HONOLULU — Perhaps reflecting the serious challenges to tourism posed by the current economic crisis, Travel Weekly's annual Hawaii Leadership Forum — held May 13 at the newly renovated Royal Hawaiian Hotel in Waikiki — featured a keynote address by the state’s governor for the first time in its 12-year history.
Before an audience of about 200 hoteliers, airline executives, travel agents, tour operators, vacation planners, marketers and state tourism officials, Gov. Linda Lingle stressed the unprecedented nature of the severe economic challenges Hawaii faces today, but she was also quick to point out a variety of obstacles the state's tourism industry has overcome in the past.
"We all went through 9/11, the Gulf War and SARS, and each time it was the tourism industry leaders who used their hard work and innovation to propel the industry to the next level," Lingle said. "Today, we are dealing with the worst global financial crisis since Hawaii’s statehood, and it is your industry that will lead us out once again."
She went on to mention current hotel occupancy lows not seen in Hawaii in more than 20 years, visitor arrival figures that were down 14% in 2008 and visitor expenditure numbers that were down 18% in this year’s first quarter.
Hawaii’s first Republican governor in more than 40 years, Lingle also voiced a great deal of frustration with the state’s Democratic-controlled legislature and its recent successful vote to override her veto of a statewide hotel room tax increase.
Known as the Transitory Accommodations Tax, the current rate of 7.25% a day will increase to 8.25% on July 1 and then 9.25% next July.
"This increase in the hotel room tax is counterproductive to our efforts to market Hawaii as an affordable, value destination," Lingle said. "But we still have positives on our side, including high visitor satisfaction."
The governor discussed her administration’s plans to build on that satisfaction by investing in modernization projects for the state’s airports, harbors and highways while repairing and maintaining state parks, small-boat harbors and hiking trails enjoyed frequently by visitors.
"We don’t want them driving over potholes on their way to hotels, or sitting in traffic, or being disappointed in their experience at the airports," Lingle said of future visitors.
"The worst mistake we can make is to put these projects on hold and wait for the economy to turn around. Every dollar we spend is an investment in the visitor industry and brings us another step closer to our economic recovery."
Packages, specials spur debate
The vast number of specials and packages currently available in the Hawaii market was discussed extensively on both of the forum’s expert panels.
Albert Herrera, vice president of hotels and resorts for Virtuoso, said the strain of limited revenues had put a strain on the relationship between his members and suppliers, and the countless specials now being offered by hoteliers were often forcing agents to work more for less.
"Advisers are working three times as hard to close and hold the sale for approximately 30% less revenue," Herrera said. "It’s because of the way the market is and with people lowering their rates and all the two-for-one specials.
"That’s great for the consumer, but it’s equally hard for the agent, because technically now they are only commissioned for the two nights whereas before it would have been for three," he added. "But on the suppliers’ side it’s equally hard, because they need to do it to be competitive. So it’s a domino effect."
Ken Pomerantz, president and chief marketing officer of MLT Vacations, insisted that if Hawaii properties really want to attract more Midwest and East Coast customers, more aggressive efforts must be made to get specials and packages into the market earlier.
"The hotels in particular in Hawaii haven’t adapted yet to the new demand curve," Pomerantz said. "They are waiting until close in to lower their prices to stimulate demand, and by that point people in the Midwest and the East Coast have already made their plans."
Jack Richards, president and CEO of Pleasant Holidays, agreed that aggressively priced specials and packages were appropriate for the current market, but he also felt that releasing them with an appropriate lead time — more like six to eight weeks — made a great deal more sense.
"It’s not only being aggressive, but it’s putting the rates out there for an extended period of time," Richards said. "I think all of the tour operators on the panel would agree that we are getting just hundreds of specials from hotels not only in Hawaii but all over the world, and the people that are winning the game are the people that are putting their prices in the market for a long period of time."