Tourism 2.0

Hawaii’s visitor industry wants to take it to the next level

January, 2005

From New York to Nagasaki, from London to Los Angeles, ladies love Vera Wang. The Big Apple designer is the world’s most sought-after wedding dress designer. So when Halekulani Corp. Chief Operating Officer Peter Shaindlin discussed with his staff how he could make a revamped honeymoon suite at his property stand out, Wang’s name came up again and again. Why not a Vera Wang honeymoon suite, they wondered?

In December 2003, Shaindlin approached Wang, who was receptive to the idea. “We believe that we were able to offer her an opportunity to work with a more independent, one-of-a-kind entity, vs. the idea of a more ubiquitous, homogenized luxury-type of brand,” says Shaindlin. In the end, Wang signed on to design not only the honeymoon suite, but also housewares and furnishings for the suite.

This bridal coup fit perfectly with a broader vision that Shaindlin has undertaken since arriving in September 2003. Other facets include renovations of Lewers Lounge and hiring global cocktail guru Dale DeGroff to revamp the libations offerings for the resort. “The marketplace around us is becoming more competitive. We want to make sure not to become static physically or to rest on our laurels in terms of reputation and acclaim,” he says.

On the other end of the modernization spectrum is the Native Hawaiian Hospitality Association’s web database which offers information online to Oahu visitors and residents about Hawaiian cultural events. It covers everything from free hula festivals to paid tours built around Hawaiian ethnobotany to restaurants serving authentic Hawaiian food. The association hopes to make the Hawaiian part of Hawaii more apparent and available to all, says Peter Apo, head of the organization. “We think that this is an important part of building a sustainable tourism where both locals and visitors can more easily appreciate and experience the unique culture of the islands,” he says.

Shaindlin and Apo are hardly alone in their efforts to modernize what is, by all accounts, a relatively mature product. That’s despite the fact that the visitor industry is back and firing on all cylinders. The state’s Department of Business, Economic Development and Tourism is projecting that, in 2005, a host of key industry metrics will eclipse 2000, the last really good year for tourism. Visitor arrivals will surpass 7 million and total visitor expenditures will hit a whopping $11.3 billion. That compares favorably to the previous record year of 2000, when total arrivals hit 6.9 million, and the top expenditure year, 1995, when visitors spent $11.1 billion. The recovery in Japan is driving more arrivals from the Far East.

Now, the talk has turned to taking Hawaii’s biggest and most important industry to the next level. Call it Tourism 2.0, the quest for a true Hawaii sense of tourism. The location defines the effort to a certain degree. In the urban epicenter of Waikiki, others are thinking along the same lines as Shaindlin. The Marriott installed D.K. Kodama and his Sansei chain into its premiere dining slot. The Royal Hawaiian Shopping Center is moving toward an eagerly anticipated renovation aimed at reopening a window onto the fabled Pink Palace and its lovely coconut grove. Outrigger Resorts Chief Executive Officer David Carey says that the combination of private- and public-sector upgrades in Waikiki has given the area a new lease on life. “We would not be where we are today without those upgrades. It has fundamentally changed the perception of the product,” says Carey, who notes that, for the first time in recent memory, serious Wall Street money is interested in Waikiki.

On the Neighbor Islands, a host of properties have used money from Mainland investors to even more extensively revamp their offerings and target higher value customers. Take the Sheraton Keauhou Resort on the Big Island. The dated property in South Kona has been totally redone, with a nifty new pool, including a cool new fountain section in the keiki area. The resort also hired a noted Hawaii regional cuisine stalwart, Ben Takahashi, to oversee its new signature restaurant, Kai. On Maui, the Ritz Carlton has added cultural evenings, with slack-key guitar luminaries, as well as an ocean view sushi bar.

The lesson? Hotel companies and other top players in the tourism biz are aiming to sell to a more sophisticated, discerning audience that expects more. More hip for Waikiki, more solitude on the Neighbor Islands and more Hawaiian all around. “Visitors are no longer taking a vacation. They want an experience,” says State Tourism Liaison Marsha Wienert.

How to keep improving that experience while simultaneously growing the visitor industry and keeping locals happy has become a matter of great debate. The Hawaii Tourism Authority (HTA) attempted to address these issues in its 10-year tourism plan. Issued in October 2004, the lengthy document lists nine goals, including: maintaining and improving transportation access in and around the state, honoring and perpetuating the Hawaiian culture and community, protecting natural resources and conducting collaborative research to guide tourism programs and policies. HTA plans to measure progress toward these goals through visitor and resident satisfaction surveys as well as through visitor expenditure numbers and state and county tax collections. The biggest challenge for the HTA and Wienert is adding substance to this warm and fuzzy wish list.

Witness natural resources. Many state and county parks are desperately in need of maintenance and upgrades. Filthy bathrooms, overflowing parking lots and eroded trails are the sad norm. That hasn’t stopped the jockeying over who should foot the bill. Environmentalists are telling hoteliers they should dip into the HTA’s pockets to fund improvements. The resort companies say the state and counties should take care of the parks out of general revenues. The Lingle administration has promised to pony up roughly $50 million over the next two years to bring the parks up to speed. The HTA will provide over $1 million to the state Department of Land and Natural Resources annually for parks maintenance, providing that HTA funding isn’t slashed.

That money should help. But big bucks won’t ameliorate even bigger looming conflicts over who gets to use these public spaces. On Maui, the County Council has banned commercial surf schools on nine popular beaches. The state has banned all commercial activity in the Ahihi-Kinau Natural Area Preserve south of Makena on the Valley Isle. On Oahu and the Big Island, conflicts have erupted over commercial activities at popular beaches.

Activity companies and visitor-industry officials worry that these moves smack of localism, particularly with residents crowding public meetings on the topics and cursing the scourge of tourist hordes. Visitors who are paying $400 per night to stay at a top-notch hotel and spending plenty of money during their Hawaii vacations may find the restrictions particularly galling. The activity industry, which expects to tally $1.65 billion in gross sales in 2004, a 10 percent increase from the previous year, is crying out for clarity on how the state and counties plan to handle much-needed changes to licensing and use restrictions, not to mention county level beach bans, says Toni Marie Davis, executive director of the activity vendors trade group A3H.

Where surf schools have drawn fire, long-held but little realized plans for greater inclusion of Native Hawaiian concerns in tourism planning have drawn ire. While the Native Hawaiian Hospitality Association lauded the new plan, others quietly said they would believe it when they see it. True, the HTA board now includes an oft outspoken Native Hawaiian member, kumu hula Frank Kawaika-puokalani Hewett. And the HTA has started to make more overtures by funding disparate Native Hawaiian cultural events. But the general sense in the Hawaiian community remains one of skepticism.

The question of resource allocation is coming into sharper relief on the Neighbor Islands. Witness the plight of Susan Kanoho, the head of the Kauai Visitors Bureau. In early November she got a call from an airline interested in starting new direct flights from the Mainland to Lihue. However, Kanoho had to tell the airline it might not be able to secure landing spots, because Kauai’s small airport was running at near-capacity levels.

At the same time, berths for cruise ships in Nawiliwili Harbor are also pretty much maxed out and Kanoho expects to turn away some foreign vessels in 2005 that want to make port calls on Kauai. The harbor can only handle one big boat at a time, so the cruise ships supplying the monetary lifeblood of the Garden Isle must compete with the cargo vessels supplying much-needed goods and hauling sugar produced on the west side of the island. “We have a limit on how much we can handle and we are pretty close to that right now,” says Kanoho. With visitors only spending nominally more money per day than they did a few years ago, Kauai is looking at a serious brake on growth unless some of these issues are resolved.

The Garden Isle is hardly alone. On Maui, Kahului Harbor can’t handle a cruise ship and a Matson container ship at the same time. On the Big Island, backups on the Queen Kaahumanu Highway can turn the road between the airport and Kailua-Kona into a rush-hour parking lot. A good portion of these infrastructure shortcomings have resulted from rapid economic growth and rising local populations, says Wienert.

“We know that for us to continue to grow the infrastructure challenges have to be addressed. We don’t want to have to deny landing rights to airlines, because we have no gates. We want to make sure our harbors are equipped to handle both cruise ships and cargo ships,” says Wienert. While no one doubts the focus, what remains unclear is whether the new infrastructure will cover everyone’s needs. For example, no money has been allocated to improve Lihue Airport.

Boosting Hawaii’s presence on the Internet is another top priority in the new tourism agenda. The Hawaii Visitors and Convention Bureau and the Neighbor Island branches have all had extensive Web sites for some time. But those sites were clunky, had poor internal search capabilities and often offered information that was either too generic or too out of date. Honing those sites to provide more relevant information has become a top priority. Kanoho and the Kauai Visitor’s Bureau expect to have their revamped site up by the end of this year. “The Web is really starting to play into everything we do. It’s such a key medium for marketing now, particularly for county bureaus that have smaller budgets and can’t afford to buy national spots,” she says.

Reaching out to visitors on the Web is not only good for branding, it’s also increasingly viewed as a way to boost visitor spending. The activity vendors’ group A3H has spent hundreds of thousands of dollars building a Web site and technology platform that can easily feed online reservations to its members who choose to participate in the program. So far, only a few dozen of the organization’s 212 members have signed up to use the booking service. Executive director Davis expects that less than $10 million in activity bookings will happen through the site, but that should grow as more and more of A3H’s members recognize the value of the tool. “These are the best kind of customers. They want to book things ahead of time and they don’t want to pick up the phone. And they tend to even spend more. When they get here it doesn’t hurt as much for them to spend money, because they have already paid for their luau or their helicopter trip,” says Davis.

The visitor industry is also grappling with a far more difficult project, namely, how to inject more Hawaiianess into the typical visit to the Islands. It’s an effort that everyone in the industry is fond of quoting, but one that few can actually define and explain beyond mandating the use of Hawaiian terms and handing out lei. True, more hotels are offering hula lessons and Hawaiian cultural displays have become ubiquitous at high-end properties. However, articulating clear steps toward a truly Hawaiian sense of place remains elusive, yet vital.

This concerns David Cole, the chief executive officer of Maui Land & Pineapple Co., which owns the some of the most valuable tourism real estate in the world in West Maui, including land under the Ritz Carlton Kapalua and the Kapalua Bay Hotel. Says Cole: “You should be able to take off a blindfold and still be able to tell you are in Hawaii. If our resorts are indistinguishable from those in Mexico, we are in trouble.”

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