Rex D. Johnson, President and CEO, Hawaii Tourism Authority
Amid concerns about the shutdowns of Aloha Airlines and ATA, rising fuel costs and would-be travelers feeling the pinch of a nationwide economic slowdown, we checked in with Hawaii Tourism Authority president and CEO Rex Johnson for his thoughts on the state’s visitor industry outlook.
Photo by Olivier Koning
Q: How do you expect the closures of Aloha and ATA, and possible airline mergers down the road, to affect Hawaii’s visitor industry?
A: Let’s start with ATA and Aloha. [That’s] a huge effect — over a million seats out of this market. In general, that will bring us back to about 2004 levels in terms of air seats available … There will be some short-term fill-in from some of those locations that were affected by the closures [such as Hawaiian going into the Oakland market] but certainly not anything near what the loss of air seats has been.
In general, the airline industry has been going through the most tumultuous time since after World War II. We really don’t know what the effects are going to be of consolidation, nor do we know if they are ever going to get to that consolidation point. … You could end up with three major airlines a couple of years down the road, and you can’t imagine that that would be good, not only for Hawaii, but for travel in general … [The airlines] will now be in a position where they will no longer argue over market share. They will have to argue over yield. They cannot any longer afford to sell their product for less than it cost them to produce it … The bottom line is air travel — or travel to your grocery store — is going to get more expensive.
Q: What does that mean for the kind of travelers who will come to Hawaii?
A: I think that with the cost of travel going up, that there will be more affluent travelers going to every destination. And those who cannot afford it — we’re not just talking about Hawaii, we’re talking about anyplace — will stay home.
Q: How will rising airfares affect hotels?
A: I don’t think we know at this time. People are going to look at the overall price of a package and it doesn’t matter which hunk of it is taking up a lot of it. You’re still going to find some place at the top end of it where there will be price resistance. Fortunately, Hawaii has the reputation of being, if not the, then one of the premiere leisure destinations on the globe. We’ve been marketing for 50 years to try to achieve that. So as long as demand remains strong, we will hopefully be able to compete. But what it means is having demand remain strong.
Q: How is that done?
A: You have to continue to improve, reinvent and reinvigorate the overall product. And that’s what will keep you, as a destination, a place in demand.
Q: Given the rising cost of travel, is there anything the visitor industry can do to make Hawaii more attractive as a destination?
A: Right now there is room availability; there is air seat availability. A couple of years ago there was no room availability … So some of the hotels are offering value-added programs [like] an extra day for free – not only here, but you’re seeing it all over … You have gone from the inability of the wholesalers to block rooms back in ’06 to operating at lesser occupancy levels so there are going to be rooms available.
Q: Is the weak dollar a bright spot amid the problems with airlines, high fuel prices and a weak national economy?
A: It’s a double-edged sword. But the dollar being weak should help in the importation of tourists, or visitors, from the remainder of the world. Not just Japan, but Europe and Canada and so on. Now, the bad side is you can’t buy anything with it, because if I go to market in Japan … your buying power is down.
Q: Are there any hopes and fears about the airline turmoil?
A: We’re just hopeful that as an industry [the airline industry] is able to survive in something like the form we know it in today. And I think that’s not just a Hawaii thing. That’s America … What you want is stability, in any industry, but particularly in the airline industry.
Q: So the best hope for the situation would be for there to be a quick resolution?
A: These are not simple questions. We’d like to have quick resolutions to what the United States is going to go through as far as the economy, and that will have a lot to do with what happens in the airline industry, which will have a lot to do with the visitor industry overall.
But just like we’ve been on such a wonderful roll for the last three years, there is a lot of market correction going on right now. And again, that goes all the way from consumer goods to houses to the whole economy.
Q: Whenever there is a boom economy, people make a lot of plans or initiatives they want to get done. How does that list of plans compare to what HTA has been able to get done?
A: I think we made some real progress in the culture side of the equation. We made some real progress during these boom times in the workforce development side of the equation, the natural resources side of the equation, and a lot of those, for lack of a better term, “other than marketing” sides of the equation. I think if you look at it from a budgetary standpoint, we made great progress in a lot of these things.
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