P. Ovalles, general manager at Black Construction Corp, a local firm.
In two years, Guam will have 9,000 rooms, compared to the current 3,900. Applications have been filed for another 18 hotel projects, valued at more than $3.5 billion.
Miyama Hills is the most ambitious development project, with the cost of the 1,300-acre mega-resort expected to exceed $1 billion. The five-year project includes a 200-room hotel, 45 holes of golf (designed by Jack Nicklaus and Arnold Palmer), 20 tennis courts, 3,000 condominiums and a convention center that can hold 3,000.
With Guam’s population standing at only 140,000, so much development has led to a severe shortage of construction and hotel workers. Guam plans to recruit workers next month in Southern California, home to 50,000 Chamorros. Builders are importing construction workers from the Philippines, South Korea and even mainland China. Some maids at the Hilton work second shifts at the Hotel Okura.
The benefits of Guam’s boom aren’t distributed evenly.
Businessman Pangilinan, who has acquired commercial property in Guam over the last 44 years for as a little as a $1 to $12 a square meter, now can command $200 to $3,000 a square meter. “The value of the land is so high, if I translate it to local values, I could live three lifetimes,” he said with a smile.
But the average home price is now over $100,000 for “little concrete boxes,” said real estate appraiser Dale G. Hodgson. “All the new building is in hotels and condominiums, not in housing.” Japanese developers plan to sell their condos in Japan for $300,000 and up, levels beyond the reach of almost all Guamanians.
“We don’t have a situation like in Honolulu where some guy drove around and when he saw a house he liked he just bought it,” said Charles P. Crisostomo, administrator of Guam Economic Development Authority, referring to Tokyo billionaire Genshiro Kawamoto, who is believed to have purchased as many 100 homes as he stalked Honolulu neighborhoods in a black limousine. “But we’re seeing people come with suitcases of money--$30,000 to $50,000 as a price for a six-month option to purchase--and they say ‘you can keep the suitcase too.’ ”
Meanwhile, Guam faces the challenge of expanding and improving basic services such as telephone, sewer, electricity and water systems. “The downside of this boom, is the infrastructure has to be brought up to standard,” explained Jesus A. Manibusan, general manager of Guam Telephone Authority.
Government agencies, unprepared for the rapid development, are finding it hard to keep close watch. Grading on the Miyama Hills project, for example, was under way when it was stopped last November by the U.S. Army Corps of Engineers and Environmental Protection Agency, which discovered that Sumitomo Construction had plowed through some federally protected wetlands.
Miyama, Japan’s fourth largest apartment builder, is redesigning its project and working out a settlement.
Last August, a group called Protehi I Tano’ta , which means Protect Our Land in the Chamorro language, successfully blocked a proposed $1-billion resort planned by Japan’s Asahi Juken Co. The proposed Taotao Resort, with a potential work force of 9,000, would have been the first major development to move into the rural, southern part of Guam.
“They were trying to get going before the basic infrastructure was in place,” explained community activist Vivian Dames, head of the social work program at the University of Guam. She lives near the proposed development and says the area is already short of water.
A growing concern is Japanese domination of the tourist business.
Japanese interests own three of the five existing golf courses as well as 17 tour operators. The six bus companies, including the local Gray Line franchise, are operated by Japanese companies.
“It’s a very closeknit group. I tip my hat to the Japanese, they work very closely. It’s hard to break into. Their network is very solid . . . it’s hard to work either around or against,” says Lourdes Perez Aguon, managing director of Discover Guam, a local tour group.
She said Japanese tour operators came to check out Discover Guam after it opened last fall to provide services for non-Japanese visitors. “They felt that we may rock the boat, but when they learned our primary group was English-speaking, they relaxed. They even referred some people here.”
Still, she cites difficulties. “We have materials at each hotel, but you have to ask for them. It’s behind the front desk when you find tour brochures in Japanese are all over the place.”
On the construction front, most of the hotel work is going to Japanese firms, such as Tasei, Sumitomo and Shimizu. Black Construction, for example, gets what general manager Ovalles describes as a “very minimal, minimal share,” of new projects. “It is very difficult to penetrate the Japanese construction cartel.”
So far, there is little worry about Guam being a hostage to Japan’s fortunes, even now with the sharp drop in the value of the yen and the Tokyo stock market. Many Guamanians believe their island would be the last destination abandoned by the Japanese and they view the huge hotels as security, investments the Japanese will protect.
“My father used to say: ‘Son, don’t worry about the Japanese tourists, they’ve been coming here for centuries and will come for centuries,” said Jesus S. Leon Guerrero, chairman of Bank of Guam. “My father said: ‘If the Japanese get in a canoe, it would head straight for Guam.’ ”