Looking to appraise the ever-changing state
of tourism in the Aloha State, Travel Weekly invited executives
from airlines, hotels, tour operators and other travel suppliers to
gather with colleagues from government tourism organizations for a
roundtable at the Ala Moana Hotel in Honolulu to discuss travel and
tourism to and among the Islands.
Moderated by Travel
Weekly Editor in Chief Arnie Weissmann and Destinations Editor
Kenneth Kiesnoski, and observed by contributing editor for Hawaii
Allan Seiden, roundtable participants tackled hot topics such as
sustainable growth, affordability, interisland transportation and
competitiveness. In this article, we feature the first half of a
two-part transcription of the roundtable (See "TW roundtable, round 2, tackles growth,
culture," for part 2).
(Editor's note: The original transcript has been edited for
length and flow.)
Travel Weekly:A recent Travel Weekly headline read "Hawaii numbers level
off after years of growth." The ensuing article reported that
Hawaii tourism seems to be doing very well but may have reached a
plateau. Do you agree?
John Monahan, president and CEO, Hawaii Visitors and
Convention Bureau: It's
important to point out that although the total numbers are flat we
are still experiencing record numbers from North America,
particularly from the U.S. West. But we are seeing some softness
from the U.S. cities. From a domestic standpoint we are at record
highs, [but] it's clearly an issue from other parts of the world.
Canada has gotten a little soft recently due to the loss of
Marsha Wienert, tourism liaison, Hawaii Department of
Business, Economic Development and Tourism: The bigger picture is the sustainability of the growth
we had in 2005 and 2006. You really can't sustain those
double-digit increases. John is correct; the U.S. has been
gangbusters. But as we move forward, what you are going to see is a
bit of stabilization in arrivals, especially from the domestic
A lot of the
increases that we saw in '05 and '06 were the direct result of the
cruise industry. So it will be interesting as we move forward when
[Norwegian Cruise Line] does change its ships to another location.
In regards to domestic travel, we'll see some decreases because of
that ship going elsewhere.
last year's roundtable Ms. Wienert said Hawaii expected 400,000
additional leisure arrivals annually due to new cruise ship calls,
so now is a good time perhaps to talk about NCL.
Andy Stuart, executive vice president, sales and marketing,
Norwegian Cruise Line: We
announced our temporary withdrawal of the Pride of Hawaii ... which
comes in February of next year ... but still it will be a very big
business compared to the cruise business just three years
Jay Talwar, vice president of marketing, Hawaii Visitors and
Convention Bureau: This is
actually an opportunity. If you look at ... the infrastructure that
the Islands have, what NCL has been doing to help build demand, but
then one of its ships going away ...plus brand conceptions [and]
demand going forward, it's all extremely positive for the Travel
Weekly audience. Where sustainability or infrastructure had
previously been capped ... there's now an opportunity there for the
travel agent community to come in and fill that out.
Rob Solomon, senior vice president, sales and marketing,
Outrigger/Ohana Hotels and Resorts: There are other numbers we don't track as frequently as we
do visitor arrivals -- the spending numbers -- but they are very
important to sustainability and for economic health and the future
of the industry.
One is net capital
results. If you [look] back even five years you couldn't finance
the kind of private expansion that we have going on in Hawaii
today. It's mostly not investment underwritten by Hawaii financial
institutions [but] capital markets from around the world voting
with their pocketbooks. They are endorsing the future of the
industry, whether it's cruise ships, air capacity, or hotel and
hospitality developments. We are talking about projects from $50
million to well over $500 million.
What does that mean
for the distribution system? Years and years of good news. We
should be measuring it more systematically because it's absolutely
a leading indicator of our future.
David Banmiller, president and CEO, Aloha
Airlines: We've been working
with United Airlines for a number of years as a codeshare partner.
United flies a lot of places, but we happen to be in the right
place, strategically located in the Pacific. [Editor's note: United
and Aloha in May announced plans to expand the partnership, giving
United a minority stake in Aloha and a seat on its board of
directors.] It really makes sense. I do not think United would do
this if they didn't have the same optimism I do.
TW:Hawaii will grow, but is it a sustainable and
environmentally conscious growth? And what's going on with
infrastructure improvements, apart from new hotel
Wienert: With all of our
projects ... we are going to be putting in some renewable-energy
types of things, ecofriendly generation of electricity from solar
power, for example. Overall airport improvements are moving
forward; Maui will be opening up a new ticket gate and ticket
counters and in-line EDS at the end of July, and the parking
structure will start construction this summer in Honolulu, where
jetways for most part have been all redone and replaced. We are
starting on a master plan for Kona [airport], which is an exciting
one and one that definitely needs the attention.
As we move forward
[we need] to make sure that public facilities meet the demands of
our residents as well as our visitors, providing an experience that
they want and expect [and] allowing us to get people to and from
places in a timely manner.
we touch on the "upscaling" phenomenon in hospitality? What's the
landscape in terms of products and offers? Is it all going to be
sort of high-end, luxury? Is it quality vs.
Solomon: It's important
to do the math when we talk about this. If you analyze it, maybe
the bottom 15% or 20% of the market doesn't exist anymore. It's
like retiring old airplanes, restaurants or cruise ships. When you
take out that 20% of your revenue mix, it has a lot of leverage on
the average rate you are earning. Historically, that bottom 15% to
20% is where you have the least visitor satisfaction. So nobody
really misses it when you take that inventory out; but
mathematically it has a big effect.
At the top end, it
definitely is a better return on investment to build a better
product. What you can't measure when you just measure the room rate
is what the quality factor of the experience is. For all the
emphasis on Oahu, Maui's average room rate is $99 a night higher.
And occupancy is higher, as well; so obviously the higher rates are
killing Maui. [Laughter.]
is this upscaling effecting tour operator sales?
Brian Robb, chief of staff, the Mark Travel
Corp.: We are not, as a group, I
believe, doing as well with the destination, as our numbers are
shrinking a little bit. When I look ... at statistics I'm seeing
fewer people [booking through agents], and the traditional tour
operators are fairly dependent on those travel agents. That is
impacting us. We're changing our business to be more of a
consumer-direct experience. ... This higher-priced product, with
enough demand, is good for us, actually.
Wienert: Currently we're
sitting at 65% repeat visitors. What we've started noticing [as of
the] first quarter last year was those visitors coming to stay in
what we'd call our commissionable hotels is declining. Where we are
seeing an increase in regards to accommodations is in condo,
timeshare and cruise. How much does that high 65% repeat rate have
to do with [travelers] maybe going around the agent and booking
direct or online?
Robb: [It is] definitely
indicative of people's comfort level of booking direct and booking
online. They may have always booked direct, but now online booking
is far more convenient and provides more information to make a
decision. But a lot of people booking online are booking with an
agent. There are a lot of agents who are both online and offline.
But traditional agents are seeing smaller revenue in every
Stuart: We still see
about 90% of our business coming through travel agents, and very
strong agents specializing in cruises or the destination. We get a
lot of first-time visitors and cruisers to Hawaii. And I think the
customer [who is] not so experienced in Hawaii or cruising has a
need for a travel agent to help them through the decision
Banmiller: We have a lot
of frequent flyers, guys who come over once a month. These people
have condos and come much more than the average person would
Aloha Airlines doing any packaging on its Web site yet in terms of
going direct and having people put together vacations online with
Banmiller: Yes we have
traditional hotel, car and packages. Our Web site bookings are up
where you expect because all the airlines are seeing that
TW:Hawaii Superferry is about to enter local waters. What's the
game plan? Is it reaching out to the trade and
John Garibaldi, CEO, Hawaii Superferry:
Initially Hawaii Superferry will be a great
opportunity for residents; it will be very complementary to
existing transport. Our first vessel will be starting service this
summer. We have a second vessel under construction, but with just
one vessel servicing Maui and Kauai ... there's limited frequency,
and I think that doesn't give tourists many opportunities. But as
we build our fleet, we see being a good option for tourists to look
at Hawaii from another perspective. NCL has done a wonderful job
exposing Hawaii as a maritime environment; I think we will now
stimulate a lot of traffic and will be complementary to the
Wienert: It's a means of
transportation, but it's also an experience. It will allow visitors
to see the Islands much like a cruise visitor, but they don't spend
the whole seven days on the ship; they'll spend three hours going
to one of the Neighbor Islands.
TW:We've been talking about moving people off Oahu entirely.
But what's the scenario in terms of getting people out of Waikiki
and onto the rest of Oahu?
Les Enderton, director, Oahu Visitors
Bureau: Waikiki remains the
focal point for our visitors, but we do market Oahu's North Shore
and the windward side; we've been doing this for some time with our
Oahu destination specialist travel agent training [and] with our
We did research
[and] found that people don't think of Waikiki just as this very
small area, 1.5 square miles, but [as] the island. If you look at
our length of stay from North America, people ... are getting out
and seeing [Oahu] from a home base in Waikiki. So I think our
marketing has been positive, and the reaction from our visitor
satisfaction surveys have been very positive, as well.
there any interest in developing a new destination somewhere on
Oahu to give people a second, Waikiki-like option?
Solomon: I think I read
that in Haleiwa [on Oahu's North Shore] they've had about 2 million
[visitors]; the numbers are incredible. And 20 years from now they
may have a sidewalk. [Laughter.] I remember
when they built the [highway] cutoff out there. The community was
worried that when they changed the route of the main road ... this
little town would be cut off and just wither and die. But that
hasn't happened. People seek it out, and that's part of the charm
of the place: It doesn't have sidewalks.
TW:There are debates going on as to whether the level of
development across the Islands is acceptable. Do you think there's
a specific point that's the ultimate limit?
Monahan: Clearly the cap
on visitors to the Islands is the number of hotel rooms. [Inventory
is] not growing rapidly; we had 82% average occupancy last year. To
combat that, the Hawaii Tourism Authority strategy has been [to
target] visitors with the propensity to engage in the destination
and allow us to grow expenditures. So far that's worked. That is
not a great long-term strategy.
At some point we'll
have to have some discussions about more [hotel] units. And if
we're able to get over that hurdle and agree that new visitor units
can be built, we'll have infrastructure issues.
determine the number of units. There are discussions going on
[statewide] in regards to where visitor units should be located --
if new ones are built.
contact Destinations editor Kenneth Kiesnoski, send e-mail to [email protected].
For more on Travel Weekly's Hawaii Leadership Forum and
Roundtable, see "TW's Hawaii Leadership Forum stresses singularity,