Posted on: Saturday, May 25, 2002
Raising prices, quality pays off for local CEO
By Katherine Nichols
Advertiser Staff Writer
Two for one. Breakfast included. Stay two nights, get the third free.
When the terrorist attacks resulted in 100,000 fewer visitors per month to Hawai'i, industrywide price slashing shed its "latest special" label and instead became the norm.
But not everyone in Hawai'i's tourism industry believed that discounting was the answer to reviving visitor arrivals to the Islands.
Roy Tokujo, president and chief executive officer of Cove Entertainment, did just the opposite. Instead of cutting, he raised prices for the 'Ulalena show on Maui from $45 to $55 and cut the number of shows in half, from two to one each night.
"What we're getting is a greater yield," said Tokujo, who added that the gross intake for his entertainment marketing company has risen 50 percent since October.
Moves such as Tokujo's — improving the existing infrastructure and quality, as well as building a few new attractions — are the key to the Islands' full recovery from the tourism downturn since Sept. 11 and to luring higher-spending visitors, tourism officials said yesterday at an educational conference for the Hawaii Hospitality Sales and Marketing Association.
After investing $10 million to build a new theater in Lahaina, Tokujo paid his entertainers competitive, full-time salaries to rehearse for nearly six months, and altered the contents of the show to reflect Hawai'i rather than just Tahiti or Samoa.
It drove up costs but also raised quality.
After Sept. 11, Tokujo introduced a "Producers' package," in which visitors pay more for premier seating and 15-minute interactive demonstrations on stage with the entertainers after the show.
"This has become our most popular package," he said.
In the works now is a "Ritz Carlton package" that includes an elegant dinner and a limousine ride to the show. Tokujo also is establishing partnerships with other high-end businesses.
"People are willing to pay a lot more for good quality," he said.
His entertainers, who also enjoy amenities like massage therapists and whirlpools before going on stage, are once again making full salaries — in some cases $40,000 per year — and performing half the number of shows.
Tokujo's success has been the result of detailed market research and 42 years of experience in the business.
And, he said, this is what's lacking on O'ahu, an island that hasn't had a new attraction in nearly 30 years.
Fellow panelists Tony Vericella, executive director of the Hawaii Visitors and Convention Bureau, and Seiji Naya, executive director of the Department of Business, Economic Development and Tourism, agreed.
"We have to bring more events, like international music festivals and entertainers," said Naya. "Somehow, we must put more resources into the supply side."
The Hawaii Tourism Authority already has authorized $1.2 million dollars in fiscal year 2001-02 to finance more than 50 product-development projects in addition to major festivals.
"HTA has to do a lot more in that area," said Naya. "I feel they haven't done enough."
Vericella said an efficient answer may lie in using tourism as a "catalyst for showcasing all the other industries in Hawai'i."
Highlighting well-established but underpublicized businesses, activities and infrastructure such as astronomy, ocean sciences, agriculture and medical research not only can enhance the Islands' offerings for certain markets, it can help diversify the economy, he said.
