Posted on: Wednesday, November 7, 2001
Tour bus companies raising rates
By Frank Cho
Advertiser Staff Writer
Tour bus companies, limousine drivers and other state regulated passenger motor carriers will raise their rates 8 percent starting next year, the first across-the-board rate increase approved by state regulators in nearly eight years.
The move comes at a difficult time for the visitor industry as other sectors have been struggling to cut their rates to attract visitors because of falling airline passenger arrivals and slumping hotel occupancy figures. Tourism is by far Hawai'i's No. 1 industry and drives most of the state's economy.
The motor-carrier industry earlier this year had asked the state Public Utilities Commission for a 12 percent rate hike, citing increased fuel, maintenance and labor costs. The PUC approved the smaller rate increase just before the Sept. 11 attacks.
After the attacks, there was discussion by carriers about whether to go forward with the rate increase.
"In light of the current economy, there were concerns about going forward with the rate increases. It was a difficult decision to go ahead with these increases, but it was a matter of survival for some carriers," said Randall Kobayashi, director of research for the Hawaii Transportation Association.
There are an estimated 1,000 motor carriers regulated by the commission, according to state regulators at the PUC.
Regulated motor carriers bring in about $170 million in gross revenues annually, but over the past few years many have fallen short of the 7 to 8 percent rate of return allowed by the PUC because of the commission's cap on rates. Experts say the increase, which will take effect Jan. 1, should raise their return back above 7 percent.
"In general, the industry has not been very profitable these past few years. I believe the industry could have justified the increase a lot sooner, but a lot of carriers felt they could go without it because of the struggling economy," said John Savitz, vice president of Polynesian Adventure Tours Inc., which operates tour buses and vans on the four major islands for tour companies.
"My customers (businesses who charter buses, vans and minibuses) have been pretty understanding (about the coming rate hike). They know it's been a long time, and they face the same challenges that we are dealing with," Savitz said.
But Ryokichi Tamaki, vice president of marketing for JALPAK, a Japanese tour wholesaler, said the rate hikes could not come at a worse time.
"Of course I will have to pass those costs along to our clients," Tamaki said. "I personally asked the companies to reconsider because we are really having a difficult time, too. They told me they met with each other and decided not to change anything."
Roberts Hawaii, the state's biggest privately owned tour and transportation company with more than 600 vehicles, said the rate increase will help it continue to make investments in its operations. Roberts plans to increase its rates Jan. 1 along with the rest of the industry.
In 1999, Robert's announced plans to add 30 new MCI Renaissance 54-passenger luxury motorcoaches at a cost of $12 million.
"This is a very competitive business. But for the past few years the attitude has been to watch expenses as best you could. But it has gotten to a point where that is no longer enough," said Sam Shenkus, a spokeswoman for Robert's Hawaii.
She said rising gasoline, insurance and equipment costs have been cutting into profits.
"You can't not put fuel in the vehicles and you can't cut the number of drivers so you end up absorbing those costs. This is a tough business," Shenkus said.
