Neighbor Islands

Even after plowing through Sept. 11, neighbor island firms prepare for more industry challenges.

August, 2002

It’s no secret that neighbor island companies pulled through Sept. 11 with few of the battle wounds that still plague their Oahu counterparts. But you won’t see many neighbor island firms resting on their laurels yet.

With the statewide drop in visitor numbers nearly behind them, these firms ready themselves this year to confront more challenges, both new and old.

“We see the market being somewhat affected by the continuing negative [performance of] the stock market and, of course, the latest round of news announcing tightened security at all airports,” says Myles Shibata, chief operations officers for Hyatt Regency Kauai Resort & Spa/Poipu Bay Golf Course.

The company reported 2001 gross sales of $77 million, down 7.2 percent from the year prior. Five of the nine neighbor island resorts that made the Top 250 also experienced declines in gross sales. Even as of this story’s writing in late June, Hyatt Kauai’s occupancy rates hovered at around 70 percent, still down from the more than 80-plus percent occupancy it experienced in the same month last year.

“But everyone in the industry realized that the year 2000 was a surprisingly great year,” Shibata says. “To compare a great year to what happened in 2001 — we already saw softening just going into 2001.”

The president and chief executive officer of Puna Plantation Hawaii Ltd. is just happy the family-run parent company of KTA Super Stores and Waikoloa Village Market managed to stay afloat in 2001. The company actually experienced a 3 percent increase in sales from 2000, with last year’s sales up to $102.3 million.

“Business remained relatively stable, and we kind of think people started to stay home and eat instead of going to restaurants,” says Barry Taniguchi, president and chief executive officer.

The company’s sales increase seems doubly remarkable considering that the 86-year-old firm now competes against the island’s most recent retail arrivals: big boxers Costco, Wal-Mart and Kmart.

“On the west side, when the big boxers opened, we took a big drop in sales, and we’re just starting to recover,” Taniguchi says. “Sales on the west side are still nowhere near what they used to be.”

Despite an overall 33 percent decline in the gross sales of energy-related companies on the Top 250, three neighbor island firms posted increases: Maui Petroleum Inc., Hawaii Petroleum Inc. and MINIT STOP Stores (convenience stores with retail gasoline sales).

All are owned by Maui’s Jim Haynes, who says the three companies operate autonomously. Of the trio, Maui Petroleum saw the largest increase in gross sales. The Kahului marketer of petroleum products for Union 76/TOSCO, Tesoro and Shell reported gross sales of $32.2 million for 2001, up 11.4 percent from $28.9 million the year prior.

“Economies were better on Maui and the Big Island,” says Haynes. “(But) sales dollars is not the whole picture in the industry. There are volume units and gross margin dollars. Our increases in sales are because we had expanded significantly, and that was the fruition of the dividends paid out for that expansion.”

All three of Haynes’ companies will eventually need to deal with the new law allowing the state to set price caps on gasoline. That controversial bill, signed by Gov. Ben Cayetano earlier this year, will go into full effect in 2004.

“You have to let the marketplace determine prices and encourage competition,” Haynes says. “You reduce prices by increasing supply, not through government manipulation. It didn’t work in the ’70s … and this has a recipe for disaster, also.”

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