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Hawaii’s visitor industry anticipates long-awaited recovery of business-travel segment.

June, 2002

The visitor industry has its fingers crossed. If recent economic forecasts are correct, Hawaii should finally see a much-needed recovery in business travel to the state.

Signs of improvement early this year have helped ease apprehension among businesses, from incentive houses to destination management companies. “The U.S. economy had been slowing down from the beginning of last year, and there had been much more caution about planning meetings,” says Pearl Imada Iboshi, state economist for the Department of Business, Economic Development & Tourism.

“With the improvements in the U.S. economy and the strong growth we’ve seen in the first quarter of this year, we should see things start to pick up.”

More than four out of 10 business travelers plan to take more business trips in the coming year, compared with 22 percent who expect to take fewer trips, according to the 2002 National Travel Monitor, an annual survey co-authored by marketing firms Yesawich, Pepperdine & Brown and Yankelovich Partners.

About 414,669 visitors came to Hawaii last year for corporate meetings, conventions and incentives (MCI), down almost 28 percent from 2000, according to the DBEDT.

“The greatest challenge was that 9-11 resulted in a lost booking window of several months,” says Karen Hughes, Hawaii regional director of sales and marketing for Starwood Hotels & Resorts Inc. “That impacted all of 2002 and some future businesses, as well.” Cutbacks in company budgets top the list of reasons for reduction in corporate travel.

“Travel expenses are always examined carefully by firms in downtimes,” says Pauline Sheldon, interim dean of the School of Travel Industry Management at the University of Hawaii. “Leisure travel is bouncing back more because there are more attractive pricing offers for leisure travelers, and there is also a pent-up demand. I believe that after 9-11, businesses got by without traveling — canceled meetings or found other innovative ways of getting the job done — and so the pent-up demand is not there.”

Other deterrents include concern over increased airport security and the availability of alternatives to face-to-face meetings, such as teleconferencing.

One upside: Many Hawaii companies have reported picking up bookings from U.S. mainland companies — specifically on the East Coast — that, prior to Sept. 11, had planned meetings overseas. For most companies, though, that boon didn’t offset the loss of other MCI bookings.

Destination management company Weil & Associates Inc. is another story. “In 2002, we’ll end up with about 150 bookings, and that’s 20 percent over what we had anticipated,” President Debbie Weil-Manuma says. “That’s attributed to groups that would’ve been going to European destinations but, because of 9-11, were looking for somewhere close or a safe haven.”

Other visitor industry segments launched marketing campaigns in the hopes of spurring business travel. Starwood, which relies on MCI travelers for 15 percent of its Hawaii business, offered in March two free weekend nights after a five-day stay. It’s also beefed up its preferred-planner program, offering members who booked in 2002 triple the usual number of awarded points, which can later be redeemed for room nights and gift certificates.

“We’ve been negotiating very strongly for 2002 between rates and complimentary rooms and whatever it takes, basically, for oh-two, within reason,” Hughes says.

Attracting corporate travelers isn’t the only aspect of the industry that’s become tougher for companies. Corporations’ enduring uncertainty about the economy has meant shorter-term bookings as well as smaller-scale arrangements.

Hughes says one business group waited until late April to make arrangements for this month.

“As a whole, companies are still a little hesitant to sign on the dotted line for future years, so they are holding off until they’re much closer in,” she says.

Weil says MCI arrangements are often much more low-key than in previous years.

“Say you’re doing a production with 4,000 people, and you’ve got Kenny Loggins for your final night entertainment,” she says. “All of a sudden, you go from 4,000 people to 2,000 people, with each person supposedly paying a registration fee. If you’re collecting $800 from 2,000 people versus $800 from 4,000, that’s a big spread. Some of them have been forced to make changes based on attendance.”

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