Tourism won’t bail us out

Implicit in the State and City governments’ actions in dealing with Hawaii’s economy is their waiting for it to recover. But why should it?

Military spending is flat, agriculture continues to decline, manufacturing is half of what it used to be and we are so overbuilt that it will be a long time before the construction industry returns to health. There is talk of attracting high tech industry but the plain fact is that every successful high tech startup we have had has subsequently left for the Mainland.

There is currently only one key to growth in the Hawaii economy and that is the visitor industry. And key to understanding where this industry is going is an understanding of what made it grow in the first place.

The real beginning of Hawaii tourism was with statehood in 1959. Once we were a state and really part of the U.S. we were seen differently; we spoke English, had good plumbing and you could drink the water. It was a major boost to tourism.

Then, in the 1960’s, the introduction of jets cut the flying time from the Mainland in half. Another big boost. Then in the 1970’s we had Hawaii Five-O and the Boeing 747. Another boost. In the 1980’s came the booming Asian economies and, in particular, the Japanese Bubble.

Each one of these events kicked up tourism another notch and so by 1990 we had 7 million visitor arrivals—up 28 times from the mere 250,000 at the time of statehood.

That was its peak. Today visitor arrivals are still well under the 1990 total. This should not be surprising since there has been no reason for it grow. Flying times have not changed in 25 years and, worse, airlines’ long distance capacity now allows foreign and domestic flights to overfly us. This takes away many visitors who used to use us as a rest and refueling stop.

Hawaii Five-O’s wannabes never succeeded in staying alive let alone emulating Jack Lord’s success. And we have been a State for 40 years. On top of that, the Asian economies have wound down and, for a variety of reasons, we are unlikely to see such visitor spending again. Add to that a Caribbean cruise ship industry that has gone from virtually nothing 20 years ago to today carrying more passengers than the entire Hawaii visitor arrivals. Now throw in new resort competitors like Mexico’s Cancun and Cozumel with much shorter flying times from the Mainland and no jet lag.

So, what are the fundamentals that will drive up our visitor market? There are none that I can see—and I dearly wish I was wrong. But wishful thinking never achieved anything. We should be grateful for the visitors we currently get—and adjust ourselves to it.

So, with no immediate prospect of a visitor resurgence or a boost from any other sector of our economy then we find ourselves having to face up to a very unpleasant reality; this economy is it—and that may be an optimistic view.

Businesspeople, facing such realities, forge plans to cope with them. Our legislature must do the same, since the Governor seems only willing to shift the responsibility to them.

If we want to attract employers, we are not going to do that with the signals we now send them. Employers want a decent public education system, not a union-centered fiefdom. They want a tax system they can live with. They want, in short, to see the welcome mat out.

As Citibank’s Walter Wriston said recently, "Money goes where it is wanted and stays where it is well treated. This annoys governments to no end."

Cliff Slater is a regular columnist whose footnoted columns are at www.lava.net/cslater