By Mabel Doge Luhan
PIC just closed down. “Temporarily,” the Saipan Tribune tells us (“PIC temporarily closes water park, rooms” https://www.saipantribune.com/
While closing down PIC “for renovations,” Eland is also proposing a howler: it’s claiming it will spend $220 million to renovate the Mariana Resort. (Marianas Variety, “DPL: Eland to spend $220M on Mariana Resort improvements” https://www.mvariety.com/news/
What now? $220 million? Do you know how much money that is?
We often have a cargo-cult view of “investors” as magical benefactors who fly over us like Diana Ross and drop down cash, no strings attached (and with DiDi, NO BRA STRAPS EITHER, ASK ME HOW I KNOW). But actual investors, not scammers, want to see a return on their investment. Do you know what kind of astronomical (for Saipan) tourist volume and spending you’d have to see to make a profit on a $220 million investment? Beyond MVA’s wildest dreams, and that’s not even counting all the K-twinks.
Eland’s promise to spend $220 million to renovate the Marianas Resort is, in my professional opinion as a hyperelderly busybody, ludicrous. Our journalists and public officials don’t know or care. They would know if they ever read a business textbook, a serious newspaper, an industry or academic journal, or just about anything other than Facebook and another “training” in Boise or Waikiki. But that’s a pipe dream. Speaking of pipe dreams—
“Eland, in addition, will develop a Micronesia Cultural Center and a premium shopping mall, construct a cliff hotel and restaurant, and redesign the swimming pool park.” Really? The Variety wrote and printed this with a straight face? Is there also going to be an intergalactic roller coaster? How about a chocolate factory? Are you six?
I commend the Variety for at least attributing those $220 million promises to DPL and Eland, and not printing them as fact. But if Emmanuel Erediano wants to convince us he has a brain, he could have asked a question or three — of Eland, not of politicians (“Variety was unable to get a comment from the Senate president or the House speaker.”)
Because as long as nobody (except Kandit) calls “investors” out on those promises (Tesla test drives, anybody? Or $7 billion resort, for that matter?), those “investors” will keep telling porky pies.
The Variety ran an announcement of J&P Holdings’s application for a qualifying certificate — a TAX EXEMPTION — but never bothered to report on it in the news section.
Andrew Roberto’s former home, KUAM News, at least mentioned J&P’s request for a qualifying certificate, and even explained that it means a tax abatement (October 17th, “J&P Holdings plans to provide passenger flights between Saipan, Tinian, Rota, & Guam”).
But over in Saipan, we get Kimberly B. Esmores in the Saipan Tribune (“MACS interested in CNMI/Guam inter-island service”) simping like nobody in human history has ever simped before:
“With the CNMI’s inter-island air service facing legal battles and fare prices at an all-time high, Micronesian Air Connection Services’ interest in providing inter-island travel between the CNMI and Guam could not come at a better time.” https://www.saipantribune.com/
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Air service faces legal battles? That doesn’t make sense, not that I expected it to.
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Fare prices (redundant) are not at an all-time high. That is a lie.
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Could not come at a better time? Find me a legitimate news article that directly uses that phrase (not in quotation) and I’ll EAT MY HAT. EVEN MY RED FRILLY HAT.
What is most amazing about this Esmores article is that it goes on for 813 words and quotes verbatim from the QC application, but never mentions the QC application, nor that a QC allows its holder to legally dodge CNMI taxes.
It must mean that in the reporter’s journalistic opinion, dodging taxes is not important. It’s much more important to note that the supposed new airline “will not charge a higher rate for online bookings.” Has this person ever bought an airline ticket before? Or known someone who has? Or maybe seen it on TV?
Speaking of pusillanimous pet poodles, the Variety and Tribune don’t even dare mention IH Group’s history of broken promises, nor mention that IH Group’s website touts its entirely imaginary Rota projects, including a BEAUTY PARLOR.
https://www.ihgroup.kr/blank-
IH Group also promises to “contribute to new drug development.” For once, they might be telling the truth!
IH Group also has some imaginary businesses in Saipan:
https://www.ihgroup.kr/blank-
Why, they even have a letter from Melchor Mendiola, ca. 2014 CE, proving that IH Group’s Rota projects are entirely real!
https://www.ihgroup.kr/
And do you remember how much the Saipan newspapers fawned over the supposed chairman of IH Group, Kyunam Kim, when he came to visit us, supposedly to give IPI $150 million? Just to clarify: white linen suit, Jackie O sunglasses, and a ponytail is absolutely not how joseonjok gangsters dress in Korea. It absolutely isn’t.
And joseonjok gangs are absolutely not notorious for retail investment scams in Korea, but that’s a moot point anyway, because these upstanding “investors” of IH Group are clearly law-abiding something-or-other.
Speaking of joseonjok, isn’t it amusing that IH Group’s website footers are not in Korean but in Chinese? That just shows how multilingual they are!
And anyway, the apparent CEO Kim Ilhwan (Jin Yihuan, amirite?) has a totally legitimate LinkedIn profile ( https://kr.linkedin.com/in/
This is all totally legitimate.
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Mabel Doge Luhan is a woman of loose morals. She resides in Kagman V, where she pursues her passions of crocheting, beatboxing, and falconry.
2 Comments
Sadong Tasi Resident
10/23/2024 at 3:05 PM
A fair enough question, Mabel.
To cover the cost of a 30-year loan of $220 million on a 117 room facility at a 5% interest rate with a 60% average occupancy rate, you would need to charge approximately $558.53 per room per night.
This does not factor in secondary revenue streams such as vendor rent for occupied spaces, F&B or paid amenities. Additionally, if executed correctly a $220mm CAPEX investment can result in a property with a valuation significantly higher than the loan amount.
Cheers!
Mabel Doge Luhan
10/23/2024 at 8:35 PM
Thank you for your EXCELLENT AND INFORMATIVE COMMENT. It let me try out that newfangled Visicalc, since my least intelligent falcon (the one named Zaldy) seems to have mistaken my HP 12C for a tit mouse.
But you’re wrong.
First, the details. 5% interest rate? 30-year loan? This isn’t owner-occupied residential real estate. 10% would be a more realistic interest rate on commercial real estate that was owned free and clear and had some liquidity in case of default, which isn’t the case here. And no CNMI business would ever have a thirty-year time horizon. In thirty years, we’ll all be dead! (Except for me.)
Just for funsies, take a 10% interest rate on a 10-year 220MM loan, using simple amortization, and you need $1,397 gross profit per occupancy night just to service that loan. (I ALSO COST APPROXIMATELY $1,397 NIGHT TO SERVICE)
But that’s not the room rate to make the project dance. That’s just the gross profit per room night that you need in order to service the loan. So you’d break even charging $1,397 night only if you weren’t paying your employees and weren’t doing any maintenance — which might be a realistic assumption for a project in Saipan!
If you’re actually paying hotel expenses and your hotel is running at 30% gross margin, you need to be charging $4,657 a night just to break even on the loan. Who’d want to risk 220MM to just break even?
But that’s still poppycock. Because nobody’s going to lend you that 220MM. 220MM collateralized by what? A non-transferable lease issued by an infamously corrupt and fickle local government for a derelict property on a remote island that nobody wants to visit? What’s the LTV on that, when your denominator is basically zero?
This is why almost all CNMI hotel projects are funded by dirty money or by mom-and-pop retail investment scam victims in Korea or China.
THANK YOU FOR YOUR INPUT AND I’M ON SILVERSINGLES HMU