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Hilton Hawaiian hit by corporate pullback


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POSTED: Thursday, February 26, 2009

Wells Fargo & Co. abruptly canceled an 11,000-room-night corporate incentive meeting that would have brought millions of dollars in revenue to Hawaii following criticism that such trips are a misuse of taxpayer bailout money.

               

     

 

Slowdown continuing

        Hawaii's visitor arrivals in January fell for the 11th straight month and suffered an eighth straight double-digit percentage decline. Here are the monthly percentage changes in visitors and total arrivals.
       

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
2009
  % Change Arrivals
January-12.5%522,241
2008
December-16.5%563,542
November-15.9%496,877
October-13.5%511,518
September-19.5%461,052
August-17.4%608,392
July-14.1%614,207
June-14.2%580,862
May-7.4%554,399 
April-7.6%548,792
March-1.0%666,167
February+5.9%603,689
January+4.1%597,126
Year total-10.8%6,806,622

        Source: Department of Business, Economic Development and Tourism

       

 

       

The decision from Wells Fargo to cancel its meeting at the Hilton Hawaiian Village comes on the heels of its announcement that it would cancel a pricey Las Vegas casino junket after federal lawmakers scorned the bank following media reports of its planned trip. And, unfortunately, this cancellation could be just the first wave of trouble for Hawaii's lucrative corporate incentive travel market if the current business environment does not change, said Jerry Gibson, vice president and area director for Hilton in Hawaii.

“;In our hotel group, we are on most of the islands; we've lost millions due to government recommendations,”; he said. “;The biggest (is) Wells Fargo recently, but we've also lost LPL (Financial), IBM and Hewlett-Packard.”;

Business travel to Hawaii began falling last year as the recession hit, and has stalled further since government recommendations have urged businesses, especially those who have taken bailouts, to avoid expensive travel. Congress actually scolded American International Group Inc. for spending money on spa treatments shortly after it took $85 billion in taxpayer money, and the company was hit by a torrent of negative publicity.

“;It started with AIG on the mainland, but it's trickled to Hawaii and here we are in this situation where the state is facing tens of millions of dollars in cancellations,”; Gibson said.

Destinations like Hawaii and Las Vegas, which despite their current value are still perceived as luxury getaways to exotic destinations, are now facing mounting cancellations from corporate America, he said. And, other branded hotels in Hawaii like Hyatt, Starwood and Marriott also have lost corporate business along with Hilton, Gibson said.

“;Hawaii has built an industry, and many companies have motivated employees to bring them more business by offering reward trips to places that they deem desirable,”; said David Lewin, general manager of Hyatt Regency Waikiki Beach Resort & Spa. “;Incentive trips aren't paid for by taxpayer dollars, and knee-jerk reactions could bring about disaster.”;

When Hawaii's hotels abruptly lose room nights, the impacts extend to the employees, vendors, suppliers and contractors, Gibson said.

“;We can't make up 11,000 room nights by May,”; he said.

Hilton's inability to fill all the rooms vacated by Wells Fargo will throw a lot of inventory on the market, making it harder for hotels to generate strong price points, Lewin said.

“;With so much available inventory, all hotels are going to have to offer lower rates to compete,”; he said. “;All this screaming and yelling about companies taking care of their people is not good for resorts anywhere.”;

David Carey, president and chief executive of Outrigger Enterprises Group, said that an unintended consequence of the government crackdown on business travel is that it hurts the economy.

“;On the surface, it sounds right to say stop going to exotic travel places and stop spending money; however, they forgot that this money goes back into local communities,”; he said. “;The doorman, the bellman, the cook, the chef and all the other local employees, suppliers and vendors are going to suffer when these businesses don't come to Hawaii.”;

Roger Dow, president and chief executive of the U.S. Travel Association, said there are scores of instances in which the game of “;gotcha”; has forced businesses to cancel legitimate activities that would have grown their bottom lines and generated jobs and economic growth for local communities.

“;Policymakers must realize that meetings and events are the lifeblood of local communities across the country,”; Dow said. “;It is critical to protect legitimate travel spending and the millions of American jobs it creates. Meetings and events are responsible for 15 percent of all travel and create more than $100 billion in spending and $16 billion in tax revenue.”;