 I'm Jay Fidel. This is ThinkTech on a given, what is it? Wednesday. And we're talking today about how the reopening is going for tourism in Hawaii. You know, I mean, it's been a problem in my lifetime anyway that the, you know, that tourism and the regular, the regular community are kind of separated. But we really have to care about tourism now. Tourism is the engine of our economy. What was on in Waikiki and the tourism industry affects all of us. And increasingly so, it is what makes this state tick. Don't forget. Okay, so we got to, we got to talk to people who, who do know about what's going on in Waikiki, like Allison Schaffers from the Star Advertiser. She reports on it. Star Reporter, and that's her beat, Waikiki and tourism. And she knows so much about it. It's really amazing and wonderful to have her on the show. Thank you so much, Allison, for coming around. Oh, it's my pleasure, Jay. Thank you. So, you know, you had this really interesting article. It was a couple days ago. It was really valuable to read it because it, it gave us a window inside what was going on with the hotels, big and little. And for that matter, other businesses that were accessory to the hotels. So can you talk first about the hotels? As I'm, I'm, you know, looking at the article, there are 270 major hotels in, I guess, Waikiki or maybe that's the state. A lot of them are, they're not doing business. What's the story? Okay. So the 270 number is from a list of watching, maybe the top lodging accommodations across the state. So that's if you take the top hotels and timeshears and condo hotel. So of that number, less than half are currently open. And one of the things that's interesting, I spent some time computing that yesterday. If you take a look at who's closed, only about 40% were planning to reopen for the August 1st even. So we still have about 142 properties out of that 270 that are closed and only about 40% of them were going to reopen for August 1st. Other, other ones, and there are a lot of the big box, big brand, large properties are waiting longer because in a lot of ways, reopening, if you've got a huge property with huge infrastructure and energy costs, it's more expensive to reopen at very limited occupancy. Yeah, some of them, some of them have taken the approach of refurbishing the hotel. A couple of them you mentioned in the article, including I'm remembering the Holly Kalani for one, and they don't plan to reopen. They might have reopened earlier if there wasn't all this up down about, you know, lockdown and then reopening and then lockdown. But they're talking about the middle of 2021 now. What's going on there? If you look at a property like that Holly Kalani, they have a huge inflow typically from Japan. And while Hawaii has been working on trying to get a travel bubble or a travel corridor with Japan, we like their low numbers and we thought they would like ours. The issue is it's really hard for any other country to separate Hawaii from the rest of the US. And so while we're working on bringing, trying to formulate travel agreements with places like Japan and Korea, New Zealand, Australia that have like-minded philosophies about COVID and limited case numbers, we haven't... Those are the bubble countries, right? Those are the bubble countries. But we're not, you know, everybody says, oh, well, let's just reopen the bubble countries. We feel like we'd rather have those visitors back than the US visitors, which is our core market. And here's the thing, you know, they don't want us back right now. And if the Japanese visitor were to come, they would have to quarantine to Hawaii, which is part of the US. They would have to quarantine for 14 days upon their return to Japan. And there's not very many people that, you know, want to do that. And therein lies the problem with that. But you take a property like the Hale Kalani, and you take some of the main Waikiki ocean fronts, far more heavily dependent on Japan than the rest of the state. And that's not looking too promising. And so, yeah, I mean, at some point you have to look at your numbers. And if your numbers are going to be too low to make a profit at all, in some ways, it suggests that maybe you're better off borrowing money or reinvesting so you can be repositioned for the future. Yeah, are any of these hotels on the market? Are they trading? Because, I mean, if I'm a hotelier that's not making any money and I don't see a way out of this, at least not for the short or intermediate term, my first thought is going to be to find a buyer and get out of the business. Yeah, I think, you know, in other times, we've seen that. I think it's a little early yet. One thing, the lenders, they're still been working with a lot of the properties. I think statewide, we have probably somewhere between 40 and 50 properties that are on the, you know, the watch list for the commercial back securities. That doesn't mean that they're necessarily in default, but it might mean that, you know, they've got some sort of an arrangement. So they're being steady. But honestly, when it comes to hotels, most of these lenders, they don't want to take back a hotel that's, that's, it's hard to run them anyway. And the best of times, it's very specialized. And when it's the worst of times, how is that going to be helpful to them? I understand from talking to the industry that most of the closed hotels are still losing between 1 million and 1.5 million every month just to be close. So if you take that back as the lender, it's, it's, that's not necessarily desirable either. And I think we'll see, we'll see some defaults. If this carries on, I think we'll see some sales. In the past, we've thought we've seen sales in these times. Hawaii being Hawaii, we haven't really seen fire sales. We tend to trade at a premium. I hope that still happens in the future. You know, but if you look at other destinations, we're not necessarily any worse off, it's just that we depend more on tourism here than some other places. What about repurposing the hotel? I mean, for example, there was talk about make putting the homeless in them because the homeless are very exposed to COVID in their homeless way of living. And likewise, you know, the issue of taking COVID patients, I don't know if we've achieved that level of COVID patients, but there was also talk about, and in other places this has happened with hotels, tend to be hotels in other places. I wouldn't say that the hotel industry is unwilling, but again, that might be a little early. If we see that in other places, what we've seen is that the government would tend to take out a contract at a particular hotel and more or less lease the space and the government is paying for this program. From a hotelier standpoint, that's probably not the first way you want to recover your money. I mean, can you imagine being marketed later as the homeless hotel? It doesn't exactly, you know, it's not what people think of when they when you're having your traveler's book a trip to Hawaii. Or the COVID hotel, for that matter, there's been other properties that have turned into places for quarantine or places for COVID recovery or hospitalization. We may see that down the road. You know, our numbers aren't such that we need that right now. And, you know, I don't know, though, there may be, if we don't get these hospitality workers that to work, there might be an awful lot of new families that actually are part of the industry that are now homeless. So what about now? You know, we have the August date. We have this potential hybrid of the quarantine and then the pretesting on the mainland or wherever so that we can get a certificate. You know, is that how does that affect the market here? Does that build the confidence in the public? Does it build? Does it build the hotel guests? Does it build the industry? Is it affecting things in any material way? I think there were a lot of problems with the August 1 reopening because they didn't really fill in a lot of the details quickly enough. So actually, if I talk to a lot of the hotel industry, which is part of the reason I think we were only seeing about 40% of the hotels that were closed planning to reopen for that August 1st date, they were actually a lot of them were seeing fewer bookings, so more cancellations for August and September than they were seeing future booking. So it's going the reverse direction. A lot of that was I've heard from very disgruntled travelers, many who have rebooked their trips three times or more to Hawaii without knowing at the time it was announced without knowing if children would have to be tested, not knowing where to get a test, how much it was going to cost, checking with their providers and finding out some of them wouldn't test unless you were sick. Some of the providers were saying they wouldn't even CVS was telling people in some places that they wouldn't get the test results back from it would be an average of five to 10 days. And that's, you know, with the 72 hour window, that's pretty risky for a traveler so much to come to Hawaii and then worry that if they don't get the test result, they would have to quarantine. Now, Governor E. Gay on Monday when he rolled back the date to September first, he did answer a few details, he did say all children would have to be tested. That's pretty humbug. I don't think travelers will like that. But the one thing that he did say that I'm getting some good feedback on is that if you take the test and you don't have it back in the 72 hour window, that you could come here and quarantine until you got the result back, and then you could be out of quarantine as long as it was negative. That's probably a pretty good compromise. That will help. I think the other issue with the pushback now, you know, it gives us a chance to restart bringing tourists back. But I think that there's this perception that somehow the floodgates are going to open and we're going to have 10.4 million visitors or like last July, we had over almost a million visitors, you know, nowhere near. And part of the reason is some of the things that you and I had talked about before that travelers don't necessarily have confidence. Some people don't have confidence in traveling. It's going to depend on what level of confidence they have. And some of these things are out of Hawaii's hand. Some of it's the economic issue. A lot of it's the, you know, with COVID cases sweeping the mainland, especially the some of the US West states where we rely on 45% of our visitor rivals typically that that is not conducive to thinking about planning a trip. If I'm told it's so dangerous, the California governor and I live in California is closing the bars in the restaurant. And he's going to, you know, make me stay home. I'm not thinking about booking a trip. So in some ways, this delay, we might have, we already missed the summer peak travel period for families. We might have missed another window because there was a time when COVID was not as active as it is now. Now we've got a more active period. So it's hard to say, you know, when we reopen what that's going to look like. But, you know, even on a good year, September or October are not peak travel periods. Well, okay, that gives me a tiny bit of comfort. But you know what? This this thing about the quarantine, even when it was first adopted, I personally, I was skeptical. Why? Because most my observation is that most tourists who come here do not come for as much as two weeks. They come for like a week. That's that's the package. And so how can you possibly spend two weeks in quarantine when you have hoped for getting out and doing stuff and getting out of your hotel room? I just can't imagine that working. I can't imagine a tourist legitimately sincerely intending to come here and spend two weeks in quarantine. Have they been doing that? Or have they been breaking breaking the rules? We neither are some quarantine breakers. We've sent some of them back, including the what the last month that was the 21 members of the carbon nation on the Big Island. On the other hand, I do think that the definitions of who is a visitor and who is a returning resident and who is an intended resident can be somewhat blurred. And I do think that there's a fair amount of people who might be originally from Hawaii or might have family in Hawaii that are either furloughed from their jobs for a very long time or have been laid off and and they may be coming and they may be willing to quarantine for a time. If you're planning on staying, you know, for the entire summer, two weeks at home is probably not so bad, especially if you came from a place where the lockdowns were worse or you had food or shelter insecurities, those types of things. So it's really hard to say. We know that since April, the COVID Flight Assistance Program through the visitor Aloha Society of Hawaii has sent back about 157 visitors who were not prepared to quarantine. And in some cases it was it was flagrant disregard. In some cases it was just lack of knowledge. But in any case, Hawaii didn't pay for all those tickets, but they some in some cases they paid for the whole ticket or a portion and those people have been returned home. Oh yeah, I wanted to ask you that. So yeah, so I have a ticket. It's a return ticket. The dates are fixed. This is a problem. You know, the airlines are pretty inflexible about that. And I get here, I violate the quarantine. The state of Hawaii tells me I got to leave and you say this, the state is paying their way back. That means me as a taxpayer, I'm paying their way back. In some cases, like say somebody comes and they don't have any money or any means. The only other alternative is to put them in our prison. So in some cases that might be more expensive. I don't know out of the 157 how many have gotten full freight. Sometimes the help is just getting their flight, the airline to allow them to return and the state hasn't spent any money on that. So you know, it just depends. What about the airlines? We spoke about public confidence and all that. What's the state of affairs on the middle seat right now? If I want to have confidence, I'd like to see the airlines make it as safe as they can for me. I'd like to see the guy at my right and my left wearing a mask all the way through and I'd like to see an empty seat. It's not a complete solution, but at least it gives me some confidence that the airline cares. You know, I think that all the airlines are taking some steps to restore public confidence. Some are doing more things than others and it varies slightly. I think most of the carriers are requiring masks. The middle seat, originally most of the carriers had committed to it. I understand a couple carriers have bowed out of that and are already booking middle seats. So you know, I think it's like anything else. The onus is on the consumer to double check before you book and brands are different for a reason. So certainly if you want to come to Hawaii and you don't want the middle seat to be filled, there are some carriers who are flying without a middle seat at this point. I don't think though that that's going to be the travel of the future. It's not sustainable for the carriers to be able to afford that. You know, I think currently right now the load factors are so small that it's not as big of a deal. Later they're going to need some revenue coming in, especially when they don't have the federal bailouts. So I think, you know, we can expect to see that for a little bit, but I don't know for how long into the future. Yeah, well I hope we got a recover on this. I mean, you know, I'd like to talk to you about the factors that enter into this decision process by the government and by the hotels. I mean, one is the union and all those people was at local five. We had them on a show a couple months ago and they were very concerned about their people as they should be. And you know, the query whether they had the deep pockets to keep on paying benefits on an indefinite basis. But then you have the hotels themselves. They are a serious lobbying force. They don't mind going down the legislature. They don't mind talking to the governor and so forth. And they're going to be asking for reopening. They're going to be asking for every opportunity to get back in normal. How is that working? Because, you know, it may not be the best thing for the state in general. People outside the tourism industry may be maybe worried about that. And, you know, where is the political and economic influence on this? Where is it coming from and how effective is it? People worried about, I just want to make sure I understand your question. People outside the visitor industry worried about what in particular? Well, they worry about some some guy coming here right now, quarantine or not, and bringing the virus. They worry about, for example, testing a person, finding a person who is sick, testing that person, tracing that person, tracing everybody he talked to, and finding out what, you know, where the infection went from him into our community. I'm not sure we're doing that. So that's a concern of the person outside. And then on the other side of it, the hotels want to reopen, I think. The union wants them to reopen, I think. So where is the tension on that? I think there are a lot of detail to still be worked out. Obviously, we're trying, they're trying to come up with this September 1st now reopening plan that has some rules that you would be subject to a pre-arrivals test, and that if you didn't have the negative result, you would have to quarantine when you got here. Obviously, we know that's not a foul-proof method, because in many ways, as you pointed out, the quarantine is it's mandatory, but it's still kind of on the honor system. We could do something different, other destinations have. Some people are pushing for that in Hawaii. Ultimately, I don't know, you know, if that will get any traction or not. There are destinations like, I think Cambodia is one of them, that if you go, you're required to do about a $3,000 deposit that pays for your quarantine intel and all of your meals until you're out of quarantine, and you know, they take that stuff very seriously. There's some destinations that are doing that. Other destinations are requiring a second COVID-19 test, with the idea that if you stay more than a few days here, that they would want just to make sure that you didn't pick up COVID-19 on the flight, or in some other you know, if it or even before you got here, that in the window between the test and you getting on the flight, but you it didn't materialize. You know, certainly, these are things that we could do. There's a bit of an outcry from the visitor industry. They don't want to see that, because they feel like if we make it too onerous that visitors won't want to come back, and they're not looking at very many visitors returning as it is. I mean, I was on a conference call earlier today with local five, and even for the August 1st reopening, some of the bigger properties were talking only about bringing about 12% of the workforce back, and that's based on they think their occupancy is going to be about 12%, and then they thought the next month they would bring back 20%, and then 30%, and then maybe 40%. From what I'm hearing in the industry, we're not expecting to see, you know, 50% occupancy into maybe in the holiday frame if we're lucky, but probably not until next year. Yeah, it's pretty serious now, because our economy is dependent on tourism, not just the hotels, but all the accessory, you call them accessory, you know, businesses in your article, and I really wonder if we have a sense, if people in general have a sense, and whether you have a sense of how profound the damage will be on a long-term basis. You know, if you extend this whole process into September and October, oh my gosh, and then, of course, is the Christmas season where, you know, so many people come here, and we may not have that. If it's a function of the vaccine, I'm not sure we will have the confidence necessary to bring those people over here by the millions, essentially. They're not here, what happens to the rest of us, because that money, you know, feeds through the whole economy, keeps us all going, and if we don't have jobs and we don't have that money filtering through the economy, gee whiz, what happens to Hawaii? Fact is, it's the engine of our economy, so you must be thinking about that. What do you think is going to happen here? Because we have no immediate solution. Let's talk about a vaccine and a therapeutic, but no immediate solution. And if you had to make an optimistic guess, you would say, well, sometime in the spring, can this industry last until the spring? Not without some additional bailouts or support, and certainly the people can't. I think part of the problem that we have in Hawaii is, you know, but it's not just Hawaii, it's everywhere. People find it hard to pivot, you know. We went into this, we started the year out with the lowest resident sentiment towards tourism ever. We had 10.4 million arrivals that brought in about 18 billion dollars in visitor spending, but on an adjusted basis, it was really only about what we've had when we were bringing in, you know, 6.5 million visitors or so. And because of that, and because they were pockets of the community that were feeling over tourism, there was a lot of a resident sentiment against that. And the natural inclination, I think, now, and it's a wise one, is to take a look at how we can rebuild tourism in a way that would be favorable, and it would take into account some parameters that would make people feel like there was less tourism. The problem is we really started discussions about rebuilding tourism, probably too late in the cycle, and now we're entering a phase of desperation. You know, it works when you take some time to think about adjusting a destination, and the reason I say that is, look at Kauai. They were shut down for, the North Shore of Kauai was shut down for more than a year because of mass flooding, and when they reopened, they put into place the tourism management plan for Hain Estate Park that really did help that community feel a little bit less overburdened and overtaxed by all the cars along the roadway and, you know, not being able to go to their own natural attraction. We could do that for the state of Hawaii too, but I think we've gotten into the situation where those discussions should have been taking place immediately as we collapsed tourism, as well as the discussion of how do we start bringing it back. But we were so panicked about just trying to be safe, and I understand that, that now we're kind of playing catch-up, and it's very difficult. You know, you talked about people being afraid, you know, with tourists coming, and you know, I definitely get that, but without a pre-arrivals testing program or some protocol in place, what we're left with is basically a quarantine model because we cannot stop U.S. people at this point from coming to Hawaii. It's a state, and as an American citizen, you have a right to go to any state that you choose to. And so we cannot stop people from coming into Hawaii. We can insist that they follow the quarantine, which they may or may not. Or, you know, we could put in a testing program, and we might get a few more visitors, and we would hope that, you know, probably the visitors that would be willing to jump through those seats are a more compliant and well-heeled sort of visitor because I'm hearing that the test will probably cost anywhere from $150 to $300 a pop. And so if you're looking at that, that's the sort of visitor that Hawaii typically has said we want fewer visitors coming that are able to spend more while they're here. You know, but beyond that, the whole delivery aspect of it is something we have to talk about too. When a visitor gets here, if things are not open, if they have to wear a mask everywhere they go, if the residents aren't welcoming because they don't want them here, because there's not that confidence, if they can't get housekeeping in their hotel rooms, if they don't have service, if they, you know, we're going to have the other issue of what kind of an experience can we provide for them. So these are all discussions that need to be taking place as we head into this September 1st reopening, and hopefully since we had the August 1st start and stop that gave them a little bit of a head start on preparing because, you know, last week we certainly weren't prepared for the August 1st reopening with less than a month in, and so hopefully with, you know, now that there's a little bit more time they'll work out some of these details. Hope so. It's a matter of rebranding, you know, it's not so easy. It's a matter, for example, of putting ultraviolet light in these hotels, you know, to kill virus. They do it in hospitals, they can do it in hotels, and if I'm a tourist and they tell me, oh yeah, you know, between visitors we go through every room and we use ultraviolet light, I feel better about it. It's a branding issue, and I want to think that Hawaii is not only clean but super clean. But let me ask you my last question, Allison, because we only have a few minutes left. It's probably the toughest question of all, I'm sorry. So you mentioned that this is the time to think and maybe reimagine what tourism is like in Hawaii. This is the time, not later when we're, you know, in greater trouble, not later when a lot of companies and tourism organizations have folded. And so, you know, I'm a little worried, for example, about Alamoana. That's an accessory retail establishment. It's directly connected to tourism, of course. Now there's talk about building condos in part of Alamoana instead of having shops. Now that's troubling in the sense that those condos are not necessarily going to be for local people, are they? They're going to be for investors offshore in Asia, whatnot. So you say, well, that's a change. And then maybe that comports with, you know, the dynamic of, you know, of the new world, of the new COVID world. But it's not necessarily something I would treasure myself. And so the question is, what do you see for tourism in the new post-COVID world? When the problem is solved and people start coming back and we have to rebrand ourselves and attract tourists, maybe not in the same numbers, and integrate that tourist experience with the, you know, the local community, somehow they get it all harmonious. How do you envision tourism in Hawaii when we get through this thing, the other side of the tunnel? You know, I think what has always been special about Hawaii is the culture and the environment. I think that that needs to be front and center. You know, and that those are going to be some of the discussions probably. There are destinations in the world like the Galapagos Islands and places like that where people are willing to pay a premium to go for a very special, very unique, very exclusive experience. And you know, that may be more where we're headed. The mass, mass tourism of Hawaii when we opened it up for jet travel and anybody can come to Hawaii. You know, they'll still, I think they'll still be, that'll still be a part of the tourism economy, but maybe less though as we try to pivot into more what the community would like to see. And now that they're launching campaigns right now and, and, or starting, starting to go towards that direction and what they're hoping for, appealing to visitors to care about Hawaii that want to do what's right for this place while they're here and are already invested in our destination. So you know, hopefully those are some of the discussions that are taking place. You know, how do we make our rules and lockdown get us to there rather than just using them to stop travel? How do we use them to reopen travel in a way that we would like to see it reopened? Yeah, Alice is great to talk to you. You know, there's a long road here and it's still going to be central no matter what happens to the state of Hawaii and you're going to be there, you're going to be on it, you're going to be reporting from it. And we hope we can check in with you from time to time and see what's happening. Really appreciate it. Oh, my pleasure Jay. Thanks so much. Aloha, Allison. Aloha.