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Obamas' vacation puts Hawaii's struggling tourism industry in spotlight

ANA SEMUELS  Jan 03, 2010

Between dealing with terrorism threats and crises abroad, President Barack Obama has been unwinding in Hawaii with his family. They've snorkeled in pristine bays and dined in fashionable restaurants. Tourism officials only wish there were thousands more visitors like them.

Tourism is the glue that holds this island state's finances together, keeps its streets clean, its workers paid and its kids educated. But for the past two years, vacationers and corporations alike have abandoned Hawaii in favor of less exotic destinations closer to home. The result is an unprecedented slowdown in the industry and some cavernous cracks in the state's budget.

Hawaii was so short of cash this year that it furloughed teachers and suspended school for 17 Fridays during the academic year, giving it the fewest school days of any U.S. state. Home foreclosures and bankruptcy filings are soaring. The unemployment rate has more than doubled over the past two years to 7 percent. While that's well below the national average of 10 percent, it's a stunner for a place that just a few years ago boasted a jobless rate under 3 percent.

For the first time in a decade, the number of Hawaiians receiving welfare benefits has increased. Crime is up in Oahu this year, even as it fell nationwide. And as if things weren't discouraging enough, an army of rats in Honolulu's China Town is plaguing the already beleaguered restaurant trade.

It's the "worst recession in our lifetimes," said Marcus Oshiro, chairman of the state's House Finance Committee.

The number of visitors to the islands in November fell 17 percent from 2007, and total spending by air visitors for the first 11 months of 2009 decreased $1.3 billion from the same period in 2008.

Tourism officials are hoping that the Obamas' visit can begin to turn that around, with images of sugary beaches and 30-foot waves being beamed back to snowbound mainlanders.

But some Aloha State natives are blaming Obama, a Hawaii native, for at least part of the slump. They say he didn't do them any favors last year when he said companies receiving government bailouts shouldn't be taking trips "to Las Vegas or go down to the Super Bowl." He might as well have said Hawaii.

Lavish conventions and corporate junkets have come under fire since it was revealed that troubled insurer AIG spent $443,000 at the St. Regis Resort in Dana Point, Calif., just days after accepting an $85 billion federal bailout. The backlash has cost luxury destinations such as Hawaii a bundle. More than 100 corporations and associations scrapped Hawaiian business retreats or conferences after Obama's comments, according to Hawaii's Department of Business, Economic Development and Tourism.

"We're losing the group business that's either canceled due to economic reasons or concerns about being seen as a company going to Hawaii," said Keith Vieira, senior vice president and director of operations for Starwood Hotels and Resorts in Hawaii and French Polynesia.

That drop has especially hurt Hawaii's Big Island, which traditionally feels a slowdown first and recovers last compared to Oahu, the most populated island, said Joseph Toy, president of Hawaii tourism research firm Hospitality Advisors. In November, hotel occupancy on the Big Island was a meager 40 percent, he said.

Occupancy at hotels on the Big Island and Kauai fell to 54 percent from 72 percent and to 60 percent from 78 percent, respectively, over the past three years, according to TZ Economics, a local research firm. The overall drop in hotel revenue exceeds $1 billion across the state, according to some estimates.

There's hardly a tourist spot on the planet that hasn't been hurt by the global slowdown. But Hawaii has proven particularly vulnerable. Located 2,900 miles off the West Coast, it's completely dependent on air travelers and cruise ship passengers.

The tourism decline here accelerated in early 2008, as the U.S. economy faltered and employers axed tens of thousands of workers. Suddenly, a tropical vacation became an unthinkable luxury to many consumers.

A number of ritzy hotels are in foreclosure or have changed hands because of financial difficulties. Shops around the upscale areas are feeling the slowdown too. "Usually at Christmas time, you couldn't walk through the mall it was so crowded," said Dion DeBois, who works at a jewelry store at the upscale Kings Shops at Waikoloa Village. "Now, nobody's traveling."

Obamas' vacation puts Hawaii's struggling tourism industry in spotlight
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Source: Los Angeles Times

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