As travel professionals gathered in the Sheraton Waikiki at the invitation of Travel Weekly, visitor metrics were excellent: Average daily rates for hotels and revenue per available room were higher than in any other state, and significant airlift had recently been added.
But when new heights are reached, the urgency to address unresolved issues intensifies. One such issue was singled out as the greatest challenge the industry faces: low unemployment.
Arnie Weissmann, editor in chief, Travel Weekly: The unemployment rate in Hawaii is less than 2%. That's phenomenal, but you've also got an aging workforce. Is this an issue?
Jerry Gibson, area vice president, Hilton: This is definitely an issue. Our average housekeeper at Waikoloa Village and Hilton Hawaiian Village is 61 years old.
Ray Snisky, chief commercial officer, vacations, Apple Leisure Group: Did you say "average"?
Gibson: Yeah, 61. So that means there are people working at 70. And that's a tough job. There's a lot of demand, but there aren't a lot of people entering the market wanting to do those jobs. If you're not working on this now, you'd better start working on it.
Jenn Lee, vice president of sales and marketing, Travel Professionals International: Millennials don't want to make beds.
Weissmann: Yes, not even their own.
Sean Dee, executive vice president and chief marketing officer, Outrigger Hotels and Resorts: Our corporate offices and most of our properties are here. Attracting and retaining talent, and being able to compensate competitively, is probably the No. 1 issue we face. Our demographics are even slightly older, especially in housekeeping.
When you think about hospitality, you think about the front desk and housekeeping, but there's also IT, finance, sales, marketing. So we're trying to be creative and expose the next generation to the breadth of opportunities within the industry. We're working on some initiatives with both domestic and international folks.
Harris Chan, area vice president, Hawaii and French Polynesia, Marriott International: In Waikiki, every year we bring hundreds of high school juniors to spend a day to see what have to offer. We're also involved with Kapiolani Community College, who train a lot of culinary staff. But millennials aren't interested in housekeeping or steward jobs. And we have a big problem that [President Trump] wants to limit immigrant workers. We depend a lot on immigrants. I see problems coming up in the next five years as we start to lose our housekeepers.
Elizabeth Churchill, CEO, The Churchill Group: The family-based visa policy issue is at the crux of the issue in Hawaii. We've had a lot of the Filipino workers coming in through that policy, so if it changes, we're going to have serious problems. The children of staff go to college on the mainland, and they don't come back. We've had a brain drain for many years.
Peter Ingram, CEO, Hawaiian Airlines: Another root cause is affordability of housing. It ties into the question of economic sustainability. Many people must work two or three jobs. And when we're trying to recruit for entry-level positions, it's a challenge for them to find housing, to buy food and clothing. Hawaii's expensive.
Like Outrigger, we're based here and employ people at a variety of positions, including management, analytical and IT positions. Recruiting these can be a challenge because there are opportunities on the mainland that pay as much or more, places where the cost of living is lower. Even people who were born and raised in Hawaii and, all else being equal, would love to work here are saying they can't afford to.
Snisky: And, you know, because as much as the millennials get [picked on for not wanting to do menial jobs], Gen-Xers weren't really high on working in housekeeping, either. It goes back to the point about allowing in immigrants on the mainland, as well to do jobs that U.S. citizens aren't interested in doing.
And people who live here may have to spend four hours in the car because they can't afford to live closer to work. And then put a smile on their face all day, helping customers.
Lee: In Jackson Hole, they actually build housing and pay for housing so employees have a decent place to stay.
Terry Jones, managing principal, Essential Ideas; founder, Travelocity.com: Let me take this in a different direction. People complain that a lot of jobs are being taken by robots, but people can't hire anybody to do a lot of the jobs that robots do. And they've now got robotic carts for housekeeping that are quite helpful in speeding things up, and they're doing the same thing with room service. If you can't get people and you can't afford to house them, then you need to think of another way of doing business. There are tools for housekeeping and room service delivery. Hilton has an app so you can check yourself in, select your own room. It also becomes your key, and you can check out with it. That's good.
The bad part is, when do I ever talk to the guests and tell them about other things I have? You can send a message saying hey, something's going on, do you want to come down? Wynn is doing the Alexa-in-the-room thing. On one hand, we may say we don't want it because it's inhuman. On the other hand, we may need it because we can't get humans.
Tovin Lapan, Hawaii correspondent, Travel Weekly: On another topic, the legislature just failed, for the second year in a row, to establish an independent airport authority. There's a lot of talk about airport construction and improvements, and an airport authority would ostensibly help with that.
Snisky: It's shocking that Hawaii is one of [three] states that doesn't have an airport authority. This is really important. We have a world-class destination here.
Ingram: This is an issue we're passionately engaged in with the legislature. The Airlines Committee of Hawaii (ACH) -- all the airlines that serve the state's airports -- believe, and I don't think anyone disagrees, that the airport infrastructure in this state is inadequate, and that we're ill-equipped for serving the travel needs of the future. The ACH and other parties presented what we thought was a better path forward, including a professionally managed corporation that would oversee the airports.
A couple of key points: All the funds we're talking about come from the users of the airport system, indirectly through the airlines or concessionaires that operate at the airports. We're talking about how you manage those dollars. We made it through to the end of the legislative process with a bill that went through the Senate with almost unanimous support, a bill that went through the House with almost unanimous support, then mysteriously -- and we're still doing an autopsy on this -- the bill died in committee because the House members didn't show up to the last meeting, even though the Senate had agreed to change a provision to match the House bill.
Jennie Ho, CEO, Delta Vacations: They just didn't show up?
Ingram: Right. This was political theater in its highest form, and it's really disappointing because we're talking about infrastructure that is essential to the tourism industry and residents alike. And the money is there to invest, but it's not being invested efficiently. It's taking too long to get through construction. We are only able to have funds authorized when the legislature is in session, which is only for a couple of months every year. There are all sorts of bureaucratic encumbrances that we think [could be solved] having an airport corporation. Like 47 other states.
Lee: And on the very basic level of marketing the islands, [the airports] are a really crappy representation of the experience [visitors] are getting ready to have. You land and you're like, holy guacamole, is this what I'm getting ready to experience on the rest of the island? I mean, it's their first impression.
Gibson: Absolutely. You come in from Japan or Korea or wherever, and you come into Customs, and it's just the worst -- the first experience and the worst experience. It just has to be fixed. There's so many great airports out there, like Incheon and Haneda, and now L.A. with what they've done, San Francisco, others, many others. We should be the best.
Ho: Right. And how do we activate our collective abilities and power?
Churchill: Yes, what's the solution? To have the airline employees go to the state legislature and carry signs?
Ingram: Last year, there had also been [an airport authority] bill put forward. We had spent the time between the last two sessions addressing issues that were identified, and we thought that the bills that were presented in the House and Senate this year were clean from the perspective of last year's issues. I think we've got to go back and regroup and understand the best way forward. There's unanimous agreement that there's an issue that needs to be addressed. So, if you don't like this solution, let's figure out another. But I guarantee you the status quo is not the solution.
Chan: In addition to you guys working on the details of the bill, maybe we as an industry should mobilize our employees.
Ingram: Yes.
Chan: To be behind you so that next year during the hearings, we'll get the employees of the airlines, employees of the hotels and tour operators ...
Churchill: And the airports.
Chan: Everybody, lined up at the State Capitol.
Ingram: And to your point, Harris, we have 6,900 employees at Hawaiian Airlines. In a state the size of Hawaii, that's a pretty big workforce, and close to 90% are residents and voters. We have constituents, and we're actively equipping our employees with information so that they can ask the right questions of their lawmakers. I think we didn't push the pedal really hard on that this year because all the indications were was that there was broad support in the legislature, and there is sometimes anxiety about mobilizing a workforce. But I think it is something that we absolutely should be looking at as we go forward.
Jones: I've spent a lot of time lobbying [in Washington] and would observe that when something disappears at the end, this is a power grab by somebody who doesn't want to give up the power. Whoever's running it now doesn't want it to change. So, somebody's got to hire a lobbyist, burrow down and find out who that person is. Because you can mobilize a lot of people but this was somebody with a lot of power who pulled it, and maybe you know who that is, but you've got to find a way to either build a coalition against that person or find out what that person, or persons, wants.
Weissmann: Is this perceived as a problem on all the islands, or is it a Honolulu problem?
Ingram: All.
Jack Richards, Pleasant Holidays: I was thinking that as you move through [from one island to the next], it even gets a little worse.
Gibson: We all take surveys from our international travelers. I'm sure that for all of us here, it's the number one issue.
Jones: I was shocked. I haven't been here in maybe five years, and to see those same leather chairs that have been there since I was 12 you know? It's just unbelievable.
Weissmann: A lot of what we've spoken about so far is related, in one way or the other, to the increase in visitors; record year after record year after record year. There's a lot of ancillary issues around that. For instance, how is Hawaii balancing the increase in tourism with residents wanting to maintain their local spots and limiting any negative impact on the environment?
Gibson: Traffic around the island is certainly difficult at this point, whether you're going to the North Shore or Kailua, and the influx of transient vacation units (TVUs) is huge on all the islands, but particularly you really see it here on Oahu, and it's very difficult from many standpoints. One, you can't find a long-term rental now because they're all taken up with TVUs.
There's so many challenges with this. And long-term rentals for people that are either coming onto the island, graduating from the university or whatever, is extremely difficult. This is having an impact on a way of life in Hawaii, and you see it all the time.
David Hu, CEO, Classic Vacations: There's going to be alternative accommodations and there's a free flow of that being advertised through all of these alternative mechanisms, and it's starting to drive different kinds of visitors. And there may be an alternative demand structure that's coming.
Richards: My perspective is that it's fine, because the island is running near record occupancies and rates. Where are we going to put these people? And the answer is, they're going to have to go into alternative accommodations at some point because you just simply do not have enough hotel rooms to accommodate daily nonstop service out of multiple markets from the West Coast.
We've offered private homes, condominiums, for many, many years. This is not a new product for us. We sell it today.
Weissmann: Specifically, do you sell Airbnb?
Richards: We offer private homes and condominiums today.
Ho: There you have it.
Ingram: The issue of housing is one we're very interested in. The appeal of Hawaii as a destination is its environment and its open spaces, and if we want to keep the demand strong for that, we need to have solutions that provide investment in sustainability and infrastructure. We need to couple that with economic sustainability, because the economy of the state is, and for the foreseeable future will be, tied to tourism. And tourism is the fuel that's going to contribute to building better infrastructure and accommodations and more roads and schools and hospitals. We've got to, as an industry and with our communities, find solutions that are viable from the sustainability standpoint of the environment, sustainability of the economy, sustainability of the infrastructure. And it's not easy, but it is something we have to think of from a holistic perspective.
Snisky: I think that the Let Hawaii Happen campaign by the Hawaii Visitors and Convention Bureau is some of the best work they've ever done. It prominently features the authenticity of the island, which I thought was a great differentiator. Because there are lots of places with nice hotels and nice pools all around the world, but the authenticity of the campaign is fantastic.
But they've also done a good job getting people to say, "Well, you know what, I've seen the strip at Waikiki. I want to go to that rare place." And now they're going to these places and the local community is saying, "Whoa, what are you doing here?"
Ingram: And it's fueled by social media.
Dee: A few years ago, there was a great speech about how to market Hawaii by former [Hawaii Island] mayor Billy Kenoi. He said take away the charts and the numbers and the way to get Hawaii to be a great place to visit is make it a great place to live.
Weissmann: To what extent do you think Hawaii's strength this year is related to the problems resulting from hurricanes in the Caribbean last year and some of Mexico's issues from bad press last year?
Hu: Well, Hawaii shouldn't be complacent. These other competitive markets are going to come back. They are going to spend. We know that. And they will come back with a vengeance, like they have done all the previous times they've had a dip.
Ho: Cancun was negatively impacted, but we've really seen record growth into Cabo, into Puerto Vallarta. And it's an interesting question: Are people choosing Hawaii instead of going to Cancun? We've looked at this again and again and really, the only segment that we think might be making this swap are customers from the Midwest, where perhaps the negative press is the most impactful.
Richards: Our luxury brand business to Mexico is way up, year over year. The mass market is down, but the luxury upscale side is way up. So, they're still going to Mexico, but they're not necessarily staying at all-inclusive resorts, which is really interesting.
Weissmann: Are any of you pursuing new source markets? How is the profile of inbound travelers changing?
Gibson: The segmentation for Hilton in Hawaii is very much the same as it was five years ago. I haven't seen a big shift.
Ho: We are very purposefully trying to grow new market segments. If we all only sit back and wait for the customers from Japan or Los Angeles to come to Hawaii, we would not be having the conversations that we're having about new air capacity and record average daily rates. We are very purposefully investing in our presence to drive demand from the East Coast, from additional places in the Midwest. It's not accidental that Hawaii is doing well. It's with committed investment from, I think, everyone around this table.
Snisky: I think the biggest change in our industry is the growth of the convention and meeting segment. That customer is paying a higher average daily rate and generating more revenue per available room, and it's going to probably change things as much as any of the other things that we're talking about. It's the dynamic that leisure [interests] are trying to understand.
Lee: That's where travel agents can really play a key role, because they're the ones that drive the leisure traffic and interest in certain areas. Let's start with the experience. What are you trying to do? Have you ever thought Hawaii? Because our agents are seeing Hawaii, Hawaii, Hawaii from all the suppliers, they're starting to think about Hawaii and then they're recommending it. It's not the answer to everything, but there are hundreds of thousands of travel agents out there who play a big role in getting leisure travelers here.
Hu: And education is a great role that agents play. They help travelers know Hawaii's not just one thing, it's a lot of different things.
Weissmann: I think about four or five years ago I asked whether any of you were seeing any impact from the China market. And I think you, Harris, said that you saw that as having a very long runway.
Chan: That's what I said, yeah.
Weissmann: Has it taken off yet, or is it still on that long runway?
Chan: I have been telling the Hawaii Tourism Authority and even the governor that China is a big market but it's going to be a long runway because, number one, sun and surf is not what the Chinese are looking for. Nor the quality of life, or the quality of air we have. For that, we'll have to wait for the next generation, who are educated overseas. Those are the ones that will be eventually coming our way. It's going to be a long runway, but once it takes off, the potential is big.
Richards: We're seeing record numbers of Chinese coming to California, in Los Angeles and San Francisco. It's partly the good shopping.
Ho: Shopping, yeah.
Chan: They like shopping. They like the casinos. They like the Chinese food. When they travel to Italy, to Spain, they're still looking for a Chinese restaurant. I worked in China for five years, I know them, what their preferences are, and that's why I keep telling the state, "Don't invest too much money in China right now. They're not ready for us and we're not ready for them."
Dee: Diversity of the market is a big advantage for Hawaii. Korea, Japan, the U.S., Canada, Australia, New Zealand. We don't really have seasonality so much anymore because we have a ton of different reasons for people to come here year-round. Part of the strategy that works is, you know, high visitor satisfaction on the first visit, they you'll come back and visit another part of Hawaii. We see that happening.
Richards: Our data suggests about 65% to 67% of the total market today is U.S. And as the airlift goes up, we expect that number to go over 70%.
Churchill: I'm bullish on Korea. South Korea has been phenomenal. I mean, they're country collectors. They like to go to different destinations, different countries and then go home and tell everyone where they were. It's all about status
And they're flying to neighbor islands. The Japanese market is still slow to go to neighbor islands. They're still weak on Kauai.
Gibson: [Koreans] send groups, too. You're right. It's really growing well.
Ingram: One of the things with Korea that is a contrast to China and has contributed to some of the growth that Elizabeth talked about is that access to Hawaii and to the United States is easier. We've had visa waiver for Korea since 2012. That was when we launched our first flights to Korea. Making our destination easier to access is a key contributor to our ability to succeed there.
Chan: The Koreans are taking over the Japanese in our hotels on Maui as a percentage of the market segment. A lot of young Koreans can speak English, and they'll rent a car and explore the island, and they love it. And the best thing is they drive on the right side of the road.
Snisky: It's the little things in life.