State wary of tourism slide
| • | Further economic slowing predicted |
By Michele Kayal
Advertiser Staff Writer
With all signs pointing to a rapid slide for Hawai'i's tourism industry, local executives are embarking on extensive marketing campaigns to rescue what is expected to be one of the state's toughest years for attracting visitors.
The first definitive signs began emerging yesterday that the state's biggest economic growth engine is losing ground amid slowing U.S. Mainland and Japanese economies. Hawai'i hotels showed their first year-to-date dip in occupancy in April, according to figures released by PKF Hawaii, putting them officially behind last year.
Though the numbers dropped less than one percent, to 79 percent occupancy, the shift is a harbinger of what likely lies ahead. The development also comes as a widely watched predictor of Hawai'i's future economic activity showed a continued downward trend. The state's Leading Economic Indicator showed a seventh consecutive monthly decline, suggesting the state's economy will slow further toward the end of the year.
Hawai'i companies have been forced to scale back expectations that 2001 would be roughly on par with 2000, a year that saw a record 6.9 million visitors spend a record $11.2 billion. Many have begun using 1999 as a benchmark instead, calling 2000 "an anomaly."
"The numbers are closer to '99 than they are to 2000," said Lois Shore, senior vice president of marketing for Classic Custom Vacations, a high-end tour operator. "But 2000 was an anomaly, and it exceeded expectations. Unfortunately, the expectations were that that would continue."
Local executives have put their marketing machines in overdrive. Other destinations, also suffering from a softening U.S. Mainland economy, are fiercely competing for visitors. Corporate business, gloomy all year, appears to be growing worse, as some hotels endure twice as many cancellations as usual, and scramble to fill their rooms with leisure travelers instead of free-spending business groups.
Aggressive pursuit
Starwood Hotels and Resorts Worldwide, which originally projected slight increases over 2000, has now fallen behind last year's figures, said Keith Vieira, Starwood's director of Hawaii operations. To make up the difference, Starwood, which has 13 hotels in Hawai'i, is putting more than $500,000 into additional marketing efforts over the next 45 days, trying to bring more business in the late summer and fall. Starwood is also sending three sales teams to the Mainland to call on travel agents, wholesalers and other clients.
"We're pulling out all the stops," Vieira said.
Wholesale tour operators, who supply a large percentage of Hawai'i's visitors, have also launched campaigns. Pleasant Hawaiian Holidays, which says it sends about 450,000 visitors a year to Hawai'i, blitzed 2,000 travel agents in New York and Chicago this week with 150 Hawai'i salespeople in an effort to boost summer bookings. Outrigger Hotels and Resorts and many of the state's major hotel and travel companies also contributed people.
Private industry has also pooled its resources to try to turn the bleak picture. Hyatt, Hilton, Starwood and the Hawaii Prince hotels, plus DFS, are the major contributors to a campaign being run by the Hawai'i Visitors and Convention Bureau that will pump an additional $1 million into advertising in the Japanese market, said bureau chief executive officer Tony Vericella.
Japanese wholesalers Japan Travel Bureau, JALPAK and others are also participating. The money comes in addition to the $10 million the bureau had already budgeted for Japan in 2001.
JTB projects Japanese overseas travelers will grow by 4 percent this year, but not all of them are headed for Hawai'i. Through the end of March, Japanese visitors to the Islands were down 2 percent for the year compared to the same period in 2000.
DFS, which enjoys a strong Japanese clientele, estimates that only about 10 percent of travelers from Japan are choosing Hawai'i this year, said group vice president Sharon Weiner. The figure is down slightly from last year.
In addition, Weiner said, Japanese visitors appear to be spending less than last year.
Competition is fierce
Travelers on the Mainland also appear to be seeking other destinations. Classic is seeing more people opt for what they perceive as the "better value" of Mexico and the Caribbean, Shore said. Stable hotel room rates in Mexico and aggressive marketing campaigns for U.S. customers are making them hot competitors.
"Every other meetings and incentive destination is on the prowl for business, and every other leisure destination is trying to capture as much as they can," said Robert Solomon, senior vice president for sales and marketing at Outrigger Hotels and Resorts.
The visitors bureau has moved about $850,000 out of longer-term programs, Vericella said, to target specific groups of visitors who may travel immediately.
"We can hopefully stimulate a certain percentage of those who might be on the fence about making the trip," he said.
But groups are perhaps where the state is suffering most, many said, as crashing technology companies and firms that merely do not want to give the appearance of living it up in hard times cancel long-planned meetings.
Neighbor Islands not immune
Tech firm Cisco Systems, which recently laid off 8,000 people, was the only cancellation at the Hawai'i Convention Center, said Sandra Moreno, a bureau vice president. But hotels on all islands, which handle smaller, and often tonier groups, have taken a harder hit.
Kaua'i's Princeville Resort has seen twice as many cancellations as usual, and is trying to fill rooms once slated for business groups with "recession-proof" clients like weddings.
"That's significant," said Rod Lau, director of marketing and sales. "I had my plans working the leisure market harder than usual just in case something happened, and it did."
With 2001 nearly half over, time is running out for Hawai'i companies to salvage what started out as a strong and hopeful year.
"We had great January and February, and we've been on a ragged edge ever since," Solomon said. "We're looking for the next up-draft."
Advertiser staff writer Glenn Scott contributed to this report.
Michele Kayal can be reached at mkayal@honoluluadvertiser.com
