tourism in the neighbor islands
50. DBEDT (1978)
51. Ibid. Caucasians comprised the largest percentage of tourism employees. At the top echelons, Caucasians accounted for nearly half (46 percent) of managerial and professional employees.
52. Schaefers (October 16, 2005).
53. Ibid.
54. During the second investment boom, the mayor of Honolulu, Frank Fasi, announced that he would demand from Japanese golf course developers a 100 million development exaction for each proposed golf course on Oahu before county permits would be issued. Shortly after that, the golf course building mania subsided. Callies (1992).
55. Rose (1992).
56. Natarajan (2004), p. 35.
57. This section borrows heavily from Mak (1993).
58. Fujii, Im, and Mak (May 1992), pp. 185–195. Direct fl ights between Hilo and the mainland began in 1967 and ceased in 1987. United Airlines initiated direct fl ights from the U.S. West Coast to Maui in January 1983. Direct fl ights to Keahole-Kona Airport on the Big Island followed in June 1983. Direct fl ights to Kauai began in August 1984 but were terminated in September 1985 and replaced by one-stop service via Honolulu. Direct fl ights greatly increased the number of tourists visiting only the Neighbor Islands (and not Oahu).
59. Aguiar and Arakawa (June 5, 2005), pp. F1–F2.
60. Hawaii Visitors Bureau (1995).
61. In 1971, the average length of stay in Hawaii among westbound visitors was around eleven days. The average length of stay on Oahu was around six days and roughly three days for each of Maui, Kauai, and Hawaii. By contrast, in 2004 the average length of stay of “domestic” visitors to Hawaii was nearly ten days; the average number of days spent on Oahu was 7.6 days, 7.7 days on Maui, 7.1 days on Kauai, and 7.4 days on the Big Island. DBEDT (2005), p. 8.
62. Kindly supplied by Cy Feng (DBEDT).
63. Mak and Sakai (1992), pp. 185–200.
64. Mak (September 16, 1993).
65. Bonham and Gangnes (November 2001).
66. Bonham, Edmonds, and Mak (2006).
67. DBEDT (1996), pp. 1–5.
68. See, for example, DBEDT (2000), pp. 8–9.
69. DBEDT (1996), p. 3.
70. Mak (September 26, 1996).
71. Bonham, Edmonds, and Mak (2006).
72. Grandy (2002).
73. See, for example, Gee (September 20, 1993), p. C1; Shiraya (June 7, 1993), p.
D1; and Wright (April 11, 1994), p. C1. See also DBEDT (July 1999), pp. 15–18.
74. Honolulu International Airport was shut down for two full days, and when
commercial fl ights were resumed on September 13, it took a week to catch up. See Ishikawa and Brannon (September 14, 2001), pp. B1 and B5.
75. DBEDT (2005), p. 12.
76. The ships were old and hardly competitive with the sleek and glamorous mega cruise ships that were being built. The company ordered two new ships from a U.S. shipyard, but construction was delayed and costs were far over initial estimates. The ships were not completed.
77. Magin (February 14, 2003), pp. A1 and A10.
78. Despite the repeal of England’s Navigation Acts in 1849, cabotage laws such as the PVSA remain prevalent around the world. Mak (2003).
79. For additional details and the economic implications of the PVSA, see Mak (2004), pp. 88–89.
80. Senator John McCain of Arizona and other cruise ship companies objected to granting a monopoly to Norwegian Cruise Line. DePledge (February 23, 2003), pp. C1 and C6; Magin (February 14, 2003), pp. A1 and A10. A study done by the General Accounting Offi ce (February 2004) concluded that the exemption would not grant substantial market power to Norwegian Cruise Line because “NCL will likely have little power to raise prices on these itineraries because of competition from other vacation options.”
81. Magin (February 14, 2003), p. A10.
82. Ibid.
83. Arakawa and Dingeman (May 25, 2007).
84. Dingeman (February 27, 2007).
85. DBEDT (2006), p. 105.
86. Indeed, domestic pleasure travel in the United States increased yearly after 2001. Bonham, Edmonds, and Mak (2006).
87. Bonham, Edmonds, and Mak (2006) and Edmonds and Mak (June 22–23, 2005).
88. Bonham, Edmonds, and Mak (2006).
89. For a detailed explanation of the econometric methods used in generating these forecasts, see Bonham, Edmonds, and Mak (2006).
90. “Recovery” here refers not to getting back to the level of tourism in year 2000 (i.e., before September 11, 2001), but to where tourism would have been had 9/11 not occurred. See Bonham, Edmonds, and Mak (2006) for further explana-tion of this point. As of year-end 2004, the travel and tourism industry in the United States still had not fully recovered from the eff ects of 9/11 and subsequent events.
91. And 2004 saw an 8.3 percent increase over 2003.
92. The continuing decline in Japanese travel to Hawaii could be partly due to demographic change and changing consumer tastes in Japan. Japan’s rapidly aging population means that there are fewer and fewer single females in their twenties, and this group comprises the largest cohort of Japanese visitors to Hawaii. Mak,
Carlile, and Dai (November 2005), pp. 151–162. See also Kobayashi (October 2003), p. 5.
93. Over 10 billion if airline purchases in Hawaii are included.
94. Direct, indirect, and induced. State of Hawaii Data Book, 1995 (1996), pp.
208 and 348.
95. Income per person in Hawaii increased to 115 percent of the national aver-age by 1985 before sliding down to the U.S. averaver-age in the late 1990s.
96. See, for example, Brown (2000), p. 57.
97. Residents indicating this numbered 65 percent in 2002 and 53 percent in 2005.
Market Trends Pacifi c Inc. and John M. Knox & Associates (December 2005).
98. The numbers were 61 percent in 2002 and 51 percent in 2005. Ibid.
99. Kass and Okubo (July 2000).
100. DBEDT (July 1999), p. 7.
101. See, for example, R. M. Towill Corporation, Inc., et al. (2004), p. 28. Towill et al. simulated the eff ects of an increase in tourist spending on real wages in Hawaii and concluded that “residents are better off when visitor spending is not accompanied by a growth in the labor force” (p. 28).
102. Mak (1993), p. 21. The planes could easily land on the shorter runways but could not take off fully loaded with fuel. They had to take off partially fueled and then top the fuel tanks in Honolulu.
103. Arakawa (June 5, 2005), p. F2.
104. Nearly identical resident reaction surveys—with a few changes in the ques-tions asked from year to year—were conducted in 1988, 1999, 2001, 2002, 2005, and 2006. For the latest study with comparative responses for all six years, see Market Trends Pacifi c, Inc., and John M. Knox & Associates (November 2006).
105. Market Trends Pacifi c, Inc., and John M. Knox & Associates (November 2006). There was also a limited survey in 1993.
106. John M. Knox & Associates (2004), p. 56; Market Trends Pacifi c, Inc., and John M. Knox & Associates (2006), pp. 13–17.
107. Market Trends Pacifi c, Inc., and John M. Knox & Associates (2006), p. 14.
108. Ibid., p. 57.
109. Curiously, respondents by sizable percentages do not want more hotels to be built even if more tourists were to come; the highest percentage (73 percent) was reported in 2005.
110. World Tourism Organization (1994), p. 8.
111. Market Trends Pacifi c, Inc., and John M. Knox & Associates (November 2006), p. 17.
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Since the beginning of the twentieth century, the Hawaii State government’s stance toward tourism has been to encourage its growth. That stance has not changed. However, tourism has always been viewed in Hawaii as private business and allowed to operate largely by the rules of a market economy. In his recently published memoir, longtime Hawaii tourism executive Robert C. Allen recalled that “No other resort complex in the world ever came together under similar circumstances, created as it was by individuals of considerable skill who gathered together the elements of a sleepy exotic resort and created the booming Hawaii visitor mecca.”¹ Having adopted a laissez-faire approach, the State government has tended to shun direct involvement in the development of tourism, unlike governments in many other destinations around the world.
For example, Hawaii’s State government has not provided fi nancing for private resort development, nor has it given (until very recently) generous fi scal incentives to induce private investment in tourism. It has not entered into the hotel business, either by outright or joint ownership. Nor has it set quality ratings for hotels and other tourist services. With the exception of tour bus and limousine service, it has not imposed economic regulation (i.e., regulation of prices, service levels, and entry and exit) on tourism sup-pliers. It has not passed legislation to regulate hotel overbooking—a chronic problem in the tourist industry—or to require tour bus drivers and guides to meet certifi cation standards for competency. Virtually everywhere else, responsibility for destination tourism promotion is assigned to govern-ment agencies. In Hawaii, the fi rst tourism promotion bureau—the Hawaii Promotion Committee, predecessor of the Hawaii Visitors Bureau—was founded by the Merchants’ Association and the Honolulu Chamber of Commerce in 1903, both private entities.² In the mid-1990s, the industry
Genesis of State Policy on Tourism
founded the Visitor Aloha Society of Hawaii to assist tourists who became victims of crime or misfortune.³ The industry also started the Visitor In-dustry Education Council on a shoestring budget to educate residents about the economic benefi ts of tourism.
One area in which the State played a direct role in launching tourism development in the early post–World War II years was in infrastructure de-velopment, which is a traditional function of state and local governments.⁴ The State wanted to encourage the development of tourism on the Neigh-bor Islands to stem thirty years of population exodus and decline since 1930 (see chapter 8). The First State Legislature (1959) passed Act 18, directing the State Planning Offi ce to submit a plan for the development of tourist des-tination areas in each county.⁵ The Planning Offi ce came up with a menu of public improvement projects that heavily targeted the Neighbor Islands.
Between 1960 and 1970, the State’s visitor-related capital improvement pro-gram (CIP) expenditures totaled 168 million, of which more than half was spent on the Neighbor Islands. Most of the money (83.5 percent) was spent on airports and roads, and the rest was spent on parks, historical sites, sce-nic lookouts, small boat harbors, water and sewer systems, golf courses, and so on. During the 1970s, 393 million more was allocated to visitor-related CIP projects, of which 63 percent were destined for the Neighbor Islands.⁶ Governor John Burns’ biographers, Dan Boylan and T. Michael Holmes, note that “One of the legacies of the Burns era [1963–1975] was the rapid development of the neighbor islands as tourist destinations.”⁷ Actually, the policy was in place from the very beginning of statehood under the watch of Hawaii’s fi rst elected governor, William Quinn.⁸ The State has also sup-ported human resource development for tourism by funding tourism edu-cation and manpower training programs at the University of Hawaii.
Roaring ’60s and Refl ective ’70s
The decade following statehood saw spectacular growth in tourism in Ha-waii. The number of visitors grew from less than 300,000 in 1960 to nearly 1.8 million in 1970, an average growth of 20 percent per year. The growth rate far exceeded all expectations. For example, the State Planning Offi ce predicted in 1960 that visitor arrivals would increase to 764,000 by 1970.⁹ In the same year, the Hawaii Visitors Bureau predicted visitor arrivals would reach 773,000 by 1968; the actual number was nearly twice that many, at over 1.3 million.¹⁰ First Hawaiian Bank’s chief economist predicted 700,000
visitor arrivals also for 1968.¹¹ The Economic Research Center at the Uni-versity of Hawaii predicted even lower numbers.¹² Tourism’s share of total export earnings rose from 14.3 percent in 1960 to 32.3 percent in 1970, and tourism revenues as a percent of Hawaii’s gross state product rose from 7.4 percent in 1960 to 16.2 percent in 1970.¹³ Some feared that tourism was creating another plantation economy with low-paying, menial jobs. In his second state of the State address, Governor Burns said that he did not see an economic future for Hawaii in sugar; instead, he argued that “From both a short and long term point of view . . . tourism shows the greatest promise of sustained growth.”¹⁴
The late 1960s were prosperous years for the nation’s economy. Fueled largely by the explosive growth of tourism, Hawaii’s economy outper-formed the rest of the country. The ensuing labor shortage induced mas-sive population immigration to the state—the preferred term in Hawaii is “in-migration,” as most of the newcomers came from other U.S. states rather than from foreign countries. Between 1960 and 1970, Hawaii’s resi-dent population grew to 770,000, a gain of 137,000 since 1960. Net civilian in-migration (excluding military dependents) averaged more than 5,200 persons annually between 1960 and 1970 and accounted for somewhat less than 40 percent of the growth in the state’s population. These fi gures do not indicate the number of tourists present on any given day; the average daily census of tourists more than tripled from 12,000 in 1960 to nearly 37,000 in 1970.¹⁵
For many—and perhaps most—residents in Hawaii, the frantic pace of economic and population growth in the ’60s was quite unsettling. Change was coming much too quickly. In the late 1960s, forward-thinking residents began to question whether unchecked growth was good for Hawaii. The 1970 Legislature created the Temporary Commission on Population Sta-bilization, which was replaced by the Commission on Population and the Hawaiian Future. In 1970, the Governor’s Conference on the Year 2000, involving some 700 laymen, was convened. The Sunday Star-Bulletin &
Advertiser noted that the conference was “essentially an educational under-taking to sensitize people to the view that they can have an impact on the future(s), rather than being passive and adapting to whatever happens.”¹⁶ John Griffi n, the emeritus editorial page editor of the Honolulu Advertiser, recalled that the purpose of the conference was not to predict what the future of Hawaii might look like in thirty years but to bring a broad spec-trum of the state’s population together to examine alternative scenarios
of future development. Griffi n described the purpose as “brainstorm[ing]
exciting possibilities.” A State commission was later established to follow up, but nothing came of it, as “the momentum dwindled and died.”¹⁷ Tom Coff man, a scholar of modern Hawaii history, has observed that “such com-missions often refl ect an active concern but a lack of resolve or clarity.”¹⁸
Another conference, this one on Alternative Economic Futures for Ha-waii, was held in March 1973. Unlike the Governor’s Conference on the Year 2000, this was a private aff air funded by the Chamber of Commerce, private businesses, and labor unions. Following the one-day conference, task forces were appointed to continue with the real work. In late 1974, the task forces reported their fi ndings. Based on what happened in the 1960s, the task force on tourism envisioned potentially huge increases in tourism growth in Ha-waii between 1973 and 1985. Starting with a base of 2.6 million visitors in 1973, the task force assumed a “low” visitor estimate of 5 million in 1985, a
“medium” estimate of 10 million, a “high” estimate of 15 million, and a “very high estimate” of 30 million (the actual number of visitor arrivals in 1985 was 4.8 million).¹⁹ The chairman of the task force noted that tourism not only held the greatest potential for Hawaii’s future economic growth, it also presented the greatest threat to Hawaii’s lifestyle.
By the early 1970s, resentment toward tourism began to surface, espe-cially among many Native Hawaiians.²⁰ But opinion polls showed that most residents still supported tourism. A survey of Oahu and Maui residents in 1972 commissioned by the Hawaii Visitors Bureau found that 69 percent of the respondents thought that tourism was “good,” compared to 8 percent who thought that it was “bad” for Hawaii. Another 22 percent of the re-spondents said that tourism was both good and bad.²¹ A similar statewide survey found that 73.7 percent of the respondents thought that tourism was
“good” for Hawaii and only 5.3 percent thought that it was “bad.”²² None-theless, there were fears that unchecked growth could lead to the erosion of Hawaii’s famous hospitality—the “Aloha Spirit.”
In 1972, Citizens for Hawaii, a public interest group, published the widely circulated Maximillion Report (often referred to as the “Babbie Report”), urging the State to take steps to stabilize the growth of Hawaii’s population at one million by the year 2000. University of Hawaii at Manoa sociology professor Earl Babbie authored the report. It noted that “in many ways, the quality of life has been declining in Hawaii in recent years—and . . . the observed decline is largely the result of population growth.”²³ The report also argued that halting net migration was the key to stabilizing Hawaii’s