 Okay, welcome back to think tech. I'm Jay Fidel and this is Corona watch is it or community matters make it. It's all the same these days In fact, everything we do is about Corona watch I tell you the truth and everything everybody does is about Corona watch it occupies all of our time and thought and it occupies the media Right up to the top. So we are very lucky today to have Keith Vieira. He's a leader in the hotel and tourism industry He's here in our studio and we are so happy to be able to ask him questions about what is going on in Tourism and hospitality and hotels and all the ancillary industries and businesses that are that dependent on tourism here in our Essentially our mono economy state. Welcome to the show Keith. Thank you very much So, you know, you've been right in the middle of this You've seen it coming from all sides and I'm so curious to know, you know, how you feel first How do you feel Keith? Um, I think scared We've never seen anything of this magnitude this quickly You know after 9 11 we knew that would be major But nothing has changed as much so quickly in what we've seen in the last three or four days So and the impact to the community on the trickle down from you know, it's one thing to run You know 50% occupancy, but it's a whole nother thing when you close hotels So I think it's really uncharted waters for us Well, I don't think people realize Exactly what it means to close a hotel or close a restaurant. Can you describe? I mean suppose for example, I I get I get in order to close a hotel and on the manager general manager of the hotel. What do I have to do? Where do I start? I mean, it's probably something I have never done before. Yeah, what do I do? Well? I think the the tricky part has been Last week hotels were looking at well maybe we need to look at the 10% drop in business 20% drop in business or 30% drop in business and That really went on until Sunday or Monday of this week and then all of a sudden when the mass cancellations came in relative to Some of the things the president has said some of the things the local governors have said such as EG Yesterday about tourism tourism not being carried on here That changes the ballgame So when you look at what you're gonna close you have to pick a time frame that is gonna make some sense And I think most hotels are saying okay Hopefully this is 30 days because that kind of dictates what little staffing you need during that closure period You obviously want your sales department kind of prepared to sell for the future, but you don't want them calling customers So what do they do? You obviously have the ongoing maintenance and cleanliness of the hotel That's important, but a lot of hotels even today are still running 50% because people haven't left yet on their return trips Now that's gonna change in the next couple of days But right now if your restaurants are closed and you're here on vacation, what an awful Experience so to answer your question really about the timing It probably takes you three to four days to put your whole plan together And most of the brand companies have been through this before or have plans for it And they're helping the the local management teams get that done And then it would probably take three to four days to implement the actions But there's so many unknowns relative to three employees, which are really the shame of this whole thing is what it's gonna happen to these employees You know their medical is just a layoff as the furlough is that paid time off So those things are being dealt with right now I think in the next two or three days conversations with the unions Conversations with parent companies as far as how do we do our best for those employees? Yeah, I can see that as a major problem because a lot of them don't have the resources to carry on without a job for any Or pay for any length of time. So let's talk about losses for a minute I mean, I hate to have this conversation with you But here we are and I think we have to belly up to a number of issues like this The hotels are not going to make revenue in the period of closure. That's one thing Nobody's coming around and there is subsidiary businesses and the lobbies in the restaurant They're not gonna make any money either. So all of that is a dead loss. What about the people who have paid? For reservations, you know going forward and who have given the hotels money or given their credit card, you know money What happens to that? Is it refunded or is it put on in abeyance? What happens different companies have different policies It's going to be refunded or credited. I think it's going to depend on the time frame If this is you know, 30 days or 30 to 40 days, then I think credit didn't make some sense But when you have cases where this could be much longer or people have put up major sums You're gonna have to do something that shows sympathy through their situation And I think companies are evaluating this daily My feeling is by the end of all of this there'll be full refunds for most of this that has happened the group business That was canceling in the prior two weeks. I think that's a different story because they still could have come And there'll be legal issues relative to that but for the individual in essence almost every company is refunding Deposits right now. Yeah, and I can see it from the view of the of the of the guest We all know this is beyond the control of anybody really although we wish the United States had done things earlier and thoughtfully And We know that he's he's got a certain interest in this brand He likes this brand or he wouldn't have made the reservations He wouldn't it wouldn't have come to this hotel now. He's like he's he's his nerves are jangled He's worried about everything as we all are And the treatment he gets from this hotel and what he paid is really going to determine his view of that brand for the rest May I say for the rest of his life? So how the hotel handles this how they handle each customer or refunds or credits Whatever it may be the tone of the letters and emails that go out. This is going to determine in large part You know the business of the future, isn't it? Absolutely? Dead on right a brand is a promise and you expect to be treated certain ways And I think certain companies I can tell by the direct the emails that I get Have really stepped up to the plate I think Marriott's done a good job in communicating both to their customers and their frequent travelers And I think Marriott has about a hundred and twenty million frequent travelers So I think they've done a good job educating them along the way and about every three or four days The information comes out. So that's going to be key. His communication is critical Just someone has a corollary discussion I was supposed to be staying in Las Vegas arriving yesterday and on Sunday I was calling the hotel to find that what was open and they said well two restaurants and by five hours later The whole strip was shut down So you better reach out to those customers want apologize for the timing of it Make sure you're showing their best interests at heart Make sure you talk about the employees that are really bearing the brunt of all of this both the direct employees and the ancillary down the chain And then continue communicating and when we come out of this I think you're gonna see a lot of value added offers for people to take advantage and enjoy things again We saw this after 9-11 People immediately realize I want to get my family I want to go on vacation in Hawaii because the whole world is going through this Hawaii I think will be the prime destination where they want to re rejuvenate the regroup with their family and celebrate the passage of Perhaps a very difficult time in our history. Yeah, gee. That's a that's a very interesting point Gee, I see it the same way, too. We know this is over and the coast is clear People are gonna want to you know Kick their heels a little they're gonna want to take a vacation. They've been cooped up You know under these quarantine requirements now It's time to live a little and they'll come right back here all of them as long as we can assure them that a We're over the hump and be we're ready for them You know because it's hard to get it started again, which we'll talk about later in the show But let's let's talk about you know during the period of down you you referred to this earlier You have fixed costs the hotel has fixed costs. It has it has to meet in order to preserve the property so to speak So many so many things I'm sure that if you looked at a budget for any of these hotels the the cost would be huge They would not be dependent on the number of guests. They would be just to maintain the property So they have to come up with bucks to pay those costs on an ongoing basis I mean, maybe some of the some of the vendors would forgive them, but I think mostly the vendors are suffering themselves Keep them business Go ahead, sorry. No, I was gonna say absolutely because You know Hawaii has been under a lot of pressure to work with local vendors as they should and so many of them have contracts with Waimanalo farmers for their produce You know national cleaning supplies and some of the national things well That's that's generally done through national purchasing and they may not be as effective But for the little guys operating mom-and-pop operations operating unique product for the rooms it could be Unique smells the different things that infuses the people put in the room They're the ones that are gonna they can't survive they their inventory cannot sit on the shelf So that's gonna be a major problem as far as planning for it Many hotels have gone through a renovation to the level of they had to close Oh, you know a roll Hawaiian a couple of years ago was closed for I think about 17 months and so you have some experience of what needs to be done going forward the maintenance It needs to take take place, but at the end of the day You can do everything possible to try to keep people employed But your book of your employees, especially your line employees are not going to be employed And that's what scares me now. It's very easy to close things. It's very easy to tell people don't go out We're gonna lock you know, you got to stay undercover But what about those employees who have bills today? Yeah, and what about those employees who sort of give it up? They're so down about this. They go look for other jobs I'm not saying they're going to get other jobs, but they may find other ways to live their life And so when somebody calls them a month later, they say sorry where I'm not available anymore I I'm not here. You know, I went to the mainland whatever I went to Asia. Who knows what but I'm not here so then you have to recoup and fill those pukas and Find people who are somewhat skilled and who can continue to operate the hotel. That's not so easy It's hard it's hard enough to find staff without this kind of problem, but this is gonna be significant problem, isn't it? Yeah, it's a major problem and plus the hotels as all the industry here This isn't just about serving coffee or meals. It really is a sense of aloha it really is understanding the history and culture of the place and making sure you emanate that to people and your guests and even the employees that are from foreign countries They love talking about their history. They love talking about their relatives that maybe came over To work the plantations and then eventually moved over to the hotels, etc So this is not that simple where we need to hire another a new 10,000 employees. We need these employees back We need their positive, you know energy back, but we need to help them survive during that process Yeah, just another reason to help them in that process so that they don't they don't go off and not be available later The other thing it comes to mind and this is this is a conversation to take a while But just to summarize my view of it you have you have You know, this is the biggest industry in the state for sure by multiples and it has been for a long time And so just just thinking loosely you got taxi cabs You got restaurants out there in the community. You got you get tour companies You got all kinds of events and things that happen That not only draw upon the tourist market, but that are dependent on it And if you shut the hotels down such as the administration has shut them down in the state Then you're essentially shutting down the whole Connected infrastructure of all of those businesses all of those mom-and-pops all of those employees and staff Can you give me some idea of the depth and breadth of the effect of that of that action on There's these ancillary businesses. Yeah. Yeah, absolutely, right I mean because you have one you have the full-time employee And and they have to deal with you know, maybe they can get unemployment And and maybe there's some help from the union so you have some of that But there are so many workers that work two or three part-time jobs And if you lose one of your part-time jobs, it could be banquets on weekends It could be as you said taxi cab drivers Uber drivers, etc When you lose that part that you're counting on but that's what helps you survive every month And it's not that simple just to get another job because those jobs really aren't available as much outside of tourism It's gonna be brutal for them If it's 30 days, I think people will get by if this goes on for 1690 or perhaps even longer. They're not gonna get by And there really isn't a catch-all system You know, you can try to deal with the benefits and you know, medical and other areas like that But at the end of the day the money that's needed to buy food to Pay rent or the various things they need to do. It's just not gonna be there The scope is it's huge. Yeah, and it is a major crisis for the state economically for sure But going back to the hotels now If you said 30 60 90, I mean we have no way of knowing It sort of depends on how good we are in following the rules It depends on how many people we let in or don't let in how we contain Whether we find the masks to test people whether we find, you know, the medical equipment to save them All these things are up in the air I have to say and we're not really prepared to deal with you know the supply of masks or surgical gowns or respirators or hotel beds and all that stuff and so This will ultimately be the factor That tells us how long this is gonna last. I think personally I'd be interested in your view of it I think 30 days is really really optimistic because it was still going up So other countries the only country that has actually slowed down ironically enough is China or so they say It's ironic But you know 60 days also seems a little bit, you know, so if I were a prudent hotel planner, I think you are Then what am I really planned for here? Is it the summers at the end of the year? What I'm looking for is like the tipping point the point where we start having less case fewer cases a Point where you don't have to worry about walking down the street and picking up picking up the virus Yeah, I think the hotels are gonna look at if we can ramp up in 30 days Is it 60 is it 90 and you really have three different plans because on the short term? It's gonna be you have to work the other thing is a Hawaii so dependent on our partners No matter what we do as a hotel industry if the airlines don't correlate and have an increase in seats That's not gonna work if all of our tour operators which have been big supporters whether it be JTB or pleasant Hawaiian holidays Over the years a lot of people still trust them to package them for example pleasant is owned by triple A of Southern, California They have 59 million members So we have to partner with those kind of partners who sell Hawaii and get an offering in in the market I Tend to think as we go through what we're going through with the medical situation on a parallel sheet of paper Needs to be done all the steps We're gonna do to wrap back up when we find out that there is some good news in terms of controlling this disease Or some things that we can look at in terms of time frame But you're gonna have three different programs because it's gonna look a three different time dates because it's gonna really affect your employees Your marketing plan you can't go and market now or even 30 days when people are coming off of this huge suffering But you also just can't wait for the market to come back whoever's first in the market is probably gonna do best So you have different levels of the plan on different dates and then you plan to implement it as you go along The way the news has been coming in so incredibly quick on what's going on You know that may help you respond quicker than would be a normal situation Yeah, I think it's on top of mine for everybody, but that's a good segue for a break Let's take a short break and come back and talk about the recovery How that's gonna unfold and what we can do now to prepare for it what we can do then to prepare for it as Keith Fiera hotel manager and and guru and a Hotel expert par excellence. They're gonna help us understand what's happening in tourism. We'll be right back Okay, we're back. We're alive with Keith Fiera here on community matters talking about the hotel industry and all the ancillary Businesses around it and how they are doing in the crisis the corona crisis And now the most important part. I think is to see at the end of the tunnel to try to plan for it try to you know Clean it all up so that people want to come here again And we can sort of re-establish our global brand and our global tourism industry. So Keith What are you working on now and how do you see the interim period as an opportunity to develop a recovery? You have to have your plan in place and I believe HTA is working on a general marketing fund on a certain amount I think the industry will come in with probably five or six times that and be ready to go But what's gonna be important is that we speak with one voice. We need to get the message out led by H HTA and HVCB about Hawaii is a safe comfortable welcoming place to be really highlight our brands of the Aloha spirit And I think it's gonna be value-added offers I sure hope that hotels don't start all cutting rates because it's gonna take us years and years to recover if they do that But if you take whatever rates it would have been typical for this time of year and you include a third night free or you include Certain dining dollars or you include free activities free luau or different things that's going to enhance their stay And then that way when the market recovers you can just take away some of the free offers and go back to normality And it may sound a little bit callous You're worried about rate when we're on the worst possible time, but this is survival I mean this is survival for the long run and Hawaii's an expensive place to do business We've get some of the highest ADRs in the world because our product is worth it But because we have owners putting hundreds of millions into the product continually and trying to improve it We have siren some of the highest wages in the US We have some of the highest benefit costs in the US and our employees deserve it because they work hard You know destination that runs 85 to 90 percent occupancy. So I think it's going to be Absolutely critical that we try to get things back to somewhat of a normality as soon as possible One area that will probably benefit as a as a leisure destination. We're only about a 17% group Business, you know, I wish that was much higher 30% over time But right now destinations like Las Vegas and other strong group destinations are going to have a much harder time coming back Because the groups aren't going to book right away. It's going to take a while So I do think we can really drive leisure visitors And I think in a 60-day period assuming the airline seats are there We can get back to some kind of normality after the start of it So 60 days after the 60 that you have to go through what we went through Well, indeed it is survival you mentioned that and I think it's not only survival of the industry here and all the ancillary businesses Survival, but it's also survival of the state because as as tourism goes so goes the state of Hawaii no question about it That's a clearly established rule. So query in the meantime We can't afford to lose you the state cannot afford to lose you Is the industry seeking a bailout is it seeking special special, you know funding from the state or the Fed? I think they're gonna look at that right now You're just trying to deal with what goes on every day some of the major hotel companies are dealing with Have met with the president and looking at what can be done as the airline industry But what we need here is local leadership, you know, I remember after 9-11 Walter Dodd's calling me and saying I got I want the five mayors. I want all the heads of the hotel companies. We're going to Japan We're gonna visit every major customer there and we're gonna talk to them and ask them to come back to Hawaii You know, that's the kind of leadership we need I noticed the other day on the governor's committee He had Peter Ho and Peter Ho said we better be putting together a marketing plan We're funded by you know strong Cohesive dollars that we can get back into the marketplace when this is over So that kind of leadership from the business community that kind of leadership from government that kind of leadership from the community It's gonna be crucial because no one segment can do it alone We're gonna have to get back to people and I think in the end of the day when you put in Hawaii in front of people They'll generally trues us nine times out of ten putting aside the issues with cost and distance But if they can go anywhere in the world, they want to come here Well, you know one of the things it seems to me is exactly what the condition of the state is at the time You know, we we sound the old clear signal, you know, for example, if there's any issue about a continuing Epidemic continuing contagion and that's a real problem because I think the biggest marketing Message that you could ever give is it's safe Come here and say it's safe again. You don't have to worry about it This place is completely under control and you can have the brand that you were looking for before that we all had before But how do you do that? And when do you do that and to whom do you do that? Well, you got to be very careful I mean, we have a saying here bachi, you know the minute you talk safe Terrorist you have none of that bachi gonna get you so you try to talk more about the experience But I think everybody's gonna come out of this with a greater sense of the importance of cleanliness You know when you go on cruise ships, there's 10 sanitize every you go. We're gonna have a lot more of that Allowing the homeless to be living on the pavilions in Waikiki When the restaurants are gonna be closed and you have to do takeout. I mean, that's just crazy So I hope we take this opportunity to really institute a much higher level of cleanliness So that people feel more comfortable on an ongoing basis because today it's this virus. It could always be something else at another time So I think that part is gonna, you know, probably stay with us at least hopefully for a while Yeah, well, you know one one thing that Interests me is something that you said when you came down to our program what three or four years ago I don't know if you remember. Yeah, and it was this whole thing about relating the industry to the community That was your that was your most important memorable point to me. That's what you spoke about How do we make the industry relate to the community? How do we make the community relate to the industry because over the years, you know It hasn't been perhaps as close as we would have wanted it to be And there are things that we can do could do and hopefully will do that will bond us up closer Make us appreciate and make the hotel industry appreciate the community may be better than before So at the same time people say when we're finished with this epidemic things are gonna be different I know I can tell you my life is gonna be different. My family's life is gonna be different I'm gonna have a different view of the world. I'm gonna appreciate every day of being alive more Hopefully when this is over. So my question to you is How is this gonna change if at all you mentioned a number of changes that will take place within the hotel tourism industry Can you speak more about the change say in the mind of the community the change in terms of the relationship of the community? Is it gonna change and if so, how? You know when you think about we've had yearly growth since the since the recession was over in 2008 2009 and the community Was just getting the brunt of it by the Rena cars and everything else going on But when you dig into that We had 56,000 hotel rooms 10 years ago and we had 7 million visitors and today we have 57,000 Hotel rooms when we have 10 million visitors So I think what's happened in the last three or four years is the huge growth in alternative accommodations Has really In a way hurt the perception of the industry Because all of a sudden tourists are all around people. They're at the beach. They're parting by the pool at night There's 10 people in a house that normally has two people So I hope we can separate this issue and people I think people will again understand how important tourism is And that may scare them a little bit, but they're also going to realize that over time We're pretty consistent and we've had good growth And acceptance of the product But the industry has got to find a way to work with the communities to get a hole in the Whole of these alternative accommodations and make sure it's what the community wants Some areas may want them some other areas may not want them. I think that's up to the community But we have to be careful because airlines needs, you know, need passengers and seats There's a lot of restaurants that do business and a lot of shops and retail to do business with this But I think it's going to be an opportunity for us to get a hole of this issue that Is very you know, you have people on clearly on both sides for some people who make money by doing this It's very important. So we need to get a hole of that But I think on the overall basis people are going to realize how important tourism is to the state Maybe even lee kataluna Absolutely we're all going to have to get on board because it's the driver So the other thing comes to mind in the same vein is so we have a certain balance between Waikiki And the neighbor islands the neighbor islands have some fabulous hotels Sometimes the the people in island like the hotels sometimes they don't like that, you know But it's always a source of of jobs and revenue for them And I wonder if you see any changes in that balance going forward when we come out the other side How is the industry going to be spread around the state? It would be the same or different I think because of the physical issues and the cost of building anything in hawaii I don't think it will be physically much different But I do think there's going to be a need to incorporate more into the community with our product And also have people experience What hawaii has to offer now One of the reasons they come is they do some of that would get an ice shave in haleiva or Go paddling into the sandbar in kanaiwe bay We just have to find a way that locals are accepting of that so that we don't infringe on their spot in kanaiwe bay that we don't Take their beach spot that they go to so it's not easy to do But I think we're going to get a sense of as this grows back up. Let's do it better and let's do it right this time It's an opportunity So last question keith, you know, you're obviously involved in this up to your eyeballs I wonder what your personal, you know agenda and expectation is On how you can participate in making this recovery most most efficient I just want um We're going to have to get to in the next two to three weeks I think 60 70 of the hotels in the state will close if not more Especially if this continued bad news comes forward and they find the virus being spread by airborne or other issues that are that are going on So it's going to clearly get worse before it gets better It's going to force government to come up with More plans to help people be able to remain financially. I don't want to say hold but survive You know if the senate bill goes through and people get sent a check of a thousand dollars on april 6 Well, that's a good start. Uh, the benefit side of it is one that scares me because of the cost of benefits But um, I think that's going to have to happen For me, I want to work with people who want to talk about the recovery Because we will get through this And when we do we need to be the first to market we need to Continue to put hawaii in that positive light I mean this you could travel anywhere in the world and when you say hawaii The smile on that beautiful wonderful place We have to make sure we don't lose that and perhaps find a few more ways to enhance that So that visitors do want to come here and spend the 18 billion dollars They were going to spend this year on an ongoing basis not necessarily the number of visitors But visitor spending has to continue to grow Keith fiera makes my heart pound. Thank you so much for coming down A hotel leader at tourism ministry in hawaii And I hope we can meet again and follow up in the weeks to come. Thank you so much. Thank you. Thank you for having me