Suppliers: Price-cutting not a viable strategy

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HONOLULU -- Agents believe the price of a vacation is the most important reason clients go to destinations other than Hawaii, but travel suppliers here said lowering prices is not a good strategy for attracting clients.

That was the general feeling among suppliers and from travel agent research presented by Travel Weekly during the 2002 Hawaii Leadership Forum here.

Fifty percent of respondents to a Travel Weekly poll said price is the main reason other destinations are more popular than Hawaii.

Average nightly hotel rates have been down lately in Hawaii, with a 3% drop in the first quarter compared with last year and average dips of up to 20% and more during some weeks. Even so, average room rates grew 4% in 2001 compared with 2000.

Debbie Lundquist, chief operations officer at Classic Custom Vacations, said selling cheap vacations to get clients here is not going to make for happy clients. Not all travelers to Hawaii are "looking for the $399 deal," she added.

David Carey, president and chief executive officer of Outrigger Hotels & Resorts Hawaii, said that for a travel supplier, cutting prices "is a shortcut to not putting enough emphasis on marketing."

Carey cautioned that put-ting low-priced Hawaii deals on the Internet will cheapen the product."With respect to Internet sales, high-end travel to Hawaii should not be considered a commodity in the price mode," he said.

Responding to Carey's remark about Web sales, Lundquist -- whose company recently was bought by Expedia -- said the Internet caters to a different kind of customer and eventually that mode of selling will become accepted.

"Expedia understands that travel agents deliver another kind of customer," Lundquist said. "Internet providers that survive will be brought up to the level of traditional wholesalers."

Joni Paahao, senior vice president of sales and marketing at Aston Hotels & Resorts, said the Internet does have its place in Hawaii travel sales.

"Hawaii needs to be on all the distribution shelves and maybe the Internet, too," said Paahao. "The dot-com companies [eventually] will embrace some of the traditional [supplier] principles."

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