Looking Forward

This is my last message of the year, the century and indeed the millennium, and it seems appropriate to focus not so much on what we as a company have accomplished during the past 53 years, but to make some predictions about the future.

As in the past, both local and remote events will affect Hawaii’s economy and its visitor industry. We might have some influence over what goes on in our state, but in the event of a distant situation, we are often helpless.

I am going to go out on a limb and say that potential Y2K computer issues seem to be under control, and I do not expect any significant issues to arise in our country after the new Waterford crystal ball drops at Times Square 13 days from now. Internationally, there might be some computer problems, but I am optimistic that any disruptions will be handled in a reasonably short period of time.

At the same time, hotel occupancies and job opportunities throughout the state are improving. Statewide numbers from October show that Revenue Per Available Room (RevPAR) increased by 8 percent for the month and 1.2 percent year to date. Those numbers confirm once again the economic impact that the 32,000-person American Dental Association meeting in Waikiki had on the entire state during October.

This trend should roll forward into 2000. The Hawaii Visitors & Convention Bureau reports that the Hawaii Convention Center has firm bookings for 23 meetings averaging 6,000 to 7,000 each during the coming year.

On the continental U.S., the source of 55 percent of Hawaii’s visitors, the economy continues to be strong. The economies in Europe are growing significantly, and there are definite signs of a turnaround in Asia. The value of the yen in relationship to the dollar has strengthened by about 20 percent during the past year, and Japanese visitors are once again buying luxury items in Hawaii’s shops. The economic revival in South Korea also is being felt, and we might host 50,000 visitors from that country this year, double what it was in 1998.

In Waikiki, there are a number of projects planned and in progress which will significantly improve Hawaii’s leading destination resort. The renovation of Kuhio Beach Park and the dredging and beautification of the Ala Wai Canal are just a few of a number of public projects. In the private arena, the new Hilton Kalia Tower will add 453 deluxe rooms, and major retail/entertainment space will be increased through projects planned for the site of the former Canlis restaurant and the Duty Free Shops/Bank of Hawaii area, to mention just a few. The public and private sectors also are joining together to establish a Business Improvement District (BID) for Waikiki. Experiences in New York City, Portland and other areas have shown how a BID can focus resources on an area to significantly upgrade and maintain the streets, sidewalks and parks, with benefits for all involved.

Against this rosy background, we should understand there are several major external threats to Hawaii’s Travel & Tourism economy.

The first is competition. Every major visitor destination in the world_including the cruise line industry_strives to take away market share from Hawaii, and many are succeeding. They are all becoming more sophisticated in the way they develop their destination products and have built fantastic resorts, hotels and activities in many areas of the world. Combine this with better advertising, marketing and pricing, and our customers have been lured away, leaving Hawaii with essentially flat visitor numbers during the past decade. This challenge will continue and might even accelerate.

The second threat comes in the form of congestion of the world’s airlines and air routes. “The skies are crowded and getting more so every day,” United Airlines CEO James Goodwin recently reported to an international aviation conference. The growth projections are “frightening” with a 30 percent increase in traffic predicted during the next 12 years. Airports, such as Narita, San Francisco International and Chicago Ohare, already are at or near capacity, and the process of expanding or finding alternate sites has become unbelievably difficult and expensive. In addition, our nation’s air traffic control system is woefully out-of-date and Europe’s is even worse. Complaints to the U.S. Department of Transportation about airline service doubled in October compared to last year. All of this has the potential to discourage visitors from attempting a perceived long and arduous flight to Hawaii.

The third threat is that of a sudden destabilization of world peace or security. There are many hot spots in the world today, ranging from Chechnya and the Balkans to Indonesia. The possibilities of a local conflict spreading, terrorism or aggression by a rogue dictator are always with us. On rare occasions, this can benefit normally secure Hawaii, but generally, any sort of international incident causes people to immediately stop traveling, just as they did when the invasion of Kuwait turned into the Gulf War.

As we go into the next millennium, we should:

• Rededicate ourselves to renewing and improving Hawaii’s physical plant. There are so many more projects for both the public and private sector to accomplish, particularly in Waikiki. This is going to take a great deal of cooperation and new attitudes by business, government and labor.
  
• Anticipate change. As the world continues to move toward a single, faster-paced economy that is driven by technology, Hawaii will be changed in ways we cannot accurately predict at the moment. Somebody is going to “move our cheese,” and we must be ready to react quickly and decisively.
  
• Continue to improve the revitalization of tourism marketing as recently begun under the direction of the Hawaii Tourism Authority.
  
• Rededicate ourselves to making the visitor experience in Hawaii the best and most memorable in the world. Ideally, every experience from arrival, to check-in, through meals and activities, will be smooth and seamless and reflect the true spirit of aloha and ho’okipa.

Combined, this is a big order, but not insurmountable. If everybody works together during the next millennium–business, government, labor, and the community_we can compete and keep Hawaii the world’s greatest visitor destination for many, many years to come.