Tourism, construction appear stronger as year winds up
By Kevin Dayton,
Timothy Hurley
and Jan TenBruggencate
Advertiser Staff Writers
As with Hawai'i as a whole, the Neighbor Islands' economic outlook for the year ahead is optimistic but tempered with caution over the possibility of war with Iraq.
Tourism in the Neighbor Islands remained relatively strong this year compared with O'ahu, and construction — fueled by the booming real-estate market as well as commercial and government development — provided an additional boost for most of the major islands.
In the year ahead, executives say those two drivers generally remain at the core of the Islands' economic growth and, barring any war, should continue to propel continued growth.
Maui
Officials on Maui are hopeful that the steady improvement in the island's economy since the 9/11 attacks will continue in the new year.
"The economy appears to be strengthening," said Lynne Woods, Maui Chamber of Commerce executive director. "But if war or some other tragic event occurs, it won't last."
Marsha Wienert, executive director of the Maui Visitors Bureau, said she is also "cautiously optimistic" that the island's tourism industry will remain stable in 2003.
"There's definitely a pent-up demand for our destination," Wienert said. "We're hoping to get our fair share if we can convince them to travel."
So far, she said, the first quarter is looking like it will be better than the first quarter of 2002, when the industry was still limping from 9/11 effects. Wienert said it appears not only that there will be more visitor arrivals, but that they will stay (and spend) longer.
The island's tourism industry also will be bolstered by more cruise-ship visits and a growing destination wedding business, she said.
Maui also will benefit from new weekly direct flights, including an Aloha flight from Vancouver, British Columbia, in January, a Hawaiian flight from Portland, Ore., starting in February and a Hawaiian flight from San Diego starting in June. Air Transit and Sky Service airlines have launched new direct charters from Canada, filling the void left by last year's bankruptcy of Canada 3000.
The real estate sector also continues to perform strongly, and a number of projects are in the works, including Starwood Vacation Ownership's time-share known as the Westin Ka'anapali Ocean Resort Villas on Maui. The first phase of 106 villas is expected to open in the fall.
The county will open the new $8 million Wailea fire station in January and construction on the $3.64 million West Maui Senior Center and the $4 million West Maui Resource Center for the homeless is continuing.
There also are a handful of major road projects in progress, including the $80 million Mokulele Highway widening project.
Kaua'i
Major initiatives in government, construction, tourism, retailing and agriculture promise an active economic year for Kaua'i in 2003.
Construction will be one of the biggest drivers in the economy next year, with multimillion-dollar projects around the island, but focused on Lihu'e.
The largest will start in March — the $35 million state judiciary complex next to the new county public safety building on Kapule Highway on Lihu'e's outskirts. Other projects include completion of Grove Farm's $15 million renovation of Kukui Grove Center, the island's largest shopping complex. Grove Farm is also completing its 18-hole golf course, which had been stalled at 10 holes after the firm ran into financial difficulties.
The big-box retailer Home Depot is scheduled to spend $12.6 million to buy about 10 acres from Grove Farm and to build a 95,200-square-foot single-story store, with a 24,000-square-foot open garden area. It is scheduled to open by midyear.
Marriott will near completion during the year of its 230-room time-share complex on the site of the old Waiohai Hotel in Po'ipu. And construction on developer Lewis Geyser's 250-cottage Kapalawai resort in West Kaua'i is expected to start shortly, with an opening scheduled in 2004.
At last count, the county's Office of Economic Development reported there were 1,769 time-share units — more than on any other island — and 2,689 traditional hotel rooms.
Some of the visitors in those rooms will tour garden and agricultural projects. The county hopes to launch a new Agricultural Tour Operators Association, to help jointly market botanical gardens, tree farm visits, sugar plantation tours and related activities.
The island's cattlemen are hoping to capitalize on the public's interest in safe, natural products by marketing locally produced grass-fed or range-fed beef as an alternative to imported feedlot products.
Big Island
In Hawai'i County, the largest construction boom in a decade gained momentum in 2002, with the building industry apparently on course for another strong year in 2003.
"The Big Island is hitting its own in tourism, and we have our building boom that is going on and continuing, and will help the economy stay robust and strong," said Linda Sasaki, executive director of the Kona-Kohala Chamber of Commerce.
Building permits for the first 10 months of 2002 totaled more than $420 million, considerably more than any 12-month period since the last construction boom peaked in 1990, according to statistics from the county Department of Public Works.
Paula Helfrich, president of the island's economic development board, said projects scheduled to break ground in the year ahead include the $28 million Mauna Kea Astronomy Education Center, the $48 million U.S. Department of Agriculture Pacific Basin Agricultural Research Center, and the first $27 million increment of a much larger federal project to improve the Saddle Road.
That last project, to make a safer, shorter link between Hilo and the tourism centers in Kona and Kohala, would help spread the wealth from the visitor industry between West Hawai'i and the east side of the island, she said.
Agricultural exports are expected to continue their steady growth, with Big Island farmers hoping to expand exports to Japan if they can win approval to ship genetically engineered papaya there, said Margarita Hopkins, economic development specialist for the county Research and Development Department.
About 75 percent of the papaya now grown on the Big Island is a genetically engineered strain designed to resist the ringspot virus, a pest that did major damage to crops in the early 1990s. Canada this year accepted the genetically modified crops, but Japanese scientists are still studying the issue, Hopkins said.
With domestic and cruise ship arrivals up and unemployment relatively low by Big Island standards — it has been running at about 6 percent in 2002, down a percentage point from 2001 — Helfrich said the Big Island economy is a success story.
Still, looming in the background is the possibility of war with Iraq or North Korea. Tourism officials remember the dramatic impact the Gulf War had on foreign and domestic tourist arrivals, including arrivals on the Big Island.
"Definitely in the past, through the last war, we saw tourism drop off dramatically during that period," Sasaki said, "and that would have an impact, absolutely."
