LEADERSHIP CORNER
E Noa owner looking for new opportunities
Interviewed by Deborah Adamson
Advertiser Staff Writer
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Title: Owner and director of E Noa Corp.
Organization: E Noa Corp. runs E Noa Tours and Waikiki Trolley, a hop-on, hop-off visitor transportation service. Tanaka, who is from Tokyo, bought the company in 1996 and transformed it from a company largely providing tours to a trolley service. E Noa means "freedom without limitations."
Age: 46
College: Harvard University
Post-graduate: Harvard Law School
Life-changing event: "My mother always planned that their children attend universities within either the U.S.A. or U.K."
Little known fact: Even though he was trained in mergers and acquisitions, Tanaka has an avid interest in public policy.
Major challenge: "With the plethora of information that's available, developing analytical skills to be deployed to meet objectives is a challenge."
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Q: How did you come about acquiring the company?
A: I'm originally from Japan. I went to school in Massachusetts, and got into law and investment banking. I was operating out of Mainland U.S.A. and Japan. I acquired E Noa Corp. through my involvement and experience in mergers and acquisitions. My original thought was to be an investor and not manage the company. But after two years or so of others managing it, I thought I had better pay attention and manage it myself. The good side is I get to live in Hawai'i. The challenge is to be in the volatile tourist industry.
Q: Are you thinking of acquiring other businesses or expanding?
A: I'm interested in new business opportunities in Hawai'i, which is why I pay great attention to the regulatory climate, labor climate as well as the state's hospitality to capital. Hawai'i cannot grow based on its own capital alone. It depends very much on outside capital flowing into Hawai'i.
Q: What is your outlook for tourism next year?
A: On the positive side, there are external circumstances that spell a better year for 2004 over 2003. The external ingredients include the following — the Mainland U.S.A. economy is on an upward trend. At the same time, the economy of Japan is about to enter real financial reforms. So the two largest sources of tourists into Hawai'i ... namely Mainland USA and Japan ... their economies are strong. Moreover, the fear of flying usually restrains overseas travel. So within the U.S., there may be many who contemplated overseas travel, but chose domestic destinations (such as Hawai'i).
From the Japanese point of view, the hunger for travel overseas is ascending. When they look at overseas destinations, they regard Hawai'i as a desirable destination.
But there are three factors that restrain the Japanese from going abroad. One is geopolitical dangers. Second is infectious diseases such as SARS, the third is a decline in the economic circumstances of Japanese travelers. When you look at those three factors, for the time being there is a lesser risk of a geopolitical catastrophe. SARS is regarded as a phenomenon found in Asia; the GNP of Japan is about to score two years of positive movement.
In the meantime, our competing destinations, such as China, is afflicted by the SARS scare in the eyes of the Japanese and Bali is afflicted with Islamic extremism. South Korea unfortunately is associated with (SARS-tainted) Asia even though it's not afflicted by SARS or terrorism. North Korean tensions also deter the Japanese from traveling to South Korea. So in that sense, Hawai'i is "lucky" our competing destinations are being avoided. Therefore the number of tourists from Mainland and Japan are likely to increase. In addition, the stronger yen and weak dollar works in favor of Hawai'i retailers.
If any one of these factors reverses itself, then we will suffer tremendous declines. It takes one terrorist incident in Hawai'i to take the entire economy down. It doesn't have to be Islamic extremists. It could come from any source.
If a terrorist attack happens in Orlando, people will drive to other Florida cities such as Jacksonville. They can't do so in Hawai'i.
Q: You had mentioned that an increase in tourist arrivals did not necessarily mean bigger profits. How so?
A: When it comes to ground transportation companies, there are decimating costs that are associated with them: workers' compensation, labor costs, the liability insurance premiums and the fuel cost. These costs are rising much faster than any prospect of an increase in revenue from tourists.
Q: You also had expressed concern about competing with TheBus when it comes to transporting tourists. How has it affected you?
A: My wish list includes restraint by the county government or any government in entering the tour business. For example, private tour buses are disallowed from taking passengers and descending into Hanauma Bay but (public) buses are the only buses allowed. In addition, TheBus has offered itself for tours around the island for $2. It can do so because it's subsidized by taxpayer dollars of about $130 million a year.
Private businesses are not and thus cannot outmatch such fares. Instead of courting the tourists, TheBus ought to court the local residents as a predominant base for ridership.
On the labor front, city bus drivers are being paid roughly 48 percent higher hourly than private drivers. Drivers on city buses also are promised no layoffs and guaranteed 100 percent of the benefits. That's another resource the private company cannot outmatch. The Hawai'i Transportation Association, whose membership includes all major private tour operators, has protested (such competitive activities).
Q: But aren't tourists important to the economy?
A: It's an inappropriate argument. We might as well open public schools and other government services to tourists. Schools and buses are paid for by taxpayers, therefore they should benefit from them.
If government expands bus services to tourists, there would be an increase in taxes and destruction of tour operators, which pay taxes. We are running a business at a tremendous disadvantage.
