Thoughts on the Hawaiian Economy

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Permalink Reply by Hawaii Web Group LLC on November 23, 2008 at 7:32pm

It's true, things are ugly. But instead of selling everything you own and running for the mainland, keep in mind that it's ugly everywhere. Hawaii is a unique location, being isolated by huge distances of water. This makes for everything costing more due to shipping. Though, I often speculate that these prices are overinflated using shipping as an excuse.

The Bottom Line: Hawaii's tourism industry can run successfully with lower costs and cut profits. This downturn in the economy is proving this. Those who have unnecessarily high overhead will suffer. Those that are prepared (as everyone should be for this time of year anyway) will survive.

The downturn has positive and negative impacts on our Hawaii economy:

-Negative-------------------

Tourists will look towards less expensive vacation destinations, closer to home. Places in Central and South America will see more of our regular visitors. Though, the reason so many people come to Hawaii again and again is because of the safety and reliability we offer. Hawaii has gorgeous weather almost always, and being a part of the United States makes it easy and safe to visit.

Our Government makes some piss-poor decisions. Closing Transient Vacation Rentals from offering vacation rentals on Maui was a weak thing to do. Many areas on Maui don't have hotels which makes it near impossible now to stay at. These decisions have cost our economy dearly, despite the downturn, and are obviously influenced by hurting resorts and hotels. The loss of these vacation rentals has hurt everyone across the board. Another genius move to hurt our economy came from the disapproval of permitting to the Lahaina Action Committee, known for their organization of Halloween in Lahaina. This year was by far the worst in many due to the streets not being closed off to cars. The crowds were down, though the fun was still there. These types of decisions hurt local businesses that thrive on this safe and successful event. Hopefully next year, we'll see a change in heart by the misguided Cultural Resources Committee. Another poor decision most likely coming from resorts pressuring government was with the closure of Kaanapali Beach to beach weddings. This is a huge beach, and these weddings don't encroach on anyone's good times.

-Positive--------------------

- The dollar is relatively weak, pulling in new visitors from places in the world with stronger currencies.

- Tourists are able to come to Hawaii and experience less crowds, quiet beaches, and big discounts.

- Overdevelopment will slow down. We already have too many hotels and resorts for how many people visit our islands. With overdevelopment comes stretched resources. We don't have enough to go around. Water, electricity, food, etc... These are all commodities that are overlooked when big resorts are given the green light. It's quite obvious that these plans are approved with the immediate mighty buck in mind, rather than logic and future impact. Overdevelopment has negative implications for our economy, resources, as well as our environment.

- Poorly managed businesses will die. Economic darwinism is good for overall business. For too long have our islands been picked apart by bad businesses trying to make an easy buck. The increased competition in all fields has brought prices down and caused our visitors to get less quality in each product out of necessity. Now that we'll be seeing less businesses survive, the strongest products will have a chance to become stronger.

If our economy continues to see a downturn, Hawaii will survive. We've done it before. It's a natural cleansing process. The problem with human thinking is that we tend to think too short term. When the economy takes a dump, we feel like it's the first time ever! And our drama-hungry press helps amplify these feelings. True, we all need to tighten our belts where we can handle it, but we also need to grow our businesses in areas that are profitable and have untapped potential. Those with the insight to tackle emerging markets will benefit during this downturn. I personally know of many businesses that are having the best months of their financial lives right now. For visitors, take advantage of discounted rooms, great prices on food, the many cheap or free activities available, and the low occupancy that keeps our beaches desolate and lines short to nonexistent. For Hawaii Business, this is your chance to find out where you're wasting money and to get the upperhand on your competition. Take advantage of resources that have been ignored for too long.

Stay Positive! Aloha!

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Permalink Reply by Todd on December 4, 2008 at 11:09am

Hi,
There has been several articles in recent days in the Star-Bulletin about home and condo sales in Oahu and the rest of the islands. In the month of November,out of 186 condos for sale on the North Shore of Kauai,only one sold. In Oahu, homes sales fell 34% and 47% for condo's compared to this same time last year. The number of days a property was on the market last year was 57 days. This year it have almost tripled that and Hawaii hasn't seen numbers like that since 1999.
Well,this opens my options for a better place or more bang for my buck. I've been in the market for a condo in Waikiki and I see the inventory getting larger but the prices don't seem to have come down much yet.

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Permalink Reply by Hawaii Web Group LLC on December 5, 2008 at 9:57am

Good time to buy, if you've got the dough. I'd wait another 4-6 months to see if prices drop. I wouldn't wait any longer than that though.

Hawaii locals are going to be hit pretty hard (and already are.) This economy is ugly, but we've seen it before. If anyone thinks people are going to stop visiting Hawaii, as well as not want to live here, they're dead wrong. We'll see numbers dwindle over the next year or so, but we'll still thrive. As I said, financial darwinism will clean up the crappy businesses (and crappy employees) and leave the best and brightest to reap the rewards. For those of you living and working in Hawaii, it's time to start working a little harder, a little smarter, and uh... start to show up. On time? That's a little too much to ask. So long as you show up, you'll be ahead of the curve.

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Permalink Reply by Hawaii Web Group LLC on December 5, 2008 at 11:09am

By the way, this was written in a joking manner. Please don't take this as an angry, upset message. I just find it humorous that local time is always at least 15-30 minutes behind the rest of the world. Funny stuff.

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Permalink Reply by Todd on December 29, 2008 at 8:21am

I've been shopping for condos in Waikiki and the really good deals are starting to pop up now. Many ads for condos are the same ads from when they put them up for sell months ago. So shopping carefully is the word,lol.

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Permalink Reply by Hawaii Web Group LLC on January 17, 2009 at 4:34pm

10 Steps for Hawaii Business Success in a Down Economy

This is a pretty good article for those that are worried about their businesses. Everyone is struggling, and in order to survive, we need to change and adjust to our new economy. Hope some of you get a little out of it.

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Permalink Reply by Todd on January 18, 2009 at 1:48am

Hi Chris,
We've both talked about this before and it's a really good business statement for everyone to read. Everything is so true in this and more. One way to measure your own business is to look at everyone elses and then make adjustments. See what they are doing right or doing wrong. You can't do this if you become part of the drama. The world is changing and you must change with it. Learning to be clever in business and thinking outside of the box is key now and I must agree.
There is one thing I didn't see in this statement that I find that works for me is to take a break from the business and step back. Sometimes,we are too close and can't see what others see. Only then, can you see the adjustments that you need to make.
Don't be afraid to ask questions and learn new things. I have learned some valuable lessons this way and found that there is always someone doing something better than the way I learned to do it. That is called "Progress" and most of the time,this progress will save you time and money in some small way.

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Permalink Reply by Hawaii Web Group LLC on January 18, 2009 at 9:50am

Good point. I just got back from Phoenix, Arizona for a professional photographers convention. This was immensely helpful in seeing how other photographers work, while at the same time stepping back from the business.

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