Visitors board a tour bus yesterday at Aloha Tower Marketplace.
Photo by Craig T. Kojima, Star-Bulletin

Road is often bumpy
for isle tour bus firms

By Russ Lynch

Tour bus operators say they are happy to get back a bit of the market share held by Gray Line Hawaii Ltd., which abruptly closed down Monday after about 70 years in business.

But they say it is not an easy business to be in and survival depends on strict controls and careful spending.

"This is a business that is incredibly capital intensive and it's also very labor intensive, so it's the worst of both worlds," said Michael Carr, president of Polynesian Adventure Tours.

"We're making good money in this business and providing a nice return to our investors," he said.

"Tourism is good right now. If the hotels are full we'll do well," Carr said, "but you have to be very tough on controlling your expenses. This is elementary."

Carr's company had revenues of over $5 million in 1994, the last year for which figures were filed at the state Public Utilities Commission, and showed an operating profit of nearly $700,000.

And it is far from the biggest. Robert's Hawaii Tours, part of a travel industry mini-conglomerate that has an airline, submarines and cruise vessels, grosses more than $30 million a year from bus operations, according to the PUC figures.

Counting everything it has on wheels, ranging from company cars to limousines to big motor coaches, Robert's has more than 380 vehicles. Fortunately, said company president Robert Iwamoto Jr., many of them are 20 years old or more and paid for and are still churning out revenues. But even that isn't necessarily a plus, he said, because today's tourists and their agents want new, slick equipment. Still, the older fleet does help to balance the books.

Gray Line said one of the main reasons it failed was that it invested in many new state of the art buses over the last couple of years, while the tourism slump continued and it wasn't able to make them pay.

There was a long chain of setbacks too, Gray Line said. The main one was the death of owner Chiaki Matsuo last year. Ownership passed to his family trust and the trustees faced a difficult decision, said attorney Ted Pettit, who has been working on the company's problems for about three months.

The company's business plan, which showed it was possible to return to a profit after a series of losses, required the acquisition of 13 new buses. They cost $300,000 or more each. In the end, the trustees decided against the new equipment, Pettit said yesterday.

The company had been looking for investors but didn't find one. "Up until last weekend, we still thought we could put something together," Pettit said. It didn't happen and the decision was made to close shop and let go the employees, about 250 of them.

Pettit said the company's hopes were built on a growing percentage of what the travel industry calls FIT visitors, free and independent travelers, who make their own arrangements often at travel desks after they have arrived.

The price of a tour to them is higher than it is to participants in a previously arranged group charter, which had been much of Gray Line's businesses.

The luxury Van Hool buses played a part too. They feature on-board video for passengers to get briefings on sights they are about to see and more than half have on-board toilets.

Now Gray Line is trying to find new owners for the buses. Pettit said the feeling is that the majority will go to the mainland.

Gary Line's demise has, at least temporarily, boosted business at other tour bus companies.

"After Gray Line closed, we got all of our ex-clients back so naturally it is good for us," said Iwamoto. He said his company had lost several tour operators to Gray Line because of what he said was price cutting.

"It's a very competitive business. It's a very difficult business to operate, I think one of the most difficult because the margins are very, very small," Iwamoto said.

Meanwhile, the PUC wants to get out of regulating the bus business but Iwamoto wants it to continue so it can control the business.

It hasn't done so to his satisfaction so far, however. "The PUC, with no regard to the financial stress in existing companies, has also allowed other companies to come in," he said.

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