Wednesday, September 12, 2001

America Attacked

Isle experts see
tourism suffering

Hawaii's reliance on mainland
and Japan visitors most likely
will hurt the local economy

By Tim Ruel and Russ Lynch |

Yesterday's deadly terrorist attacks on American soil exposed the vulnerability of the United States and will worsen an already negative outlook for tourism, Hawaii's chief industry, experts said.

The impact will stretch beyond mere inconvenience for visitors trapped in the islands for the time being. The disaster is similar to the 1991 Gulf War, which has long been heralded as a symbol of Hawaii's economic fall from grace after visitor arrivals dipped nearly 10 percent in a few years.

Some observers said it's too early to predict the long-term economic outcome of yesterday's onslaught. There has been no formal declaration of war, and it is not clear what security changes will take place at the world's airports. But all experts said the travel industry this year has taken a horrible turn for the worse.

"There's definitely going to be an effect, and it's definitely going to be monumental," said Gloria Keller, a consultant at HNL Travel Associates. "It's been slow anyway."

Total visitor arrivals to Hawaii have fallen 1.5 percent in the first seven months of this year, to 4.05 million people from 4.11 million during record-high 2000. The problem is the bulk of Hawaii's tourists are from the mainland and Japan, which are already suffering economic downturns. The two nations also rely heavily on feelings of security for travel, said Chuck Gee, former dean of the Travel Industry Management school of the University of Hawaii.

"We always thought of it as Fortress America," Gee said. "Americans and Japanese are the first groups to usually stop going to a destination that they sense is going to be insecure."

Being an island in the middle of the Pacific, accessible only by sea and sky, makes the situation more severe. "It makes us more isolated," said David McClain, dean of the UH College of Business Administration.

Gee predicts visitor arrivals to Hawaii could fall by 10 percent to 20 percent during the next few months, affecting the Christmas season, the state's most important travel period.

Many eyes are on the Japanese, who out of respect don't like to travel to a country that is dealing with a catastrophe, said Sharon Weiner, group vice president of administration at DFS Hawaii, a large local retailer that caters heavily to Japanese. "Not only the Japanese, but people all over the world are just plain horrified by this," said Gilbert Kimura, Hawaii regional sales manager for Japan Airlines Inc.

Kimura, who is also a board member of the state's Hawaii Tourism Authority, said he expects a significant worsening in Japanese travel to Hawaii.

Total international arrivals to Hawaii were down 2 percent for the first seven months of this year, with 1.41 million tourists arriving from overseas compared with 1.44 million in the same period last year. The bulk of Hawaii's international visitors are from Japan. International arrivals to Hawaii peaked in 1996 at 2.9 million people, a number that has since fallen 13.8 percent to 2.5 million last year, largely the fallout of the Asian financial crisis of 1997.

Japan Airlines averages 11 Japan-Hawaii flights a day. Yesterday seven were turned back. Two went to Kona, one of which had been scheduled as a Honolulu flight, and the other two came into Honolulu as scheduled. "I think the fact that several planes were turned back to Japan is going to have a lot of people talking," Gee said.

Late yesterday JTB Corp., Japan's biggest travel agency, said it has canceled all packed tours to Hawaii, Guam and the mainland through Friday.

The effect of yesterday's painful assault on thousands of lives could be equally bad for mainland U.S. visits to Hawaii, and even more immediate. The vacation-planning window for tourists from the mainland can be just weeks, Gee said.

Maui and Kauai, which rely heavily on mainland visitors, could be in real trouble, said Hawaii Pacific University economics professor Leroy Laney.

Experts differ on the larger effect of a drop in tourism on the local economy. Ernie Watari sees the potential of a negative "ripple effect," where a further decline in visitor spending would lead major travel agencies and airlines to cut back on the number of trips to Hawaii. Watari is the chief executive of accounting firm PKF-Hawaii, which does a monthly survey of Hawaii hotel occupancy.

In turn, he said, local hotels, retailers and visitor attractions would have to lay off staff, cutting overall consumer spending. Any spending decrease hurts business in general.

"Our economy is just not sufficiently diversified," Gee said. There are no other major industries besides agriculture and the military.

"My worry is that it's going to be like another Gulf War," said Mitch D'Olier, president of Victoria Ward Ltd., the landlord of the Ward retail and entertainment complex.

But Laney cautioned about drawing parallels with the period after the Gulf War, which he said was more symbolic of Hawaii's bigger troubles, including the collapse of the Japanese bubble economy, the failure of sugar and the state's maturity as a visitor destination.

Most observers were reluctant to predict the long-term effect on tourism. A big question is how airports will treat passengers in their efforts to increase security, they say.

Airport security is a tightrope, Gee said. Beef it up too much, and people won't like the hassle. Make it too easy, and people will be afraid.

Star-Bulletin reporter Lyn Danninger
contributed to this report.

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