Visitor industry plans for fallout from war with Iraq

By Sean Hao
Advertiser Staff Writer

Driven by the prospect of war in Iraq, Hawai'i's tourism industry is laying down plans to buffer itself against setbacks that could come while it is recovering from the economic ravages that followed the Sept. 11 attacks.

A Maui Divers of Hawai'i bus picks up customers on Liona Street. Bob Taylor, the company's president, said other than to cut costs, there's not much the company can do if traffic declines. Richard Ambo • The Honolulu Advertiser

In February 1991, a month after the start of the first Gulf War, the state's visitor arrivals plunged 22 percent from the year before, according to the state Department of Business, Economic Development and Tourism. Year-to-year growth in tourism did not resume until July of that year.

A similar decline with another Gulf War could result in layoffs, shortened work weeks, lower hotel room charges and a boost in marketing efforts as businesses look to cut costs while spurring arrivals.

"We are thinking those things through," said Jim Austin, spokesman for Outrigger Hotels & Resorts.

Many businesses don't have to think further back than Sept. 11 when travel to Hawai'i, particularly from Japan, quickly dried up. About 6,000 jobs were lost, mostly in tourism.

Austin said after the attacks, Outrigger cut back on some worker hours, dropped room charges and increased marketing to keep tourists coming.

"That may be the same thing we do in the event of war," he said. "We would need to see how much tourism is affected first.

"Nobody knows how it will be affected."

For many tourism-related businesses, it's not whether traffic would decline after the outbreak of war but rather by how much.

"Unfortunately, we've gone through this before with Sept. 11th (and) the Gulf War," said Bob Taylor, president and chief executive of Maui Divers of Hawai'i. "We know how to react. It just depends on how severe it is."

Taylor said nearly all his company's business comes from tourists. Other than to cut costs, there's not much the company can do if traffic declines, he said. After Sept. 11, Maui Divers let go a handful of employees. Hours, salaries and bonuses for other workers were cut or eliminated, Taylor said.

In anticipation of a drop in tourism, the Hawai'i Tourism Authority has drafted a war contingency plan that calls for, among other things, establishing a crisis center to coordinate industry communication, possible joint marketing with airlines and tour companies, and perhaps some form of subsidy to businesses to keep traffic coming to the Islands.

"We have a lot of scenarios," said Frank Haas, marketing director for the Hawai'i Tourism Authority. "When you talk about the possibilities, they range from nothing happening to a relatively short event to an event that's serious with biological weapons to a long, drawn-out thing."

The plan tries to address the lessons learned from previous catastrophic events that affected the tourism trade, Haas said. These include the likelihood that Mainland vacationers will travel closer to home and that Japanese visitors will cut back on trips to Hawai'i.

In the weeks after Sept. 11, Hawai'i approved up to $20 million in state and private money for emergency tourism marketing. Gov. Ben Cayetano led tourism officials to Japan to reassure potential visitors. The Hawai'i Visitors and Convention Bureau also allocated $7 million for advertising in Tokyo, Osaka and Nagoya to cover a six-month emergency marketing plan.

Additional marketing and an outreach trip to Japan by Hawai'i officials would be likely. However, the timing of such activities is key, Haas said.

"You don't want to react too quickly," he said. "If you respond too quickly and something flares up again, that's not very useful."

Among the industries most at risk if war breaks out are the airlines, which already are struggling with a slow economy and traffic levels that have remained lower since Sept. 11.

Hawaiian Airlines spokesman Keoni Wagner said the company is developing a contingency plan to deal with the effects of a possible war in the Middle East. He would not discuss details of the plan, but noted that when tourism dropped after Sept. 11, the airline cut back on staff and flights.

"We have been looking at the potential effects of war and at adjustments we might have to make to operations and obviously attempt to stimulate demand," Wagner said.

"Under circumstances such as those we are talking about, the company would be aggressive looking into any and all means of economizing without compromising safety and passenger convenience and comfort."

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