Leadership Corner: Dr. Richard R. Kelley
Interviewed by Catherine E. Toth
Name: Dr. Richard R. Kelley
Age: 71
Title: Board chairman
Organization: Outrigger Enterprises Inc.
High school: Punahou School
College: Bachelor of science in pre-med, Stanford University; Doctor of medicine, Harvard Medical School
Breakthrough job: In 1970 Kelley's parents, Roy and Estelle Kelley, asked him to manage their Outrigger Waikiki hotel while they waited for the manager they had hired to arrive in the Islands. But the new hire never showed up, and Kelley wound up taking the job. "I had a real crash course in running a major deluxe hotel," Kelley said, laughing.
Major challenge: "To continue to grow in the face of very severe and challenging competition from major national and international brands, specifically Marriot, Starwood and Hilton," Kelley said. "When you look back 30, 40 years ago, they really weren't much of a presence out here. And now they're becoming a dominant force. They have those frequent guest programs, which are very, very powerful."
Q. Outrigger started with your parents' $10,000 Waikiki apartment house in 1932. Today, the chain employs more than 3,000 people and manages 51 properties. Can you describe the growth from your vantage point?
A. I remember back in '51, I don't think we even had 10,000 visitors at that point ... Back in the '40s and '50s, everybody came in by boat. HVB (Hawai'i Visitor Board) had a tug rented and we'd go offshore and greet people. It was all individual treatment. Reservations were made and confirmed by mail with a three-cent stamp. But by 1970 larger numbers of tourists started to come. Jet plans were soon followed by the jumbo jet. All of a sudden we're dealing with an entirely different level. These weren't individuals, this was the day of mass tourism. The only way to get a cheap airfare was to book a packaged tour. Everybody was doing that. Suddenly we had 200 people in our lobby all at once, then you have nothing for a couple of days, then another 200 show up. We had to get into sales and marketing, working with wholesaler travel companies. It was just a rapid evolution of the business.
Q. Though you helped with your family's hotel business, you continued to practice medicine as a pathologist. Are there any similarities between the two?
A. None whatsoever. It's interesting, when I was working (as a pathologist), I was taking care of today's problems today. I had certain patients who needed blood tests or needed bits of tissue examined. They were very much concerned about what was happening today. But in the hotel business, suddenly I had to start thinking about reservations weeks or months away. It was more down-the-line strategic planning. The time frame was very different.
Q. This summer Hawai'i hosted record numbers of visitors, even topping pre-Sept. 11 levels. Do you think this trend will continue?
A. I think we can sustain (the growth). You talk about the total number of visitors that are in any one location on any day, it's still a small percentage of the total population. It's obviously more crowded in certain places like Waikiki and Ka'anapali and the streets of Kailua-Kona. But there's room for growth, but it should be smart growth. I think the Hawai'i Tourism Authority is addressing this very well.
Q. How important is diversification for the state's tourism industry?
A. You've got to tailor your product to the kind of visitor you want to attract. I think it's important to get the diversified visitors to our market. As we've seen, different areas of the world will have different difficulties at any particular time. If you're only getting visitors from the West Coast and, for whatever reason, there's a collapse in Silicon Valley, you'll start to get few people from there. So you better hope you're getting visitors from Japan, Korea and other areas. It's like any company or business. If you're manufacturing widgets, you don't want to have just one customer taking 80 percent of your product. Because when that customer, for whatever reason, is having a difficult time, you may go out of business, too.
Q. What lessons did the industry learn from Sept. 11?
A. I think it reemphasized how fragile the industry is. Tourism is not a necessity. When people are unsettled in any sort of way, they tend to hunker down. It took almost 18 months before people started to travel again. You can't drive to Hawai'i ... Once people get nervous about flying in an airplane, with the exception of the occasional boat, you won't get people to come to Hawai'i. This is a big cloud that's hanging over us.
Q. What do you think Hawai'i needs to do to continue growing its tourism industry?
A. I think we have a couple of challenges. One is to make sure that Waikiki continues to renew itself. This is happening, but for a long time it didn't. You look at the successful resorts round the world, most obviously Las Vegas, you'll see they've continually renewed itself. There's always something new, something exciting, they build hotels and tear 'em down.
Q. Along those lines, Outrigger will launch a $350 million redevelopment plan along Lewers Street, converting one hotel to time-shares, selling two others as resort condos and building a new mixed-use high-rise. Is this a way for Outrigger to renew itself?
A. It will provide a new focus of entertainment and shopping, open up the entire Lewers Street area so you'll be invited to come down there. It's always been very, very crowded with narrow streets and lots of buses. I think pedestrians have sort of gotten squeezed between buildings and coconut trees. This will tremendously increase the pedestrian space along there and bring lots of activity and excitement, bring the place to life ... You gotta offer something new. The visitors have become more demanding and more sophisticated ... People expect more.
