Businesses not so optimistic any more
Companies think business will level off after years of gains
Optimism has declined significantly among Hawaii businesses, according to the Business Banking Council's latest survey.
This is despite strong performances reported by the majority of the 432 companies surveyed by QMark Research & Polling during a two-week period in July.
Jean Santos, vice president of Business Consulting Resources, which commissions the twice-a-year surveys, says she can't explain it.
"To me, that's the mystery," she said. "I think it's just erring on the side of caution on the part of the respondents. The general sentiment seems to be that while everything is really strong now, something may occur to cause a shift in the economic trend. We have a community that's been through enough cyclical spins."
The semiannual study attributes the overall sentiment to cautious optimism, a "don't-want-to-jinx-it" syndrome, and a desire not to be overconfident.
Businesses predict performance will level off after the robust results of the last few years. Some 51 percent of those surveyed in the second quarter of this year said they expect business to remain the same.
This is despite 54 percent of those surveyed saying that their gross revenue had increased, with 48 percent reporting that their profits before taxes had gone up. Some 22 percent of businesses polled said they had more employees than a year ago.
When it comes to employee retention, most businesses are promoting internally or offering more job training. Some are increasing incentives to reduce turnover, and others are increasing compensation.
Those in the tourism industry are more bullish about the economy. In a separate survey of 101 tourism-related businesses, the study found that 53 percent expected visitors to increase spending in the coming year.
The industry is also shifting its focus from the Japanese traveler to the U.S. mainland traveler. Of those surveyed, 24.7 percent said sales came from Japanese visitors in 2006, a drop from 32.5 percent in 2004.
Mainland visitors now account for 56.7 percent of sales, according to the study.
While a majority of businesses seem to agree that targeting the affluent visitor is a good idea, few are taking steps to change their level of service.
More than half of the tourism businesses surveyed said they had not increased staff training to target the affluent segment of the market.
Only 26 percent said they provided more value-added service to visitors, 21 percent said they had increased employee training, and 2 percent hired more employees to cater to the affluent visitor.
"The visitor segment hasn't yet clicked into what they want to do or need to do to address the needs of the affluent visitor," said Santos. "I can't help but wonder if that's tied in to the tight labor market and the difficulty in finding quality employees, which makes it harder to do anything."
Respondents to the survey cited the cruise industry as having more impact on their businesses than the time-share industry.
A majority of businesses surveyed -- 59 percent -- said the timeshare industry had no effect on their revenue stream.
More than a third of those surveyed expect to make capital improvements to their business, whether through an expansion of their office space or the acquisition of more goods and services.
An overwhelming 70 percent said they would be interested in a special lending program by a local bank to finance these proposed improvements.