Study shows exchange rate hurts Japanese arrivals

by Krystal Paco

Guam - Visitor numbers may be at a record high, but one report shows one group of visitors are less likely to pick Guam as their next choice destination.

According to a study conducted by UOG economist Maria Claret Ruane, Japan's central bank policy to increase money supply to boost Japan's sluggish economy directly impacts our economy.

With the new policy, the U.S. Dollar is now 33% stronger against the Japanese Yen. That means a product priced at $100 would have cost 7,600 Yen, but now costs 10,000 Yen even if the U.S. cost had not changed.

Guam Visitors Bureau general manager Karl Pangelinan says the situation continues to be monitored as it immediately affects Guam retailers.

"There's some very, very aggressive policy coming out of Prime Minister Abe now I believe the Yen is at about 105 which we still think that's kind of still in our sweet spot here on Guam. But there's other things within the Japan economy that we're going to have to continue to monitor and their affects on our visitors ability to spend money here on Guam. Although the Yen has devalued over the year by I believe by close to 30%, the actual Yen spend here on Guam isn't proportionate to that. So the Japanese are spending just as much if not more, but it's just not worth as much these days," she said.

Currently, Japanese visitors make up 70% of our tourist market. According to GVB reports, Japanese on average spend close to $500 while on island for less than 3-days.

Ruane says since the release of the report in October 2013 Japanese arrivals were down approximately 4% for 2013 while other tourist markets such as South Korean and Russia have helped to fill the gap, resulting in the record 1.3 million visitors who visited the island last year.

Although still a small market, she adds that Russian tourists stay longer and average over 16-hundred dollars in spending while on island.

Ultimately, every one Russian visitor "replaces" spending lost by 3.4 Japanese visitors who decide not to come to Guam.

The report is titled "Exchange Rates and Tourism: Evidence from the Island of Guam" and was accepted for publication in the peer-reviewed internationally circulated Journal of Economics and Economic Education Research.