MAUI STRUGGLES TO ACCOMMODATE TOURISM GROWTH

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By Harry Eagar

MAUI, Hawaii (The Maui News, Jan. 31) – At the seven Maui Clothing Co. outlets on the west side, 2005 results were at least as good as the average gain for the entire visitor industry, says Patti Niemeyer, the company’s vice president and general manager.

That would be around 5 percent better than 2004, based on statistics released Monday by the Department of Business, Economic Development & Tourism.

According to DBEDT, Maui County welcomed 2,414,381 visitors last year, of whom 150,000 went to Molokai or Lanai (in about equal numbers).

While that is not appreciably higher than the 2.4 million who were counted in 1989, the old numbers included a fair amount of guesswork. Today’s statistics aim to be more reliable.

For the whole state, 2005 is reckoned a record year by a large amount – 7.4 million visitors, the first time the 7 million barrier has been broken; and visitor expenditures of $11.5 billion, up 8.4 percent and also a record.

"Passing the 7 million milestone was a tremendous achievement for our state’s visitor industry," state tourism liaison Marsha Wienert said.

"Let’s put it this way, it’s been a good year," said Rex Johnson, president and chief executive officer of the Hawaii Tourism Authority.

Maui’s 2,263,676 visitors left the island straining to fit them all in. Even if 2006 shows no growth at all – not likely, according to visitor industry experts – it will be even harder this year, because several hundred hotel rooms are scheduled to be demolished to make way for new resorts at Kapalua, Kaanapali and Wailea.

Finding workers to serve the crowds is "a continual battle," says Niemeyer, especially on the housing-short west side, and not just last year.

Maui Clothing has 20 stores, 14 on Maui, and on Maui Niemeyer has about 18 openings in stores and another six to eight at the warehouse.

Nevertheless, "we basically look at last year’s sales" to forecast the next year, she says. So another 5 percent or thereabouts is the new target.

Terryl Vencl, executive director of the Maui Visitors Bureau, says Maui’s growth of 5 percent in arrivals was the lowest rate in the state.

"We all know why," she said. Maui never dipped as low as the other counties after 2001 and bounced back quicker. And for years now, with little expansion in new visitor accommodations, Maui has had less room to grow.

"Hotels last year were running as full as they possibly could," Johnson said. "There were times in the high season where there was no room at the inn and you couldn’t get a room in town. Given that our capacity is not going to grow by leaps and bounds, we are just about where we’re in balance."

Oahu’s visitor numbers rose 6.4 percent in 2005, to 4.8 million. Kauai was up 6.8 percent, to 1.1 million (the first time it has been over 1 million since Hurricane Iniki wrecked the island); and Hawaii island was up 16.1 percent, to 1.5 million.

Molokai was up 3.6 percent, and Lanai visitor numbers grew by 3.3 percent.

Vencl says the key issues to be faced by the visitor industry in 2006 will be finding enough workers and quality of service, "and they’re obviously related to each other."

Craig Anderson, who was chairman of the MVB during 2005, says at his hotel, the Westin Maui, the hunt for workers is "opening opportunities for some people" who might not have considered working in the visitor industry in the past.

There has been a "shift in expectation" from experience to attitude.

"The aloha spirit is really powerful," Anderson says. "You’re either born with it and you have it, or you don’t."

At the Westin, the management approach is that people with the right attitude can and will be trained on the job.

Anderson says infrastructure "is on everybody’s lips" and will present the visitor industry its big challenge this year.

Infrastructure restrictions, which range from roads to housing to parks to water, make it difficult for visitor-oriented businesses to find workers.

But expansion does bring in more revenue, which can be applied to infrastructure. On the whole, says Anderson, a visitor boom "brings more positives than negatives."

For example, in 2004 the transient accommodations tax sent $20 million into the state treasury. The total for 2005 should be substantially higher.

Some of that money is showing up in the governor’s budget to beef up the Department of Land and Natural Resources, says Anderson.

Improvements to parks, for instance, benefit both residents and visitors.

But finding workers is on the minds of everyone in the business.

Hawaii has the lowest unemployment rate in the nation, and Maui County (except Molokai) is lower than the state average. It’s "frightening," says Anderson.

Niemeyer says retail businesses are constantly adjusting and changing. Even during 2005’s prosperity, Maui Clothing shuttered two underperforming stores. That still left it with twice as many as it had just a few years ago.

As the visitor industry shifts in big ways and small, Niemeyer wonders what’s next.

Most of the growth in rooms recently has come in time-share units. "How is that going to change things?" she wonders.

She says she figures "buying patterns would definitely change," but she cannot yet say how.

Maui Clothing is better known by its brands – Maui Waterwear, the biggest seller; Footprints Maui; Aloha Gifts & Galleries; Escape to Maui/Panama Jack’s; and Cruise.

Vencl says there remain soft spots here and there in the Maui visitor industry. Japanese tourism is the big one.

In 2005, total international arrivals on Maui island were unchanged at 260,184, while they were up 6 percent to nearly 2 million on Oahu.

Overall, Oahu outdraws Maui by 2-to-1. Internationally, the ratio is closer to 10-to-1.

There are other soft spots and periods when rooms go empty, says Vencl, though not as soft as they used to be.

Anderson says it is the same if you go property by property. Even though the Westin had a good year, there were periods when rooms were available.

With at least as many people expected this year, but fewer overall rooms, at least toward the end of 2006, that leaves managers free to "yield-manage," says Anderson. That is, raise rates during peak periods.

Barry Wallace, an executive vice president for hotel chain Outrigger Enterprises, said his company, which operates 22 hotels in Hawaii, is one that needs to be more selective in who it markets to.

"Our initiative has been to focus on targeting the very, very best guests – the ones who will take advantage of activities and other amenities we have to offer," he said. "That’s been the focus of our marketing for the last two years, and it certainly will be from this point forward."

Vencl says the overall strength means MVB’s marketing efforts will be directed at "filling in pukas" rather than trying to drive peaks ever higher.

That could mean looking to different metropolitan marketing areas, likely on the East Coast, where airlift is improving.

Because of closed hotels, Vencl says, Maui will be "challenged to show any further growth" in greater numbers of visitors.

"It is up to us to maintain, in the face of ever-growing competition," she says.

The Associated Press contributed to this report.

February 1, 2006

The Maui News: www.mauinews.com

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