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The Honolulu Advertiser
Posted on: Thursday, September 27, 2001

The September 11th attack
Visitor spending for year could drop by $1 billion

By Andrew Gomes
and Susan Hooper
Advertiser Staff Writers

Visitor spending in Hawai'i could end the year down $1 billion if vacationers don't return to the state at more than 80 percent of previous levels, according to visitor bureau data released yesterday.

Surfing teacher and canoe captain Dino Ching of Pacific Beach Service says commissions dropped after the attacks.

Richard Ambo • The Honolulu Advertiser

The potential loss would represent a roughly 9 percent drop in visitor spending over last year's $11 billion total. And the decline could drag into the first quarter of 2002.

The state's tourism industry, which accounts for about a quarter of the state's economy, has been reeling since the Sept. 11 terrorist attacks in Washington, D.C., and New York. Mass hotel and trip cancellations have left beaches and hotels mostly empty and forced local airlines, tour companies, restaurants and other businesses to close or cut back.

Although some indications have begun to emerge that tourism bookings have started to slowly increase, companies continue to cut back to cope with the downturn.

In the second full week after the terrorist attacks, the state Department of Labor said yesterday that 2,182 people had applied for benefits in just the first two days of the week — nearly 800 more than would be filed in a normal week. Last week, 3,377 people statewide filed for unemployment benefits.

Yesterday, tour company E Noa Corp. became the latest of a growing list of Hawai'i tourism firms to announce cutbacks when it said it will lay off between 40 and 60 employees.

Chris Kam, director of market trends for the Hawaii Visitors & Convention Bureau, said the "operating scenario" of a potential visitor spending drop of $1 billion was based on visitor days for the rest of the year remaining down 20 percent — which still would be a significant improvement over the past two weeks. The scenario also assumed a 5 percent drop in per-day, per-person visitor spending.

Touchdown Trucking porters Moses Faualo, left, and Kosene Ili, wait at the state unemployment office after having their hours cut back.

Advertiser library photo • Sept. 19, 2001

Kam, who presented the data at the Retail Merchants of Hawaii annual conference in Waikiki, said visitor-arrival growth previously anticipated later this year could now be as far off as the third quarter of next year, depending on how fast consumer confidence and confidence in air travel returns.

For E Noa Corp., which has about 300 employees and operates E Noa Tours and Waikiki Trolley Tours, the drop in arrivals has led to layoffs that began last Friday, the company said in a letter received yesterday by the state Department of Labor and Industrial Relations.

Jo-Ann Imada, the company's director of human resources, said in the letter that the company does not know if the layoffs will be temporary or permanent.

E Noa has been forced to restructure operations "as a result of the sudden and unexpected disruption to Hawai'i's tourist industry" following the Sept. 11 attacks, the letter said.

Conrad Okuma, the company's vice president and general manager, said E Noa's business has dropped substantially since the attacks.

"We have a lot of Japanese and American agencies, like American Express, that book the tour packages," he said. "So, of course, when they need to scale back on their operations it impacts us, because we need to service them a lot less."

The crisis last week prompted Gov. Ben Cayetano to order the Legislature back into session next month and to develop plans to help struggling businesses and workers, including benefits for laid-off employees, tax cuts, elimination of airport landing fees and a proposal to increase public works spending.

Work on revamping the state's tourism marketing plan has begun, and a committee headed by First Hawaiian Bank's chairman and chief executive officer, Walter Dods; Hilton Hawaiian Village's senior vice president and regional manager, Peter Schall; and the Hawai'i Visitors & Convention Bureau's chief executive, Tony Vericella, was formed to oversee it.

Yesterday, Vericella said the panel hopes to have the major elements of the plans for the U.S. West, Japan and the meetings and convention center market determined by the end of this week.

Dods said the panel hopes to develop a $20 million campaign — $10 million from the Legislature, $5 million from various visitor attractions and organizations, and $5 million from businesses and Waikiki visitor destinations — aimed at boosting state tourism.

Kam, of the visitors bureau, noted that some signs are brightening: airline passenger bookings are improving daily, and travelers are returning to Hawai'i quicker than to any other U.S. or international destination.

He also said that 70 percent of flight cancellations are being rebooked in the next six months.

"We are seeing, actually, a lot of hopeful signs on the horizon," he said.

Advertiser staff writer Lynda Arakawa contributed to this report.