For Hawaii Retailers, It's No Luau

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HONOLULU -- Hawaii's troubled economy, caused in part by dramatic drops in spending by Asian visitors, is taking a toll on business and leisure travel, the agency community here reported.

"Banks and hospitals are downsizing and laying off staff, and that certainly has had an impact on business travel," said Bonnie Gutner of Travel Inc. in Kailua, Oahu. She said corporate travel began to slow down last fall. "We have clients who would send eight people to the mainland each week. Now we are lucky if they send five a month," she said. "And only now are we starting to see the economic crisis affect leisure travel."

For example, Gutner said, each year she books a family of six adults and four children for a summer trip to Disneyland or Las Vegas. "This summer, only four adults are traveling -- one lost a job, another is scared of losing a job," she said.

Danny Casey of A Touch of Class Travel in Honolulu said the layoffs of thousands of island residents, announced in the past few months, have not yet occurred. "We'll have to wait until the end of the summer to see the real effect,'' he said.

According to the Hawaii Visitors & Convention Bureau, Japanese visitors spent $294 per person per day in 1996, the last year for which figures were available -- down 17.4% from $356 in 1995. HVCB president Tony Vericella, in reporting a 2.7% decline in eastbound arrivals for the first two months of this year, said there is "strong evidence" that spending levels continued to decline in 1997.

Moreover, he said, the average stay for all eastbound visitors dropped 7.5% last year and an additional 7.4% for the first two months of this year. Current arrivals from Korea and Southeast Asia are weak, he added, as the region attempts to deal with its own fiscal nightmares.

Lori Lum, president of the Hawaii Attractions Association, said, "The downward trend in Asian visitors is being felt. [And] with tighter budgets, many opt to bypass attractions." The association's 20 Oahu-based members reported up to 20% decreases in attendance for the first quarter of this year. She said Hawaii's slight increase in mainland arrivals -- 3.3% in 1997 and 1.6% for the first two months of 1998 -- does not appear to be offsetting the decline.

Other local businesses also are suffering. Liberty House, a massive commercial enterprise in Honolulu that employs hundreds of residents, recently filed for Chapter 11 bankruptcy protection. Liberty House comprises 11 department stores and 25 resort and specialty stores. And DFS Hawaii, the state's duty-free concession and a subsidiary of the San Francisco-based DFS Group, announced plans to lay off 300 of its 1,600 employees.

"There is less corporate business because of the economic climate,'' said Richard Tagawa of Pearl Harbor Travel, Honolulu. But he said a bigger problem is that consumers are shopping for the lowest prices. "Most of our calls are people shopping around. They are very specific. With a neighbor-island package, for example, they ask for specific hotels to compare prices,'' Tagawa added.

Rachel Shimamoto of Honolulu-based Travel Ways said clients are traveling but not as much. "We get lots of calls asking about fares," she said.

Joyce Charles, operations director for Regal Travel in Honolulu, Hawaii's largest agency, also noted an increase in people shopping around. "There's a cautious feeling out there. We're not as busy as we'd like to be," she said. "We've added fees, gone more into selling cruises and we've downsized, cutting our staff in half,'" Charles said.

Hawaii's problems did not occur overnight. As Richard Kelley, chairman of Outrigger Hotels & Resorts, said, "The Asian financial problem was only the straw that broke the camel's back. "There should be no surprises," he said, of Liberty House's bankruptcy filing. Visitor spending has been on a downward spiral since mid-1996."

According to the HCVB's latest figures, Hawaii's arrivals increased last year for the fourth consecutive year, although the 6.88 million visitors were still 1.3% below the peak year of 1990. In 1997, total eastbound arrivals -- mostly Japanese -- totaled 2.8 million for the year, a 0.7% decline from 1996, the bureau said.

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