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The Honolulu Advertiser
Updated at 3:03 p.m., Sunday, August 3, 2008

Front Street in Lahaina too quiet for struggling businesses

By CHRIS HAMILTON
The Maui News

LAHAINA, Maui — A recent lunchtime trek to Front Street revealed a rare find: an open parking spot, The Maui News reported. Wait, there was another and then another.

An on-street parking space might not mean anything to the average Maui visitor, but to Lahaina business owners it's a telltale sign of the flagging economy. Right up there with thinner crowds and fewer shopping bags in their hands.

July through August is supposed to be one of the peaks for tourist traffic, right before the kids return to school. But Front Street's sidewalks are not choked as usual with enough seniors and baby strollers to force the impatient people into the roadway, the Maui News reported today.

Compared to a year ago, for most, West Maui hotel occupancy rates are down in the double digits and so are retail and restaurant sales, Lahaina business people said. The majority of employers have avoided layoffs, but they said they fear what will happen during the tourist doldrums of September through November.

"Summer never came this year," said Robert Ponce, service and bar manager for Cheeseburger in Paradise, who said his revenues are down about 30 percent from this time last year.

Last week, the LahainaTown Action Committee, the area's business group, canceled its annual Taste of Lahaina and Best of Island Music event normally held in September because of the economic slowdown. It's a cumulative effect for sponsors and business owners who cannot spare support and workers because they have had to lay off and cut hours across West Maui, the Maui News reported.

"I'm not optimistic right now about the future," said Gerald "Chip" Bahouth, general manager of the Sheraton Maui in Ka'anapali. "Even after 9/11 we never saw summer numbers this bad."

Bahouth is among those who blamed much of the slowdown on sky-rocketing increases in airline ticket prices after Aloha and ATA shut down in April.

Air and cruise ship arrivals are both down 14.2 percent from a year ago, according to the state Department of Business, Economic Development and Tourism.

Occupancy rates are down up to 20 percent from years past, Bahouth said. The company's three Maui properties are all suffering and will likely reduce room rates and try some creative marketing to attract customers, he said.

However, they have not had to lay off any employees, Bahouth said.

Maui Hotel & Lodging Association Executive Director Carol Reimann said the situation will most likely get worse, not only because the slower fall season is fast approaching, but because many of today's visitors may only be here now because they had booked their flights months ago, when the average ticket from the West Coast was one-third less expensive than today. She said the organization is encouraging hotels to use this lull to make improvements that have been delayed.

"What I've heard is that the fall is not looking very good," Reimann said.

Higher air ticket prices eat into visitors' spending money on island, said Manoel Albino, David Brian Jewelers general manager. Sales at the high-end jewelry store are easily down 50 percent from last year, he said. He's also been opening his shop at 11:30 a.m. instead of the typical 9 a.m.

"Usually we rely on making at least one big sale a day, but those are harder to come by," Albino said. "And less foot traffic doesn't help, either."

Chris Kasper, general manager for all 10 Boss Frog's Dive and Surf Shops on Maui, said their business is down about 20 percent. As a result, Boss Frog's cut back on marketing and moved into new offices.

"It's not horrible, but if we keep slowing down who knows what we'll have to do," Kasper said.

It's not all bad news, Reimann said. After Maui Land & Pineapple laid off 46 Kapalua Resort employees last week, she said she found 100 job openings at other hotels to present to the dismissed workers. And she said a poor economy isn't keeping away time-share visitors, who must use their condos or pay for an empty unit.

Capt. Tim Putnam of Start Me Up Sportfishing also said they continue to run two trips a day on their five boats. The charters profit from the fact that Maui has only two small boat harbors and limited competition. He also said he's noticed more Canadians and Europeans arriving as the U.S. dollar sags in world markets.

"So far we're staying busy, but dark days are ahead," Putnam said. "I also think it's a self-fulfilling prophecy. We keep hearing in the media how bad the economy is, and people react like it is."

Pacific Whale Foundation spokeswoman Anne Rillero said bookings for their environmental sightseeing and dinner cruises have been lighter than in past years. And this summer, the nonprofit had to add a $4 fuel surcharge to keep up with the spiraling price of fuel, she said.

Some business owners said they wouldn't be surprised to see an influx of empty storefronts in the next several months. Ponce pointed to a T-shirt shop that didn't survive the summer. Other vacant retail spaces are scattered along the side streets.

Joan McKelvey, who owns the South Seas retail store at the Hyatt Regency Kaanapali and Pioneer Inn in Lahaina, said she expects to be fine. But lately, there have been entire days when they'll only make a few sales, she said.

Everyone in retail appears to having the same problems, McKelvey said.

"The reality is that a lot of us are like camels. We gorge in July and August and then feed ourselves off the fat in September and November," said LahainaTown Action Committee past President Jerry Kunitomo, who owns BJ's Chicago Pizzeria on Front Street. "I definitely think there's going to be some attrition, I'm sad to say."

Kunitomo said his revenue is down 12 percent from a year ago. While costs also keep going straight up because of higher fuel costs, he said he can't risk raising his prices for fear of losing customers, many of whom are local residents. He doesn't anticipate layoffs but has had to shorten shift hours. A lot of his longtime employees are cutting back on their own expenses to weather the storm, he said.

Sunrise Cafe owner Bina Buduan said some good reviews and reasonable prices have helped her restaurant stay above the slump. Every day, she said, she hears from customers who are staying at pricey hotels but come to her cafe because they don't want to spend three times what Buduan charges for eggs Benedict and coffee. And she uses locally grown ingredients, she added.

Still, Kunitomo said he also sees "more bags of potato chips piled in rear windows" of rental cars for visitors who hit the big grocery outlets in Kahului before heading to their hotels or vacation rentals.

That's hurting everyone, he said, except Costco.

For more Maui news, visit www.mauinews.com.