Mental wheels rolling for transportation industry

By Katherine Nichols
Advertiser Staff Writer

Business had been slow in the months before Sept. 11 at Polynesian Adventure Tours, but the terrorist attacks left the company paralyzed.

People who didn't lose their jobs likely faced reduced working hours; contributions to 401(k) retirement plans were temporarily suspended; and office luxuries — such as housekeeping services — were stopped.

"Now everyone empties their own wastebasket, and we rotate who cleans the toilet," said Michael Carr, president of tour bus operator Polynesian Adventure Tours.

The transportation industry of Hawai'i took some of the heaviest blows dealt to tourism after the Sept. 11 attacks.

Airlines laid off thousands. Planes were grounded, reducing the number of air seats carrying travelers.

About 33,000 people worked in airline, shipping, trucking, tour bus, taxi and trolley companies at this time last year. This year that number has dropped to 29,000.

And O'ahu has suffered the most.

"The transportation business is characterized by high capital costs and high people (employment) costs," said Carr, who has run the company for 12 years and employs 200 full-time and 100 part-time workers. "Even in the best of times, our margins are very thin. You have to watch every single penny and every single tire you buy."

Carr attributes the deterioration that began nearly 18 months ago to a decline in the U.S. stock market that slowed the corporate meetings business.

Though Japanese travelers have never constituted more than 30 percent of his business, the depression in Japan's travel market contributed significantly to the troubles before things "went from bad to terrible" on Sept. 11.

Even though business is slower than in previous years, Carr says his profits are up because of the cost reductions he put in place.

"We're smarter about what we do, and we do not run products that don't make money, period," Carr said.

One drastic change Carr has noticed since Sept. 11 is the distribution of his business. Previously, 75 percent came from O'ahu. Now it's less than half. The Neighbor Islands are pulling the company toward recovery, while O'ahu remains 25 percent below last year.

"All of the profitable activity is on the Neighbor Islands," Carr said. "My concern is, and continues to be, O'ahu. It's like we operate in two completely different markets."

In the past, Carr offered 12 different tours on O'ahu. Now there are five. Carr said the reason is visitors to the Neighbor Islands are willing to pay more for high-quality service. Conversely, O'ahu is "completely price-driven."

Neighbor Islands also tend to attract westbound travelers, and that market has grown 3 to 4 percent over last year.

The trend is slightly inconsistent, however, because Neighbor Islands also attract repeat visitors who don't usually spend money on tours they've already experienced.

Roberts Hawaii's Neighbor Island business remains about 25 percent below last year's levels.

Yet the overall outlook is improving for the company, which last week did away with a 10 percent companywide paycut imposed in September.

Business leaders can come up with a lot of suggestions on how to revive O'ahu.

Dale Evans, president of Charley's Taxi & Tours, who said business has declined about 50 percent from previous-year levels, wants traffic issues addressed.

"I think O'ahu misses the boat because we are killing the wedding business," said Evans, citing road closures and inconvenience in Waikiki that constantly frustrate visiting brides, grooms and their guests trying to meet a tight schedule.

But the problem is not limited to the island's lack of service to this niche.

"There's no brainstorming about how we can make O'ahu better," Evans said.

Carr is also skeptical about O'ahu's ability to improve. But he hopes that more targeted marketing will help.

"Aside from the Japanese coming back in record numbers with valuable yen, the only thing that will have a marked impact on O'ahu is the Convention Center," he said.

For now, though, Carr is working toward rehiring his staff — while emptying his own trash can like everyone else.