Hawaiian Islands

For planners who are curious about the state of Hawaii's meetings business and the health of the Hawaii Convention Center in Honolulu, there's both good news and bad.

First, the bad news: Full recovery probably won't be possible until sometime in 2003. Thankfully, there's also a double-dose of good news: Hawaii is already staging a strong comeback, and in doing so, 2002 is shaping up as a bargain year for staging a meeting in America's island paradise.

As the Hawaii Visitors and Convention Bureau (HVCB), the Hawaii Convention Center and meetings-dependent hotels and resorts throughout the islands redouble their efforts during the recovery phase, meeting planners can benefit as never before. Costs for meetings, including airfares and accommodations, haven't been this attractive in years.

Hard-Hit Hawaii Bounces Back

Although the meetings industry was slowing down nearly everywhere last year, in Hawaii "after Sept. 11, the business just stopped," admits Sandra Moreno, vice president of meetings, conventions and incentives for the HVCB. For all of 2001, the number of visitors attending corporate meetings fell 20 percent in Hawaii, with convention attendance experiencing a 31 percent dip.

Already this year, however, the numbers are rising. Convention bookings are expected to bring 94,300 attendees to the 50th state this year, compared with just 50,000 in 2001. In March, for example, the National Osteoporosis Foundation's meeting at the Hawaii Convention Center broke all attendance records. Its 1,650 participants surprised even the conference's meeting manager, Michelle Horton, who hadn't anticipated such an upswing following Sept. 11.

"The Center's service and food were outstanding," Horton reports, "Which is to be expected of a world-class venue; but what wasn't expected were the low rates for airfare and accommodations. Air rates to Hawaii are fantastic. Hotel rooms are much more economical than in San Francisco or New York, and freight shipment was easy and reasonable."

While she was pleased with the savings, Horton saves her greatest praise for the ultimate bottom line, reporting: "We've had an extremely productive meeting."

A Painfully Absent Drive Market

At a time when many major convention destinations are turning to neighboring associations and corporations to generate new business, Hawaii had no such luxury. Lacking a drive market, Hawaii was especially hard hit by the events of Sept. 11 and the economic turndown that hit the travel industry like a typhoon. Airlines cut back on flights and routes, and hotels laid off staff. But a turnaround in both areas is clearly underway.

"When you put it down on paper, it [doesn't cost] much more to come to Hawaii than to go to other states, or other parts of the world," points out Bob Moore of Sheraton Starwood Hotels in White Plains, New York. Indeed, this year has seen roundtrip airfares to Hawaii from Dallas starting at $650; $450 from Los Angeles. Airline group sales, zone fares and air-hotel-car packages can lead to even deeper discounts. At least one group of West Coast meeting participants who came to the Convention Center this year was able to cut their airfares down to $250 per ticket, according to center representatives.

Hawaii also remains advantageous as a global meeting site. If an organization's employee or delegate base is spread across the Pacific, Hawaii is the natural, most economical place to meet. As Joe Davis, general manager of the Hawaii Convention Center, notes, "Due to our location, rates from Asia to Honolulu are often less than U.S. mainland-to-Honolulu rates."

But statistics, which have been grim for tourism-dependent Hawaii since Sept. 11, reinforce the prevailing view that a recovery is underway, but not complete. In 2001, Hawaii fell 600,000 visitors below its all-time high of 6.9 million in 2000, a drop that ranks as the largest annual tumble in Hawaii's modern era of tourism.

Island Hopping Gets Complicated

Victims of these economic rough waters included two cruise ships operated by American Classic Voyages. The firm's popular weekly cruises, which attracted small meeting groups, haven't plied the islands since ACV's Oct. 19 bankruptcy. Left afloat, however, is Norwegian Cruise Lines, whose new 2,240-passenger Norwegian Star cruises from its Honolulu port, equipped with meeting rooms for groups who want to see Hawaii's islands in high style.

Hawaii's home-based airlines, Hawaiian and Aloha, have weathered the storm, too, although they had to call off a much-heralded merger earlier this year. These airlines, best known for their inter-island flights, are now leading the recovery by expanding their routes to the mainland and providing added competition to United, American, Delta, and the other big competitors.

At press time, Aloha Airlines plans to add daily nonstop service from Burbank, Calif., to Honolulu starting June 1, and from Vancouver, British Columbia, to Honolulu on June 15; Hawaiian will inaugurate Sacramento and Ontario, Calif., service to Honolulu on June 7, Los Angeles and San Francisco routes to Maui June 15, and daily Phoenix-to-Honolulu runs Oct. 11. Hawaiian already introduced direct flights to Maui from Seattle earlier this year. By midsummer, according to Tony Vericella, president of the HVCB, Hawaii will have "tens of thousands of new airline seats in the market." More seats, more routes and new players generally ensure lower fares, especially in a recovery cycle.

Rooms Remain a Relative Bargain

As air routes expand and airline prices drop, hotels and resorts are following suit. Figures compiled by Hospitality Advisors L.L.C. paint a picture of steady recovery and lower prices. For the first quarter of this year, hotel occupancy—measured at less than 70 percent statewide—was down 8.5 percent from the previous year.

Maui has been performing the best in this sector, achieving 80 percent occupancy by the end of March, while Oahu and the Big Island continue to struggle, with occupancy rates still down by 20 percent.

Room rates have been slashed more steeply as hotels and resorts attempt to lure back customers. Hawaii's room rates are down nearly 20 percent so far this year, with a statewide average of about $155 per unit. With rates considerably lower on every island so far this year, this is the time to shop for bargains.

Appeal Remains Strong

By next year, it may be too late to find a discount in paradise: Hawaii has not lost its appeal. In a recent poll of travel agent and airline groups conducted by the Airline Reporting Corporation, Hawaii dislodged Las Vegas as the No. 1 "up and coming" destination. This year's AOL/Travel & Leisure poll, which ranks 14 major U.S. cities, placed Hawaii as the "runaway favorite" in every "people" category it surveyed, from "best-looking" locals to "friendliest" folks. Hawaii tops the same poll for U.S. hotel "rooms with a view." And an American Express poll conducted six months after Sept. 11 reveals that travelers have been steadily returning since the terrorist attack, with Hawaii regaining its spot as one of the country's most popular destinations.

It's worth noting, too, that Hawaii has decided to pursue, in the words of the HVCB's Vericella, "a much more aggressive path" in attracting meetings groups, with a goal of having meetings-related travel account for one-third of all island visitor spending. (The current figure hovers closer to 15 percent.)

Luckily, the islands seem to be well on track to achieving their goal. Hawaii has been steadily capturing more and more attention from meeting planners in recent years. The Metropoll study, which surveys more 1,500 meetings and convention decision makers every two years, ranked Hawaii 17th in 1997, 11th in 1999 and 2nd in 2001 among America's top convention destinations. This year, Hawaii may be better than ever for meetings, with a bottom line for planners that might never be seen again.