Hawaii Roundtable: First-timers, resort fees addressed

Roundtable participants; top row, from left, Jeffrey Lavender, Jim Palank, Harris Chan, Arnie Weissmann, John Caldwell and Sean Dee. Front row, Steve Loucks, Karen Hughes, Jack Richards and Shane Nelson.
Roundtable participants; top row, from left, Jeffrey Lavender, Jim Palank, Harris Chan, Arnie Weissmann, John Caldwell and Sean Dee. Front row, Steve Loucks, Karen Hughes, Jack Richards and Shane Nelson. Photo Credit: Dave Miyamoto

Last month, Travel Weekly invited a group of tourism executives to the Royal Hawaiian, a Luxury Collection Resort in Waikiki, to discuss the Aloha State's visitor industry. Participants in the roundtable, moderated by Travel Weekly Editor in Chief Arnie Weissmann and contributing editor Shane Nelson, discussed a range of themes, including attracting more first-time domestic visitors; resort fees at properties across the Islands; and whether more midlevel accommodations are needed statewide. The original transcript has been edited for length and flow.



Arnie Weissmann, editor in chief, Travel Weekly: The Hawaii Visitors and Conventions Bureau [HVCB] just released research about travelers' intentions concerning Hawaii. Karen, is there still a sizeable gap between traveler intention and ultimate arrivals?

Karen Hughes, vice president of Meet Hawaii and travel industry partnerships, HVCB: The study showed that the intention to travel to Hawaii is really high. Our repeat factor is about 77%, and our guest satisfaction is in the high 90s. But then there's this gap of people who say, "Yes, I absolutely want to come to Hawaii," but something is getting between that and pushing the button to come. It's about 36% of the target traveler audience — those we think have the propensity to visit — that say they want to come but haven't pulled the trigger.

"We have to make sure we’re telling our story in a way that gets the point across that we are beach-plus and an experiential destination." -- Karen Hughes
"We have to make sure we’re telling our story in a way that gets the point across that we are beach-plus and an experiential destination." -- Karen Hughes Photo Credit: Dave Miyamoto

 Weissmann: Is something in particular stopping them?

Hughes: Yes. Time, distance and money.

Weissmann: Among those three, does one stand out in particular?

Hughes: It depends. From the East Coast [of the U.S.], it's time. From the West, it's price. And in the Midwest, it is probably a combination of both. We feel the reality is, if you're looking at just a beach vacation, Hawaii's never going to compete on price. So we have to make sure we're telling our story in a way that gets the point across that we are beach-plus and an experiential destination. There is a magic here we have to figure out how to put into market.

Weissmann: Articulating that magic applies to everybody here. Has anyone found something that works?

"You can say 77% of the travelers are repeaters, but why did they repeat? It’s not just the sun and surf. It’s the people." -- Harris Chan
"You can say 77% of the travelers are repeaters, but why did they repeat? It’s not just the sun and surf. It’s the people." -- Harris Chan Photo Credit: Dave Miyamoto

Harris Chan, vice president of operations, Starwood Hotels & Resorts Hawaii: I think we need to play up people making the difference, [because] you can say 77% of the travelers are repeaters, but why did they repeat? It's not just the sun and surf. It's the people who make the difference, [and] there's no other destination that can compete with us. I've worked in many destinations, and this is my third time back. Hawaii's always the best, because of the people.

Jack Richards, president and CEO, Pleasant Holidays: The aloha spirit can only be found in Hawaii. To me, that is the key differentiating point as to why people come here. They can get beaches in Europe if they want. They can get beaches throughout Mexico and the Caribbean, but it's the culture and the people and the aloha spirit that differentiates Hawaii.

"People think of Hawaii as a place that they want to go ultimately, and it’s a matter of translating that into reality for them." -- Steve Loucks
"People think of Hawaii as a place that they want to go ultimately, and it’s a matter of translating that into reality for them." -- Steve Loucks Photo Credit: Dave Miyamoto

Steve Loucks, chief communications officer, Travel Leaders Group: I would also say that compared to a place like the Riviera Maya or the Caribbean, Hawaii still is an "aspirational" destination; it's a place where people dream of going. People don't dream of going to the Riviera Maya. They go there because it's cheap. They go there because it's a quick getaway. But people think of Hawaii as a place that they want to go ultimately, and it's a matter of translating that into reality for them on our part as travel agents, and then once they come, we know that the return factor is very significant.

Hughes: We know that never-beens, and really all travelers, want an experience they can't get anywhere else. Our challenge is, how do you articulate that uniqueness of Hawaii to a never-been who has an aspiration?

"On the topic of challenges that both agents and consumers face … resort fees … [are]  not just an issue in Hawaii." -- Arnie Weissmann (standing)
"On the topic of challenges that both agents and consumers face … resort fees … [are] not just an issue in Hawaii." -- Arnie Weissmann (standing) Photo Credit: Dave Miyamoto

Weissmann: Does the HVCB have a specific campaign directed at never-beens?

Hughes: The consumer marketing approach has been "Let Hawaii Happen," and that's a social media campaign where people share experiences in Hawaii that they stumble upon. It's not the things you plan that make it so special, so we are encouraging consumers, through #LetHawaiiHappen, to go on social media and talk about experiences they happen upon that are unique and culturally diverse. We're going to be rolling this out to agents through some training webinars, as well. They can learn from the Twitter posts on #LetHawaiHappen about how to engage consumers in that fun exercise of sharing Hawaii experiences, because word of mouth from family and friends is always the No. 1 motivator. So if we can engage the agency community in helping continue that effort, I think it's going to be big for everybody.

Weissmann: On the topic of challenges that both agents and consumers face, I'm going to bring up resort fees, though I'll add that it's not just an issue in Hawaii. Jack, what are your thoughts?

"The aloha spirit can only be found in Hawaii. To me, that’s the key differentiating point as to why people come here." -- Jack Richards
"The aloha spirit can only be found in Hawaii. To me, that’s the key differentiating point as to why people come here." -- Jack Richards Photo Credit: Dave Miyamoto

Richards: We have 189 resorts that we do business with in the Hawaiian Islands, and we're tracking 94 that have resort fees. They range from $12 per room, per night to $40 per room, per night, and some have mandatory parking that increases the bill by $35 a day, so all told consumers are paying $75 a day. Think about that: 94 resorts now have them. And it's getting worse. We held focus groups for our sales agents, and we have roughly 65 certified destination-Hawaii specialists. We said, "Come in, tell us what's the good, the bad, the ugly about Hawaii?" We fully expected to hear price was the No. 1 issue. It wasn't. It was resort fees.

But it's a very complicated topic from a hotel standpoint. I can tell you some hotels generate $4 million to $5 million a year from resort fees. It's very lucrative to them. Others have elected not to charge them. But the question we asked our sales agents was, "Do you believe we are losing business as a result of the resort fees in Hawaii?" and the answer was "Yes."

Chan: I can speak for the Starwood group, and for the luxury hotels. We are trying to get out of the resort fees. The St. Regis, for example, and next year, the Luxury Collection. So we're working on that. But it is something that will take time to unwind, because we have been doing this for so many years. We've heard the voice of customers, from Jack [Richards] and everybody, and as a company we need to work on it.

"It’s up to us as experts working with travel agents … to train, to explain, to try to identify the value." -- Jeffrey Lavender
"It’s up to us as experts working with travel agents … to train, to explain, to try to identify the value." -- Jeffrey Lavender Photo Credit: Dave Miyamoto

Jeffrey Lavender, executive vice president and general manager, Travel Impressions & American Express Vacations: Suppliers are dinging customers with fees everywhere. Think about your airline trip, your bag fee, your food fee, your primary boarding fee, now your resort fee, your airport service fee on your rental car. [But] a phrase we have at Travel Impressions — you guys probably know it — is "price is only an issue in the absence of value." Right? So again, it's up to us as experts working with travel agents on behalf of consumers to train, to explain, to try to identify the value. You may have the resort fee here, but I can save it for you here if I do such-and-such with your rental car or take a later flight instead of a morning flight. At the end of the day, I think the travel agent's responsibility is to package it all up, give a full price and explain it well, [but] I don't think [resort] fees are going away. Everyone makes way too much money with them. They're the difference oftentimes between profit and loss.

"In a resort fee, I don’t think there’s a choice, is there? You have to pay it. So that’s a little different than some [other fees]." -- John Caldwell
"In a resort fee, I don’t think there’s a choice, is there? You have to pay it. So that’s a little different than some [other fees]." -- John Caldwell Photo Credit: Dave Miyamoto

John Caldwell, president, MLT Vacations: I think it's a little bit different when you talk about fees in other industries, particularly airlines. If you look at the baggage fee, it was sort of set up to say, "You have a choice: If you want to take a bag downstairs and you want all that extra, you pay for it." But in a resort fee, I don't think there's a choice, is there? You have to pay it. So that's a little different than some of the [fees where] you pick and choose what you want to do.

Jim Palank, director of sales and marketing, Montage Kapalua Bay, Maui: I think I'm going to go out on a limb here and say we do charge a resort charge, but it includes WiFi, it includes shuttles, which go around the Kapalua area all the way up to the Plantation Golf Course, the Bay Gold Course, Merriman's and Sansei [restaurants]. If you fly into the West Maui Airport, shuttle service to and from the resort is included in that. Beach chairs down at Kapalua Bay are included, and then entrance to our spa, Spa Montage. If a nonguest walks into Spa Montage, they'll be charged $55 a day. So I think there are some cases, Jack, where there is some value.

Richards: I'm not debating the value, Jim. I'm saying that I take over a million phone calls a year, and I have to have my people stay on the line an additional one or two minutes per call to describe what's included in that resort fee, and I can tell you we just do not do a very good job articulating it to the travel agents, and then the travel agent says, "Is it commissionable or not?" And we say, "No, it's not."

"There’s quite a bit of new luxury hotel product being developed here on Oahu, like the new Four Seasons and Ritz-Carlton projects." -- Shane Nelson
"There’s quite a bit of new luxury hotel product being developed here on Oahu, like the new Four Seasons and Ritz-Carlton projects." -- Shane Nelson Photo Credit: Dave Miyamoto

Shane Nelson, contributing editor for Hawaii, Travel Weekly: Sean, what's your take on resort fees?

Sean Dee, executive vice president and chief marketing officer, Outrigger Enterprises Group: We're sort of the naive local holdout, [and] we just historically have not charged resort fees for our beachfront properties specifically and for our system. [But] the challenge for us, in a soft ADR [average daily rate] market as our expenses grow pretty dramatically here, is without the fee lever, it's impossible for us to raise wages and salaries for our people, [and] the bulk of our costs are not fuel. Unlike our friends in the airline business, we can't hedge people's lives. So in a full-service model that has real increases in wages and benefits every year and no ADR lift, it's not a profitable business for us. So that's why we're under intense pressure to continue to evaluate the fee structure, [but] to date we have tried to hold out. We'd like to continue to do that, but it's going to be a more difficult equation for us moving forward.

"The challenge for us … is without the fee lever, it’s impossible for us to raise wages and salaries." -- Sean Dee
"The challenge for us … is without the fee lever, it’s impossible for us to raise wages and salaries." -- Sean Dee Photo Credit: Dave Miyamoto

Nelson: There's quite a bit of new luxury hotel product being developed here on Oahu, like the new Four Seasons and Ritz-Carlton projects. Is there a need for more economy and midlevel hotels, not only here but across the state?

Chan: We're kind of pricing ourselves out of the market sometimes. We need to build newer properties that aren't as heavy on the [state's] infrastructure and to take care of those two- and three-star travelers. There is actually quite a lot of newbuild now. There are the Hilton Garden Inns, Courtyard by Marriott, and right now I'm starting to convince our company that we need to look into that category in Hawaii, because we are too much on the high end, and I believe future growth has to be more balanced. [And] for the future growth of our industry, because we have soft international arrivals on the neighbor islands, we need to have more budget hotels on the neighbor islands to take care of the other travelers.

"We’re seeing ADRs [average daily rate] and RevPARs [revenue per available room] that I didn’t think you’d ever see in … Hawaii." -- Jim Palank
"We’re seeing ADRs [average daily rate] and RevPARs [revenue per available room] that I didn’t think you’d ever see in … Hawaii." -- Jim Palank Photo Credit: Dave Miyamoto

Palank: I agree with that, but the one great benefit of the incredible ADRs we're seeing right now is the fact that our customers are seeing Hawaii as a luxury destination, and they are coming here for a reason. We're seeing ADRs and RevPARs [revenue per available room] that I didn't think you'd ever see in the state of Hawaii.

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