Pessimism eases in Islands
By Frank Cho
Advertiser Staff Writer
Optimism about Hawai'i's economy is rising, even as businesses are suffering falling revenues, declining profits and increasing layoffs, according to a survey.
Thirty percent of Hawai'i business owners and top managers said they expect the economy to improve over the next year, up from 25 percent a year ago, according to a survey released yesterday by the Business Banking Council.
The survey of 419 business leaders found 57 percent believe things will remain the same, while only 14 percent said they expect the economy to get worse — down from 24 percent a year ago.
That optimism comes despite lower revenues at 49 percent of the companies surveyed, the highest number in more than three years. Only 28 percent of companies that responded to the survey said revenues increased, down from 44 percent at this time last year. Nearly one in two companies also said profits were down, while one in three companies said they cut staffing over the past year.
"We are happy that people are not as pessimistic as we had feared," said Seiji Naya, director of the state Department of Business, Economic Development and Tourism.
The survey was conducted by telephone between July 1 and July 10 with a random sample of Hawai'i businesses by QMark Research & Polling. It was conducted for the Business Banking Council and paid for by American Savings Bank. Barbara Ankersmit, president of QMark, said the survey's margin of error is 5 percentage points.
"It is the businesses that depended on the Asian visitor, they have felt the brunt of the downturn," said Gary McCarty, a council member and former president of Blue Jeans 'n Bikinis Inc.
Part of the survey focused on the visitor sector of the economy. It found that 67 percent of visitor-industry respondents reported revenues dropped, wages were down and they had to lay off workers and cut hours after Sept. 11.
Only 30 percent of the travel-related companies said they have restored compensation levels to pre-Sept.-11 rates. And among companies that cut work hours, only 47 percent said they have returned to pre-Sept.-11 levels.
Hawai'i has been struggling to hang on to the Japanese tourist market for years amid increasing competition from cheaper and closer travel destinations, such as Korea and China.
Advance bookings to Hawai'i have been on the decline since Sept. 11, with 54 percent of tourism-related companies reporting declines — mostly because of fewer Japanese visitors. Only 11 percent reported increased bookings since Sept. 11.
Despite challenges, the tourism industry remained the most optimistic sector with 58 percent of companies survey expecting to see increased sales over the next two years.
Reach Frank Cho at fcho@honoluluadvertiser.com or 525-8088.
