Going with the Flow
Smith's Motor Boat Service has navigated the ebb and flow of Kauai's visitor industry for 60 years
Back in the mid-'40s, people thought Walter Smith Sr. was crazy, shuttling people, two or three at a time, up and down the Wailua River in his makeshift tour boat – a small dingy attached to an outboard motor he borrowed from a friend. They thought he was even crazier when, a few years later, he upgraded to bigger boats that could accommodate dozens. "Back then, tourism wasn't a big deal, so people would laugh at him and ask, 'What you doing?' But he didn't care. He kept building bigger boats, until he had ones that could hold 150 people – and there weren't even that many passengers in a month," recalls his grandson, Walter "Kamika" Smith III, who grew up in the family business. "But he had that vision, that tourism would be the industry coming up, so he just kept at it."
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| NEW CAPTAIN: Kamika, who took over Smith's Boats in 2002, has made many changes since then. |
It turns out, Walter was on the money. As visitor arrivals steadily increased, so did the number of passengers on his tours. Over the years, Smith's Motor Boat Service Inc. (or, as the locals call it, Smith's Boats) tours became the Garden Island's largest, most popular visitor attraction, drawing hundreds to the lush, tropical Fern Grotto. But it wasn't just the grotto that people were going to see. Many went to experience the boat tour itself, which featured a lively mix of storytelling, music and local entertainment. "Wailua has so many legends and history that my grandfather loved to share," says Smith. "So he became really known for his storytelling and the entertainment on the boat. And that's a big part of why people would come visit us."
Nearly 60 years since the business was started, that statement still rings true, although the company has since grown even larger, with the expansion of its core product lines. When Walter Sr. passed away in 1970, his son, Walter "Freckles" Smith Jr. took over, adding a luau show and a 30-acre botanical garden tour to its attraction mix. Often dubbed the "Ambassador of Aloha," Freckles simply wanted to share as much of the Hawaiian culture and beauty with the company's guests as possible. Behind the scenes, though, very little changed during Freckles' reign, and he and the family liked it that way. The company made enough to pay its bills and take care of the employees, which is exactly what Walter Sr. had intended. But preserving the status quo meant the company wasn't moving forward, it was merely treading water.
"I think there was a general attitude of 'Things have been going good for 60 years, so why should we change anything?' " explains Kamika, Freckles' eldest son, who took over as general manager of Smith's in 2002, after having worked as an economic development specialist with the county and in various management positions (including sales, event planning and weddings) at the Kauai Marriott. "So when I came back to run the company and presented my ideas to my dad's generation, they were defensive. And that's natural, but it was difficult getting them to buy into those ideas."
Difficult, but worth it. In the three years since Kamika took the reins, he's grown Smith's Boats' annual revenues from $4 million in 2002 to $6 million last year. He anticipates 2005 sales will near $7 million. "I spent a lot of time concentrating on marketing Kauai as a destination and doing tourism promotions and sales, so when I came back to the business, I kind of brought a lot of those things back with me, and I think that has helped us grow the family business," says Kamika.
BUILDING UP THE BACK END
The first thing Kamika did upon taking over was to turn the business back into, well, a business. "We really didn't have a financial system in the past," he explains. "The owners would say that the business was running, so that means it's okay. But they really couldn't see how much money the company was making, so I had to come up with an organized system with a budget and expenditures."
Kamika began by computerizing the company's financials and putting in processes to better manage the company's expenses and revenues. He began holding meetings to discuss the numbers, making sure everyone knew just how much the company was making and exactly where the money was coming in from. Prior to that, there was no distinction made between sales generated at the luau versus the garden or boat tours.
He also began planning major purchases and expenditures in advance, steering the company away from the bad habit of buying things on an as-needed basis. "New speakers for the boats, or new engines, stuff like that, you can foresee and budget for it," says Kamika. "That way you can anticipate it and not have to buy it at full price, which is what we were doing before."
Sonia Topenia, assistant vice president and Lihue branch sales manager at Bank of Hawaii, who worked with the Smith family for many years, puts it this way: "Kamika brought in a lot of outside expertise, so he was able to build better processes. He created a map of where they're at today, where they'll be tomorrow, three months from now and so on. He basically brought a little more structure to the business and modernized what was a very manual, slower-paced company."
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| ALL IN THE OHANA: At Smith's, everyone is treated like family. Front row, left to right: Kamika Smith, "Butter" Defries, Hattie Obrero, Chanel Flores, Kalei Moritsugu, Kona Giminiz. Back row, left to right: Lono McGee, Mano Contrades, Kiilau Fu, Ambrose Smith, Cheryl Paogofie, Hano Vea |
FIXING THE STATE OF AFFAIRS
Although Smith's Boats is a private company, the Fern Grotto is actually a state park, maintained and operated by the parks division. So when the state let the grotto grow unkempt in the early 2000s, Kamika found himself in a precarious situation. "Pathways were cracked, so people were slipping, the rubbish wasn't being collected, and a canopy of trees had grown over the grotto, killing off a lot of the ground cover," says Kamika. "But the state didn't have the money to fix it, and we knew it wasn't going to do us any good to be angry with them."
Instead of making a fuss, Kamika took the opportunity to forge a unique public-private relationship with the state, going so far as to help draft the proposal that brought in $245,000 from the Hawaii Tourism Authority (and ultimately another $50,000 from Kauai County) to fix the grotto. "I just tried to be inclusive, instead of scaring the state away. My father guys' generation was like, 'They're not doing their jobs,' " says Kamika. "Well, if they're not then we need to try to work with them and do our part, because it's our business, too."
Since work on the grotto was completed in September of last year, Smith's has maintained its healthy working relationship with the state. For example, the company lends a hand with some of the park's minor cleanups and upgrades and, in exchange, the state has gotten better about regularly tending to the bigger projects.
"It's unique in that they've got this state facility that's being privately utilized, and so it's quite a juggling act," says Sue Kanoho, executive director of the Kauai Visitors' Bureau and longtime friend of Freckles. "Kamika could've easily said, 'This is a state site, so the state had better keep it up,' but instead he's done a great job of working with the state to make sure it's a win-win for everybody."
TAKING THE MARKET BY STORM
Unlike 10 or 20 years ago, when Smith's Boats was the market dominant visitor attraction on the island, visitors to Kauai are now provided a plethora of activity options, from ziplining to ATV tours. With the increase in competition, Kamika decided marketing, which the company was doing very little of, was no longer an option, but a necessity. "It's not the old days, where there weren't as many things to do on the island. Before, we figured, 'Everybody knows the Fern Grotto, right?' We found out, well, no," he says.
Kamika hired Kauai-based Tsunami Marketing, and together, they devised a simple, yet effective marketing campaign. "[We] partnered with Kamika to clarify and define the qualities that make the Smith's family of products resonate with consumers," explains Valerie Rekward, managing partner of Tsunami Marketing. "The great story was there all along, they just needed a partner to help them package it and retell it in a meaningful way."
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| SWEET HAWAIIAN MELODIES: En route to the Fern Grotto, guests on a Smith's tour boat are treated to a mele of song and dance. |
Tsunami built the company's campaign around its three core businesses: the luau, the tour and the gardens. It created new logos, brochures and taglines, and increased its advertising runs in local visitor publications – all to build brand awareness. But they didn't shoot blindly. They began by paying attention to their customers. After hearing a number of guests admit, "The Fern Grotto's nothing. But we had fun on the boat," Kamika boldy took the emphasis off the grotto and focused marketing efforts on the tour itself. "In the past, the grotto was a big draw," he says. "But now, a lot of people are coming to experience local people doing local Hawaiian music, you don't see too much of that anymore."
Almost immediately, the company realized a return on its marketing investment. The luau, which used to be lucky if it sold out one or two nights each year, began selling out on a regular basis. The boat tours regained popularity with both visitors and locals. And Smith's even saw a renewed interest in the company's wedding service, which had sort of lost momentum after the peak of its popularity in the '70s and '80s.
HARD WORKERS ARE HARD TO KEEP
With the marketing and business plans in order, Kamika is ready to move on to what he says is his next big challenge: employee retention. As the island develops, and bigger, corporate employers (such as Costco and Home Depot) vie for the island's limited supply of workers, Kamika is intent on retaining the 140 people he employs, roughly 20 of whom are immediate family members. "It's tough, because service jobs are hourly, and more and more we're seeing that the wages aren't enough to pay the bills to live on Kauai," says Kamika.
Kamika says the company already offers a pretty generous health package, which provides partial coverage to employees' family members, so he's focusing efforts on increasing wages, better scheduling and stepping up other benefits. Providing matching funds into the company's 401(k) plan, for example. Upon taking over, Kamika began a 100 percent match up to 4 percent of salary, and a 50 percent match on the next 1 percent. Prior to that, there had been no match at all. "Now that the marketing and business side is moving forward, we gotta make sure we take care of the assets," he says. "Because that was always important to my grandfather, to make sure that the business is here to provide for the family."
Although, Kamika says, he isn't even sure whether the next generation is interested in running the business, and it's making him wonder how long Smith's Boats will bear the family name. Over the past year, he's gotten several serious inquiries from Mainland-based investors looking to buy the family business. "My first thought is, 'No way, we can't sell.' But if you don't have the next generation willing to do it, does that mean you're going to have to keep working? I don't know, but so far, we just haven't answered any of the letters," he laughs. "To me, for all the changes we've made here over the years, it's still fundamentally the same business my grandpa started 60 years ago. And along with that, there comes a huge pride in owning a family business. There's nothing like it."
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