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HONOLULU – Paul and Motoko Oxman left the relative bustle of Maui to visit neighboring Lanai for two days recently and encountered hardly any other tourists. That was nice for the couple from Singapore, who enjoyed some extra serenity. But for businesses on the island, serenity causes concern.
Gift shops, restaurants and grocery markets in Lanai City – nearly all of which are operated by local residents – are in the midst of a challenging time as Lanai’s two main hotels that feed the island’s economy have been closed for most of this year for renovations.
Larry Ellison, billionaire owner of 98 percent of Lanai, can afford revenue drying up for his resorts on Lanai until they reopen. But for a lot of small businesses, it’s been financially painful.
At restaurant and bar Pele’s Other Garden, owner Barbara Lucas has trimmed her staff to five from as many as 15. Shelves that once displayed liquor bottles are empty. And the typical lunch crowd, which used to be 50 to 60 customers, has dwindled to about 10.
“I’m trying to be positive,” Lucas said. “I’m worried.”
Ellison’s management company on the island, Pulama Lana’i, has made efforts to soften the blow for businesses. Still, some residents are critical of the decision to close the 102-room Four Seasons Resort Lana’i, The Lodge at Koele for construction worker lodging, given that this hotel is within walking distance of Lanai City and provided shops with important visitor income.
“I think it was one bad move to shut down both hotels at one time,” said Stephen Ferguson, owner of Canoes Lanai Restaurant. “I don’t think they realized how fragile the economy is.”
After the Four Seasons Resort Lana’i at Manele Bay closed in June, visitor spending on the island plummeted 81 percent to $1.2 million in July from $6.7 million July 2014, according to Hawaii Tourism Authority data. October spending totaled $1.5 million, down 72 percent from $5.5 million a year earlier.
Most of the lost spending reflects absent revenue flowing to the hotels. But fewer tourists now visit Lanai City businesses that need vacationers.
Brad Bunn, president of the Lanai Chamber of Commerce, noted that even the 2014 spending figures weren’t good. Spending on the island hadn’t rebounded in years following the Great Recession, unlike the state as a whole, which has seen visitor spending set new records this year.
Visitor spending on Lanai totaled $72 million last year. That was down from about $80 million in each of the prior three years and compares with $110 million in 2007. For the first 10 months of this year, visitor spending on Lanai was $42 million.
“Those numbers paint the picture,” Bunn said.
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Lanai not closed
There’s a perception that the island is closed. To counter this, the chamber, representing about 60 businesses, has made efforts to attract day travelers, especially folks using regular scheduled ferry service from Maui.
“We’re trying to get the word out that Lanai is open,” Bunn said. “There’s more than just the resorts.”
Bunn changed up his own business focus from photography and a travel agency under the Two Boldly Go name, and created the website Lost on Lanai to promote events and excursions.
Since the hotels closed, a few retailers in Lanai City have called it quits, including a juice bar, a clothing store and a gift shop. But not everyone’s business is suffering. Hunters are still visiting the island for wild game. And the lack of hotel rooms has increased demand for bed-and-breakfast operators. The 11-room Hotel Lanai, also owned by Ellison, remains open.
Neal Rabaca, owner of Rabaca’s Limousine Service, said that he’s doing all right with customers who include day-trippers and people who own vacation homes on the island.
“I can’t complain,” he said. “It’s not too bad for me.”
Bunn estimates that about 50 visitors are making their way to Lanai daily, down from about 200 before the hotels closed.
A 75 percent drop in potential customers is hard to take, especially given that not everyone coming to the island makes it to Lanai City.
On a recent day, John and Laura Sable, from Pittsburgh, arrived on the ferry just to snorkel at Hulopoe Bay for an afternoon.
“We mainly just like the park,” said John Sable.
Even for day-trippers, getting to the island is more difficult. Island Air, an airline owned by Ellison, eliminated three of five daily round trips to Lanai when the hotels closed. For the two remaining flights, travelers to Honolulu must make a 25-minute stopover on Maui.
‘Ohana by Hawaiian also dialed back its Lanai service. Mokulele Airlines offers only charter flights to Lanai.
Shelly Barfield, a Lanai native who works for the county’s Motor Vehicle and Licensing Division and helps coordinate the TriLanai triathlon, noted that people from the Big Island wanting to visit Lanai have to fly past Lanai to Honolulu first. “That’s like a half-day of travel,” she said.
Participation in the triathlon last month dropped to about 80 from about 130 last year.
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Business stimulation
One event that has been a significant shot in the arm for Lanai’s economy since the hotels closed has been a recurring art, music and food festival dubbed Fifth Friday, which happens only four times a year and involves Lanai City businesses providing prizes and arranging entertainment to attract consumers largely from Maui via ferry.
After the hotels closed, Maui County paid to have one extra boat run for Fifth Fridays, leaving Lanai at 10 p.m. The county also helps pay for entertainment and marketing.
“Fifth Friday is huge for us,” said Lucas.
Pulama also has tried to ease the pain for Lanai City businesses. The company, which owns most of the commercial buildings in town, has given some businesses rent discounts.
Pulama also began arranging for some Lanai City restaurants to provide construction workers with lunch twice a month.
The lunch program began in October. Each Friday, four of the eight restaurants in Lanai City alternate to make 60 box lunches for construction workers. Pulama pays $12 for each of the 240 lunches, which include a drink and dessert.
Lucas is grateful for the business.
“We all need the cash flow,” she said.
Kurt Matsumoto, Pulama’s chief operating officer, said that the biggest contribution the company is making is paying Four Seasons employees, who are the primary consumers for most Lanai City businesses.
Some spending by construction workers also is helping. On one recent evening at Pele’s Other Garden, one worker ordered 12 pizzas. However, such business isn’t typical given that Pulama provides construction workers with three meals a day.
Ferguson said that all the stimulation efforts haven’t offset losses that started when half the lodge was closed last year. He said hotel workers who left the island to work at other Four Seasons hotels triggered a 10 percent loss for his restaurant, while visitors represented 35 to 40 percent. In all, sales are down 60 percent.
Ron McOmber, a retiree who has lived on Lanai for more than four decades, said that, in his view, Ellison could easily do more to mitigate all the economic disruption.
“This guy’s so rich, he could do something about it,”?McOmber said.
Matsumoto recognizes that it’s been a difficult time and said the community effort to sustain local businesses shows that the resilience of Lanai as Ellison works to produce long-term sustainable benefits.
“In the fullness of time, this is a brief moment,” he said.