Visitor-oriented companies suffer longer wait to recover
Losses mount with the tourist industry on pause
With many Maui County businesses preparing to reopen in June, others, such as companies bolstered by tourism, are having to wait longer to see customers and revenues.
A University of Hawaii Economic Research Organization study released Thursday shows tourism returning to Hawaii in late July in its best-case scenarios and not until late September in its worst-case scenarios.
The most recent state Department of Business, Economic Development and Tourism report, which points to a double-digit economic downturn this year, forecasts the visitor industry won’t start opening until September, possibly recovering 30 percent of arrivals from the same month last year.
When asked recently by The Maui News when he thought tourism might resume given the forecasts between July and September, Maui County Mayor Michael Victorino said “somewhere in the middle.”
Hawaii’s heavy reliance on tourism means that the local economy will lag behind the national pace of recovery, UHERO Executive Director Carl Bonham said in the recent report.
Maui County and other Neighbor Islands, which are even more dependent on visitors, will suffer bigger blows than Oahu when it comes to job losses, several economic reports have said.
Still, Capt. Phil Kasper, co-owner of Boss Frog’s dive shops and boat companies Calypso, Quicksilver and Malolo, was recently preparing his Calypso snorkel boat for when customers do return.
Kasper, who’s been on Maui for more than three decades, had 75 workers with Boss Frog’s and 30 to 40 boat employees before the pandemic hit.
Through the federal financial relief Paycheck Protection Program, he said he was able to bring back Boss Frog’s employees but not boat staffers due to program restrictions.
The PPP doesn’t cover his $20,000 per month in payroll taxes, Kasper said, and the company is having to drain its “meager savings” to participate in the program.
He said the hardships that tourism-reliant businesses are facing include continued or rising overhead expenses, such as maintenance, insurance and employee health coverage, with no income from tourists. Many tourism-related companies are even heading toward insolvency, he added.
“It’s a mistake to view the tourism industry as being the last industry to recover from the lockdown — because the entire economy of the Hawaiian Islands will not recover until the tourism industry recovers,” Kasper said. “We may be the last permitted to open and the last that is able to have our customers return with the reopening, but without the tourism industry, the entire economy is going to be crippled.”
Karen Christenson, Mama’s Fish House vice president and founders’ daughter, said that company officials are watching safety mandates for the travel industry, along with other factors, in determining when to reopen their restaurant and inn.
“We won’t be reopening until we feel it is safe,” she said. “Right now, we are thinking maybe August.”
The iconic tourist destination was forced to lay off 380 employees when the pandemic hit. Christenson said staying closed is difficult because it has a ripple effect on many in the community.
“It’s not just 380 people, it’s 380 families, a whole lot of fishermen and their families, the person who delivers the gas and the beer,” she said. “The extension beyond this is huge.”
West Maui fitness facility Lahaina CrossFit, owned by husband and wife Tom and Janelle Ragusa, said it will reopen to residents soon but will be operating at a loss until visitors return.
More than half of the facility’s income is generated by tourist drop-in memberships and retail sales, according to Janelle Ragusa, who added that the two rely on their small business as their sole source of income.
With new COVID-19 measures in place, the Ragusas will be working more hours but will see less income until tourism returns.
“In order to save the business, we will have to work four times more for 20 percent of the income,” Janelle Ragusa said. “Thank goodness we are so passionate about empowering others by teaching healthy lifestyle.”
Gov. David Ige said Thursday that he plans to extend the mandatory 14-day quarantine for out-of-state travelers beyond June 30.
Bonham said Friday that the 14-day quarantine could still be in place very late in the summer.
But there could be an arrangement “for releasing select visitors from quarantine if we have a travel arrangement with a country with very low case loads similar to Hawaii’s,” he said.
Japan has been mentioned as a possible partner in legislative hearings. Japanese travelers could avoid the 14-day quarantine if they complied with certain provisions, such as being tested before coming to Hawaii and agreeing to use a mobile phone app for monitoring.
The state is currently mulling options to ensure the virus doesn’t reemerge when the travel mandate is relaxed, such as thermal screening at local airports or mandatory COVID-19 testing before traveling to Hawaii.
Despite the state’s effort to suppress travel-related COVID-19 risks during the pandemic, Kasper said fear would have kept visitors from coming to Hawaii anyway.
Recent Hawaii Tourism Authority data show that there were 647 visitors on Maui in April versus 248,042 visitors in the same time frame last year.
The stay-at-home-order for residents and the mandatory quarantine for visitors spurred an “unprecedented plunge” in employment, according to Bonham.
Hawaii’s seasonally adjusted unemployment rate jumped to 22.3 percent in April, up from just 2.4 percent the previous month, as hotels, restaurants and retailers closed amid efforts to curb the spread of the coronavirus, according to the labor department.
Unemployment rates will average more than 20 percent this year in each of the Neighbor Island counties in UHERO’s baseline forecast.
“Although a gradual reopening of the local economy is now underway, tourism will struggle to recover for years to come, and the overall economy will suffer as a result,” Bonham said in the report.
Bonham noted that the point of the UHERO scenarios is to convey that “uncertainty is overwhelming.”
“All you can really do is consider alternative plausible paths for recovery and make decisions based on which scenario you think is most likely,” he said via email.
Kasper said that tourism isn’t just part of Hawaii’s economy — it is Hawaii’s economy. He added that he is confident his companies will recover and eventually thrive.
And despite conversations on overtourism where Maui last year exceeded 3 million visitors for the first time, the issue is no longer pertinent, Kasper said.
“The last thing I’m thinking about is dealing with too many tourists, that’s not at the front of my mind,” he said. “That’s a problem we don’t have, right? Ask me that in a couple of years.”
* The Associated Press contributed to this report. Kehaulani Cerizo can be reached at firstname.lastname@example.org.