Hawaii bouncing back
after tough year

The isles rebounded more quickly
than many other states

By Bruce Dunford
Associated Press

Hard-hit by the immediate impact of Sept. 11, Hawaii has proved to be more resilient than many states in the recovery a year later.

Employment fell but is now up. Bankruptcies surged but are now down. Tourists stopped coming but are now returning. Signs of lingering concern of terrorists are limited to airport security and the gates of military bases.

Democratic Gov. Ben Cayetano credits the islands' distance from ground zero and the fact that a decade of little growth had already toughened the state's economy and the business community.

"I think we're doing OK," Cayetano said when asked how the state has fared in the year since the attacks. He pointed to a 4.5 percent jobless rate in July, compared to 6 percent nationally, but added, "We're not there yet."

Leading Republican gubernatorial candidate Linda Lingle doesn't dispute the state's recovery from the terrorist attacks, but insists the state was in trouble on Sept. 10 -- and still is.

"Our goal has to be to excel beyond where we were before 9/11. I would certainly say we're better than we were right after 9/11," she said.

Unemployment figures alone don't tell the story of an economy that drove 100,000 residents away in the 1990s, she said. A true picture, she said, would "include all the people that left the state because they couldn't find work or because there was unemployment or there just wasn't pay enough to survive."

An increase in personal and businesses bankruptcy filings in the late 1990s declined in 2000 as the state's economy began to recover, only to have Sept. 11 push 2001 filings over 5,000, the third-highest year on record.

Court records showed bankruptcy filings dropping for four straight months this year.

Immediately after the terrorist attacks, the grounding of air traffic for several days shut off the vital flow of tourists who account for a quarter of the state's economy. Waikiki became a virtual ghost town.

The layoff of thousands of workers at hotels with empty rooms and at tourist attractions without customers saw weekly unemployment claims double, sending a shock through the economy.

Even after the Legislature raided various special and revolving funds for $169 million and made $44 million in cuts from the budget in May, state revenues by the June 30 end of the fiscal year dipped $88 million below the anticipated take.

To counter the downturn, the Hawaii Visitors & Convention Bureau launched a $12 million marketing campaign, focusing on the Western states, "our core market for a very long time and deemed likely to respond more quickly after the attacks," said Barbara Okamoto, a vice president of the bureau.

"Our message was to welcome and extend our aloha to the people as you would to a member of your family," she said.

As of last month, Hawaii had regained 98 percent of its visitor count, bolstered by tourists from the Western states who offset a 15 percent slump in Japanese visitors.

The key "visitor days," meaning the total number of visitors times the average days of stay, was up slightly in June over June 2001, although total spending for May, the latest month for which information is available, was off 4.3 percent, according to the Department of Business, Economic Development and Tourism.

It appears that both the domestic and Japanese visitors have changed, said Murray Towill, president of the Hawaii Hotel Association.

"The customer is out looking for bargains and deals and that means a little less spending," he said. "It's a step back from the high-spending customers that had been considered the ideal and whom we had targeted."

The uncertainty in the national economy also sees tourists giving shorter lead times in booking accommodations, making it more difficult for the hotel operators to project employment needs and plan for improvements, Towill said.

Unionized hotel workers, however, contend the hotel owners are using the downturn from the terrorist attacks as an excuse to stonewall demands for rehiring laid-off workers and for not improving contracts now being negotiated.

Members of Local 5 Hotel Employees and Restaurant Employees union have authorized a strike in its negotiations with the Hilton Hawaiian Village and the four Sheraton hotels in Waikiki.

Hotel owners, however, point to statewide hotel occupancy that while up slightly over 2001, see room revenues lagging behind last year.

The governor has a Darwinesque, survival-of-the-fittest theory on why Hawaii's businesses were able to recover more quickly after Sept. 11 than those in some other states.

"I think it's because we have been struggling since 1991 to strengthen our economy," Cayetano said. "It's been a combination of things. One of them is the fact that in the private sector in Hawaii, the weak companies have fallen by the wayside and the companies that are still in business have strengthened themselves by becoming more efficient."

Another factor in the recovery since Sept. 11, Cayetano and others have said, is that Hawaii's waving palm trees, bright sunny days, cooling breezes, clean sands, clear waters and cheerful people are seen as a safe, peaceful getaway for mainlanders reluctant to travel abroad.