ULI Hawaii News

May 2015 Hospitality Events Recap

Fitzgerald Colon and Frampton at the Mauna Kea

On May 20, ULI Hawaii welcomed 3 travel industry icons, Harry Frampton of East West Partners, David Carey of Outrigger Enterprises, and Patrick Fitzgerald of Hualalai, for a discussion on trends in the hospitality industry. The event was repeated on May 22 in a joint ULI Hawaii – HLPC event on Hawaii Island with Harry Frampton, Patrick Fitzgerald.  Thank you to our speakers and terrific moderators, Mitch Imanaka and Steven Colón

Hawaii as a world-class destination

"A great city to live in is a great city to visit." Harry Frampton with Moderator, Mitchell Imanaka

“A great city to live in is a great city to visit.” Harry Frampton with Moderator, Mitchell Imanaka

The panelists agreed that Hawaii remains a world-class destination because of its weather, scenery, and spirit of hospitality. But not all is perfectly rosy. The Hawaii visitor experience is inconsistent, according to our 3 experts.  Traffic, walkability, and ordeals at the airport undermine our travel industry.

Per Harry Frampton, “a great city to live in is also a great city to visit.” To stay at the top of the hospitality game, infrastructure must keep up. This includes roads, sewers and airports. It also includes an environment that fosters dynamic business start-ups and adequate housing to support it. Infrastructure creates business opportunities, which in turn make a place great.

Frampton had several stories of other cities that are rising to the challenge to solve some of their core problems and propel their cities to be exceptional places for both residents and visitors. It starts with extraordinary and passionate leadership that is able to build partnerships with the business community, development community, non-profits, and elected officials.

Per Frampton, it can’t be a contest among different groups to see who can spend the least while getting someone else to spend more. It’s about teamwork that allows you to produce excellent results. He urged Hawaii to think big in creating a great place.

David Carey agrees that our biggest opportunity as a tourist destination is to evolve the rest of our infrastructure to the quality of our tourist product. The rest of our streets, sidewalks, roads, parks, and beaches are generally not at the same level as Waikiki or neighbor island resort areas.

Fitzgerald concurs noting that Waikiki is re-investing in the international marketplace and the Royal Hawaiian Shopping Center, but we have to do a better job with infrastructure, especially the airports.

Frampton further pointed out that in many great destinations the #1 amenity is walking. But most of Hawaii is so difficult to walk in, even at the beach.

Pat Fitzgerald added,  “It’s not the room, it is the experience when you go out of the hotel.”

Other risks to Hawaii include our visitor base. Per Carey, 60% of our visitors are from North America, 20% from Japan, some from Australia, but not much else. If something happens in Japan for example, our visitor counts plummet.  This is not the case in other destinations with a more balanced mix of visitors. He believes that we should use a portion of visitor promotion funds for China and even Europe.

The fact that we only have one international airport is also a concern. What do we do if something happens to Honolulu International Airport? On top of this, foreign visitors have to wait 3-4 hours to enter. Carey agreed, he has been to many world-class airports and ours lags well behind in creating the “first impression” that welcomes visitors.

Trends and Changes in the Hospitality Industry

ULI Hawaii Chair, Steve Colón, introduces hospitality industry icons, Harry Frampton, David Carey, and Patrick Fitzgerald. Mitch Imanaka moderated the panel at the hospitality forum at the Kahala Resort on May 20, 2015

ULI Hawaii Chair, Steve Colón, introduces hospitality industry icons, Harry Frampton, David Carey, and Patrick Fitzgerald. Mitch Imanaka moderated the panel at the hospitality forum at the Kahala Resort on May 20, 2015

Per Pat Fitzgerald, “Food and beverage is the new golf”. His resort, Hualalai, works with 190 local providers to provide the resort’s chefs with unique and fresh offerings. Nearby Waimea has become a hub for growers and providers.

Fitzgerald says that in the past 5 years, the number of rounds of golf played in the U.S. have fallen 46%. Golf takes too much time. It is too expensive. And golf courses got too hard.  He says that people now want inclusive experiences. Golf is built around being exclusive. “A lot of resorts are built around golf and what do you do now… 100s of acres of lawn that has to be maintained.”

Besides food, the trends are toward wellness and learning experiences.

Frampton expanded on this to say that the industry is very different for different age groups. It is a huge challenge to provide the experience the 60-70 year olds want, who may have originally come for the golf, while still catering to the 40-50 year olds who have very different expectations.

Another big change is the rise of the internet and the power of individual reviews. Frampton says that his resort teams review all internet mentions every morning and respond right away. He believes that if you are on top of it, reviews and mentions make your resort better. But if you aren’t paying attention you are in trouble.

Fitzgerald commented that thankfully millennials love water activities, which Hawaii has in abundance.

Capital – where is the money for industry development?

No seats left at the May 20, 2015 hospitality forum at the Kahala Resort

No seats left at the May 20, 2015 hospitality forum at the Kahala Resort

There hasn’t been a large full service hotel built in Hawaii in a long time. The reason, per the panelists, is that it is too expensive to build one in Hawaii. David Carey remarked that with condos you can do pre-sales and get a construction loan. But with a hotel, you just don’t know if the market will still be there by the time it gets built. That’s why hotel owners expect a 15% – 20% return. The high construction cost in Hawaii also precludes select-service product types.

On the other hand, individual and time-share resort owners don’t need that kind of return. So funding for this kind of product is lower cost. This is why most resort properties today can’t get built without a good portion in time-share. It also improves the property in that the hotel part enhances the service element, and the time-share provides the financing. Plus, people who buy in to units are better caretakers. Time-share remains an attractive and feasible product, offering affordable bits of resort life for regular people.

Foreign investment is making an appearance now. Panelists mentioned the Korean, Japanese and Chinese groups are showing an appetite for Hawaii.

The Urban Experience

The panelists commented that North Americans still like the beach. But others, such as Australians and Asians are looking for restaurants, activities, and action.  Outside of Waikiki, though, the street scene is limited.

Places like Kapiolani Park enhance the urban Hospitality experience. Per Fitzgerald, “every time I go to New York, I spend time in Central Park.”  Frampton commented on walking trails. He described Denver’s 16th street, which closed to cars and became a great walking street. He added that people can now also bike for 100 miles in the city of Denver, which makes the urban experience very dynamic.

World-class entertainment seems to be lagging in Hawaii. Right now Honolulu gets the Lion King sometimes, but most acts coming to Hawaii are not convinced they will get an audience. How do we bridge the gap and ensure varied and ongoing entertainment?

The Kona Coast

PupuReceptionMaunaKea

May 22, 2015 Post forum reception at the Mauna Kea Hotel

At the Hawaii Island forum, panelists included discussion of Hawaii Island.  Frampton mentioned the dire hospital situation on Hawaii Island and feels this is a major issue. Employee housing is another problem that continues to plague the Kona Coast.

Fitzgerald said that he has spoken with a number of people about improving Kailua-Kona, which has become dilapidated. He would like to see the main road closed to traffic and made into a pedestrian walkway. Every city that has done that has seen great value.

Thank you to our event sponsors:

May 20:

East West Partners
Imanaka Asato
Sullivan Meheula Lee
A&B Properties
Outrigger Enterprises
Turtle Bay / Replay Resorts

May 22:

East West Partners
Hualalai Resort
Kohanaiki

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