Tourism displaying resilience

By Kelly Yamanouchi
Advertiser Staff Writer

Although travel to the Islands slowed with the war in Iraq and the spread of SARS, Hawai'i's tourism industry is showing surprising resilience and has not suffered to the degree it did after the Sept. 11 terrorist attacks or the first Gulf War.

What has saved the tourism industry is a persistent willingness of Mainlanders to travel, and a war that has ended quicker than some expected. The two factors have blunted the effects of the slowdown in travel because of war and SARS, double-digit declines in Japanese tourism and the continuing lackluster economy.

"It could be worse. It could be better. But no question the impact of the war on the U.S. wasn't that significant," said Keith Vieira, Starwood Hotels & Resorts senior vice president.

But the tourism industry still has lingering issues to grapple with.

"The economy is still having an overall effect and the SARS effect on Japan is devastating," Vieira said.

Data for March, reflecting travel jitters stemming from the war that started March 20, show the number of people visiting the Islands declined 4.7 percent from a year ago, when tourism was still suffering the effects of Sept. 11.

But last month's decline is not anywhere near the free-fall immediately after the 2001 attacks when total visitor arrivals for September plummeted 32.5 percent. The drop represented the dramatic impact of the events and the two-day shutdown of air travel.

At the start of the first Persian Gulf War on Jan. 16, 1991, visitor arrivals declined 5.7 percent for the month. Visitor arrivals then fell 22.4 percent in February and 10.3 percent in March.

The visitor counts so far this year run counter to the tourism industry's worst fears, and indicate the initial effects of the war in Iraq and SARS have so far been relatively mild.

"It doesn't appear there have been any significant layoffs due to either," said Jason Ward, a union spokesman for Hotel Employees & Restaurant Employees Local 5. "The war probably had less of an impact than we thought it might have and I believe that the industry was probably expecting a more significant impact."

Part of why the numbers look relatively benign is total visitor arrivals in March 2002 were already at their lowest point for the month since 1995. And, since many Mainland visitors have continued to come to Hawai'i, they have helped offset the deep drop in international travelers, particularly those from Japan. U.S. visitors declined only 1.7 percent in March while Japan arrivals dropped 16 percent.

Rex Johnson, Hawai'i Tourism Authority executive director, said the Mainland arrivals, led by the West Coast, "kind of held up what was going on over here." In fact, hotel occupancy in the state averaged 73.8 percent in March, up 1 percentage point compared with the same month a year ago.

"The good news is that we did not see a widespread cancellation of corporate meetings and corporate travel and we didn't see the huge declines in occupancy that we could have experienced given the war," said Joseph Toy, Hospitality Advisors LLC president.

One reason Hawai'i weathered the war better this time around is the conflict started and ended at a time when the national economy has been relatively soft but stable. In the early 1990s, the Mainland was suffering through a recession and that compounded the effects of the first Gulf War, Toy said.

Hawai'i has also done better in withstanding the ripples from the latest conflict and SARS compared with many other tourist destinations. During the first quarter, Hawai'i was the third best performing hotel market of the top 25 in the country, Toy said.

"Most of the top 25 markets were much more impacted by the decline in business travel," Toy said. "A lot of these cities on the Mainland depend on short-term business travel, so we had a lot less impact."

Another factor feeding into the better-than-expected visitor count is that the country has so far escaped another major domestic attack. "There weren't fortunately any terrorist attacks," Vieira said.

There has not yet been a release of pent-up demand for travel and vacations that many hoped for.

"All of us expected that after it was over and assuming it finished in victory that it would be a euphoria of travel," Vieira said. "It didn't have a feeling of ending."

Nonetheless, some hope it is finally time for a significant recovery in Hawai'i's tourism industry.

While SARS has constricted travel from Japan, "Hawai'i is at a crossroads now with an opportunity because Japanese potential visitors are looking past Asia to other destinations," said Dave Erdman, president and chief executive of PacRim Marketing Group Inc, a local marketing firm that specializes in Japanese business.

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