Hawai'i's tourism hopes rest on corporate travel

By Kelly Yamanouchi
Advertiser Staff Writer

Meetings, conventions and business travel can boost the tourism industry when the flow of vacationers slows, but with war and the rising fear of SARS, corporate business appears to be avoiding travel to Hawai'i as well.

The convention center and hotels that depend on large meetings for much of their business have been hit by cancellations from Japanese groups, shrinking attendance at booked events and hesitation on the part of meeting planners.

"We have some challenges," said Joe Davis, general manager of the Hawai'i Convention Center.

To try to stem losses, a trip to Japan is planned this month by SMG, which manages and markets the convention center, to meet with Japanese customers and drum up some business.

The visit is not related to an unscheduled trip to Japan planned by Gov. Linda Lingle, the Hawai'i Tourism Authority and legislative leaders to encourage travel to Hawai'i.

Davis said it is important for convention center staff to make such a trip soon.

"We're going to Japan. We're not waiting to think about going to Japan," Davis said. "We're going this month to thank them for business and to court new business."

Davis said one of the challenges for the convention center is to keep meeting planners from cancelling.

"Japanese groups are very sensitive to conditions in the world and travel generally," Davis said. Evidence of that reluctance to travel came in February, when a Japanese group arrived with about half of the 5,000 expected.

The American Academy of Neurology convention that ended last week brought in about 7,600 people, SMG said, down from an early estimate of 10,000.

Another large group, the American Association of Orthodontists, is scheduled for an event in May with projected attendance of 18,000.

"A lot of us are hoping for some settling in the Middle East. We're hoping those numbers will stay the course and we'll see that 18,000 figure," Davis said.

Kevin Mitchell, chairman of the Pennsylvania-based Business Travel Coalition, said one factor that may hurt business travel to Hawai'i is the bankruptcy of United Airlines, which accounts for about 20 percent of seat capacity from the Mainland.

Because many meetings are scheduled years in advance, "corporations are concerned about booking large incentive meetings to locations or destinations where they don't have a lot of options should one of the carriers, or the carrier they have contracted with, go out of business," Mitchell said.

Business visitors, who spend more on average than leisure travelers, are highly sought by both the convention center and hotels with meeting space.

"Hawai'i can attract more meetings and conventions — usually that's a customer that spends money in the local economy when buying services," said Peter Schall, senior vice president of Hilton Hotels Corp. in Hawai'i. In some ways that business is "more dependable, because people still need to do business," while vacations are discretionary.

The state Department of Business, Economic Development and Tourism is also planning a trip, this one in May to Northern California, to encourage companies to invest and relocate to Hawai'i as well as to hold business meetings here.

DBEDT director Ted Liu "has really seen this as an opportunity to perhaps market a little more aggressively" to the business sector, said Steve Bretschneider, the department's chief marketing officer.

But marketing to businesses is not an easy sell, tourism officials say.

Restricted corporate spending in a sluggish economy and increased competition among destinations have contributed to a softness in the business market, said Hawai'i Tourism Authority marketing director Frank Haas. The war in Iraq and concerns about the SARS epidemic only compound the problem.

"When the economy started to tank three years ago, we saw a reduction in general business travel," Davis said. "The number of exhibitors being sent to shows — in the past they may have sent five' now they send three. I'm not sure that's going to change anytime in the future."

Still, there is opportunity in crisis.

Meetings organizers worldwide fear they could be held liable if an outbreak of SARS affects those attending an organized event, especially in Asia or Toronto, where the risk of contracting the disease is higher. Hawai'i could be sold as a safer location.

"If I were [in Hawai'i], I would be very proactive and put myself out as a solution, as opposed to, you know, a potential member of the cast of problem destinations," Mitchell said.

Businesses that host meetings here say they are hoping that factor will work to their advantage.

"Hawai'i may have a good chance that meetings and conventions that have considered maybe Asia or Hong Kong, or even Europe, may decide to stay in the U.S., and Hawai'i could be a beneficiary of that," Schall said.

Starwood Hotels & Resorts could be seeing some of that business already. Spokesman David Uchiyama said the pace of bookings is ahead of last year, with some business from groups that had been planning to hold events overseas. If that trend continues, it could bode well for Hawai'i tourism.

"If done right, a citywide convention can infuse a lot of revenue to the community as a whole through attractions, through retail," Uchiyama said. "We need a lot more of that kind of business."

Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@ honoluluadvertiser.com.