Posted on: Sunday, September 8, 2002

ONE YEAR, ONE NATION
Islands at a glance

The picture changes from island to island, but the Neighbor Islands are benefiting from the new tourism demographic that became solidified after Sept. 11 as high-spending Japanese tourists — who tended to stay in Waikiki — have fallen off even further.

While O'ahu remains the economic engine of the Islands, with the vast majority of jobs and population, the Neighbor Islands' relative economic health is a testament to their growing maturity as tourism destinations in their own right.

Kaua'i

Kaua'i, with more timeshare rooms — 1,600 — than any other island, has seen some of the strongest hotel-occupancy figures among the Islands.

In June, Kaua'i gained 6.5 occupancy percentage points to reach 76.1 percent, the highest of any island, according to a mid-year Hawai'i hotel occupancy study released by Hospitality Advisors LLC.

"Kaua'i probably has been more insulated from the downturn because of its large number of timeshares," said Murray Towill, president of the Hawai'i Hotel Association. "Timeshares mean people probably already have committed to that trip."

For July, Kaua'i stood out as the only island to see an increase in occupancy rates, with 82.2 percent occupancy compared with a rate of 81.3 percent in July 2001. Its average daily rate also increased, to $160.65 from $157.47.

Kaua'i still was down 12.3 percent in total visitor arrivals for June, and visitor arrivals were off 7.7 percent for the first six months of the year from the year before, according to the state Department of Business, Economic Development & Tourism.

The Big Island

The Big Island remains two distinct economies — Hilo and Kona — that are struggling for different reasons.

"The Hilo side has had more challenges in terms of attracting visitors," Towill said. The recent lava flows that have been more accessible to tourists "has been a very big plus for Hilo," he said. "But you still have a situation where the major resorts are located on the other side of the island."

The Kona side resorts still lost business when corporate meetings and incentive trips dried up, Towill said.

"That was a market that was already softening pre-9/11," he said. "They've been even more adversely affected by the drop in the corporate meetings market."

Overall, though, the Big Island saw only a 0.1 percent drop in total arrivals for June and had the smallest overall decline of any major island for the first six months — down 4.5 percent, according to state figures.

Construction on both sides of the island — led by luxury homes worth up to $8 million each in West Hawai'i — plus Kona's growing ocean and energy development park at Keahole, as well as farming and dairy operations, have helped bolster the island's economy.

A dramatic increase in cruise-ship visitors to Hilo — from 98,000 in 1998 to a projected 215,000 this year — and heavy educational investments in Puna also offer hope for the future, David Hammes, an economics professor at the University of Hawai'i-Hilo School of Business, said at a recent economic outlook forum.

While the island's economy may not be booming, some see promise in the way businesses have sustained 66,000 jobs — 35,000 in East Hawai'i and 31,000 in West Hawai'i.

Maui

Maui, with 1,100 timeshares, also has marketed itself well to Mainland tourists, particularly those from the West Coast.

"They've done a very good job of selling their attributes," Towill said. "They have mixture and diversity, not as urbanized as O'ahu, but with more things to do than Kaua'i or the Big Island."

Maui's 75.2 percent hotel occupancy rate for June was nearly identical to the year before, when it had a 75.7 percent rate, according to Hospitality Advisors.

The year-to-date figure of 72.7 percent was down from 2001's 78.8 percent rate for the same period. Total visitor arrivals for the first six months also were off 8.1 percent, according to the state.

But Leroy Laney, Hawai'i Pacific University economics professor and consultant to First Hawaiian Bank, noted that Maui County has dodged much of the economic pain felt elsewhere in the state because of its combination of less reliance on Japanese visitors, strength in real estate and steady performances by the high-tech and agriculture sectors.

Still, Maui has been struggling to regain the number of jobs that existed before the Sept. 11 attacks. For the first half of 2002, the level of nonfarm jobs was running

1.6 percent below the same period in 2001, with most of the weakness in the tourism sector.

While the unemployment rate has dropped to where it was before Sept. 11 — in the 4 percent range — some of the improvement in that area is because of drop-outs in the labor force, Laney said.