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The Honolulu Advertiser
Posted on: Thursday, October 18, 2001

Tourism industry struggling to stay afloat

By John Duchemin
Advertiser Staff Writer

As tourism officials prepare to seek $10 million in emergency money from the state Legislature next week, they said the industry still faces a dire situation that could lead to many more layoffs and company closures in Hawai'i.

The number of tourists on Waikiki Beach was few yesterday. In the week following Sept. 11, occupancy rates for Hawai'i's hotels dropped 52 percent from a year earlier, while overall U.S. hotel occupancy fell 26 percent.

Bloomberg News Service

Visitor industry officials testified at a Hawai'i Tourism Authority meeting yesterday, where general approval was voiced for plans to go all-out on advertising — but frank warnings were given about the industry's dismal prospects following the Sept. 11 terrorist attacks.

Even though more than one month has passed, most Hawai'i attractions, hotels, retailers and others are still not near normal sales levels — and many are losing far too much money to survive, officials said.

"The next step for many (tourism-related companies) is going out of business," said Terry O'Halloran, vice president of business development for attraction operator Atlantis. Sales volume at Atlantis still is down about 28 percent from last year, O'Halloran said.

Many others backed up his testimony. Retail sales are down between 25 percent and 60 percent at most stores, said Carol Pregill, executive director of Retail Merchants of Hawai'i. That's better than the 80-percent drop most saw in the immediate aftermath of the attacks, but it's hardly enough to keep businesses afloat, Pregill said.

"In terms of jobs, we're now at the point where real reductions will come into play," she said. "There's just not enough cash flow. One company said they have enough money to last another five weeks — and then that's it."

Most yesterday said the outlook is bad, at least through the start of 2002. Wholesale tour company Pleasant Hawaiian Holidays expects to be down until summer 2002, said company representative Leona Nakahika. Sales are still about 20 to 25 percent below normal levels, and advance bookings for next year look even worse than current levels, Nakahika said.

"I wouldn't say next year is looking gloomy, but it's not looking good," she said. "It's hard to predict because we have a lot of last-minute bookings, but all we're hoping is that it doesn't get worse."

Seiji Naya, director of the state Department of Business, Economic Development and Tour-

ism, reiterated his forecast that the decline in visitors will cost the state between $470 million and $1.1 billion this year, and that the state will lose between 10,800 and 25,000 jobs. During this crisis, the state is losing $8 million a day, he said.

In this context, the authority board agreed to support the governor's proposal to appropriate $10 million for additional tourism advertising.

Hawaii Visitors and Conventions Bureau chief executive Tony Vericella detailed how the money would be spent. HVCB has launched an international marketing campaign, focusing on potential travelers in two dozen cities in America and Japan. HTA and HVCB want to spend $20 million over the next six months — including the $10 million up for approval at the legislative special session next week, plus $5 million from the HTA and HVCB budgets, and another $5 million from private companies.

About $8 million of that would go to advertising on the Mainland, while $7 million would go to Japan, Vericella told the board.