Drop in tourism foreseen
By Kelly Yamanouchi
Advertiser Staff Writer
Hawai'i businesses are bracing for what could be a sharp drop in tourism resulting from a war that now seems imminent.
By some industry estimates, President Bush's 48-hour ultimatum yesterday to Iraq President Saddam Hussein could precipitate a decline of more than 30 percent in visitors, possibly for weeks or months.
A war with Iraq could lead airlines to cut flight schedules and divert aircraft for military use, slowing the flow of tourists who fuel much of the economy in the Islands.
While there is plenty of hope for a quick resolution, many in the tourism industry fear major job cuts, empty hotel rooms and deserted Waikiki sidewalks similar to the effects of the Persian Gulf War in 1991.
Some leaders in the industry are hoping that the war-related economic impact will be minimal.
"I'm still optimistic that it's going to be a relatively short-lived conflict," said Outrigger Enterprises Inc. Chief Executive David Carey.
But he warned that if that is not the case, Outrigger, like hundreds of other tourism businesses, will need to "reroll the 9/11 scenario."
"If it's gonna be a big deal we gotta redesign the system," said Carey. "Immediate staff reductions, immediate freeze on capital and unnecessary expenditures.
"Some buildings may not make it. You shut down wings, you change your services," said Carey. "I hope not to go there."
Hawaiian Airlines spokesman Keoni Wagner said there is a definite risk airlines will cut flights.
"We have to consider the likelihood that traffic will drop precipitously as it has in the past," Wagner said. "So we are sort of anxiously waiting to see what the effects will be."
An Aloha spokesman said the airline has a contingency plan, but had no comments on the prospect of a war's impact on the carrier.
Many in the tourism industry are even more concerned about the impact of a war if it is coupled with a terrorist attack.
"I think we're all right now in uncharted territory," said Joe Toy, president of hotel consultancy Hospitality Advisors LLC. "Obviously, however, the potential would be devastating."
Toy said February's federal orange security alert, the second highest alert of a possible terror threat, led to a drop in visitor arrivals for several days. The orange alert issued nationwide yesterday, coupled with the president's warning of war, will likely have an even greater effect. Visitor numbers could drop by more than 30 percent, he said.
Whether people choose not to travel will depend on discussions between ordinary people worldwide about the meaning of the threatened war, Carey said.
"It's a thousand or a million of those discussions that's going to make those decisions," he said. "I'm hopeful that during this conflict people will be more used to conflict than they were before."
Carey said hotel occupancy could drop 10 percent to 15 percent during a war. He said he hadn't seen cancellations yesterday, although bookings have recently slowed.
There are few positive factors for the tourism industry in Hawai'i. The future of the nation's airline industry is cloudy as many carriers restructure to cut costs. Concerns about infectious diseases in Asia could compound the drop-off in travel to Hawai'i.
But the Dow's rise yesterday was one indication that some believe an economic recovery will come, one that could bring a boost in tourism.
If nothing else, Bush's address "at least takes out the uncertainty of when the war's going to cover," Toy said.
Reach Kelly Yamanouchi at kyamanouchi@honoluluadvertiser.com or 535-2470.
