Sunday, January 28, 2001
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Posted on: Sunday, January 28, 2001

Tourism growth expected, but may not match 2000

By Michele Kayal
Advertiser Staff Writer

In 2001, Hawaii tourism will be an odyssey led by the Mainland economy, the stock market and a man named Alan Greenspan.

"It’s going to be a good year, but not as exciting as the last two years in terms of the success of tourism," said Chris Resich, chairman of the Hawaii Visitors & Convention Bureau, who will take up a post as president of destination management company MC&A next month.

Wholesalers, hoteliers and tourism officials across the Islands say 2000 was the best year in a decade - if not "in history," in the words of one executive. Flush from a stock market and a Mainland economy that seemed to have no "off" switch for most of the year, high-tech companies made Hawaii their meetings paradise in 2000, as did many other large groups.

High-flying travelers made the state’s most expensive hotel rooms the hardest to come by, and visitors spent a billion dollars more than tourism officials had hoped in what seemed like ambitious dreams. Arrivals are expected to approach 7 million, the most ever, when final counts are in.

Most in the industry predict that 2001 will be "a good year," with some growth. But they also add that it is certain to fall short of the boom seen in 2000. A key issue for Hawaii tourism this year will be whether Greenspan, chairman of the Federal Reserve Board, can successfully ease the U.S. economy toward slower, steady growth - a development more preferable for sustaining Hawaii’s business than a boom-bust cycle.

After watching earlier hikes in the prime rate prompt an unexpectedly sharp decline in business activity, the Fed dropped its prime rate by half a point earlier this month and could adjust the rate downward again.

Hotel analyst Joseph Toy projects that hotel occupancy will be flat, but that rates will rise 3 percent to 5 percent; in 2000, rates rose 6 percent.

Sales at Pleasant Hawaiian Holidays, Hawaii’s largest tour wholesaler, were up 13 percent for 2000, said marketing vice president Karen Schulz Hughes, compared with the 5 percent or 6 percent the company expects this year.

Classic Custom Vacations, one of Hawaii’s largest package-tour operators, expects its Hawaii business to be flat this year, said Classic chief executive Ron Letterman.

And Japanese visitors, after declining several years ago, are not expected to begin returning in droves yet. Japan Travel Bureau, the largest Japanese wholesaler, predicts a slowdown in growth of outbound travelers - a 4 percent increase, compared with an 8 percent increase in 2000.

JTB manager of tour planning, Yujiro Kuwabara, said he expects Hawaii to get a good share of that business, but some local retailers, such as Maui Divers, said they believe Japanese sales could be off as much as 10 percent in 2001.

Hotels on all islands have seen pillow-soft group bookings - which bring the biggest bang for the buck - and some have already logged last-minute cancellations. The Hawaii Convention Center’s events roster is only two-thirds full, with half as many attendees booked as hoped for.

For 2001, an exuberant Hawaii Tourism Authority originally set a target of $12.6 billion in visitor spending, which would have been a more than 10 percent increase from 2000. But last month, the authority pulled back from those hopes, downgrading the numbers to "planning targets." Board members said they expect the numbers to be revised.

"I don’t see a collapse in the market, but I think people are going to look back and say 2000 was our highwater mark, and 2001 was very good, but it wasn’t as good as 2000 was," said Rick Garrett, president of Happy Tours Vacations, another tour provider. Garrett said his bookings are up 10 percent from the same time last year - but they usually run 25 percent ahead.

Still, good news is also on the horizon. In 2001, more than $250 million in renovations will be completed in Waikiki. DFS Hawaii will open its $65 million Galleria entertainment/retail complex, and the Hilton Hawaiian Village will begin receiving guests in its new Kalia Tower. Hilo Hattie’s will open at the ewa end of Waikiki. And the city’s improvements at K¬hi¯ Beach and along Kalakaua Avenue should be completed. The area’s Business Improvement District is slated to begin in March, potentially offering cleaner, more decorative streets and sidewalks.

And although the meetings market is thin, in May for the first time Hawaii will be the host city of a conference of the Asian Development Bank, a high-profile event expected to boost the state’s image as a business destination.

The cruise business also will be a bright spot. International lines will make 233 calls to Hawaii ports in 2001, about a third more than in 2000. Norwegian Cruise Line plans to add a Hawaii-based, 1,960-passenger ship in December. And American Classic Voyages, parent of American Hawaii Cruises and United States Lines, will see its first full year with two ships, the Independence and the Patriot, in interisland waters. Company executives said they expect the ships to carry more than 100,000 people in 2001.

"We feel very good about the introduction of the Patriot to the Hawaii market," said American Classic chief executive Philip Calian. "We seem to be having record days in which bookings are coming in."

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