Tourism in Troubled Times
Price of Paradise · Hawaii Public Radio · aired 1994-04-09
Guests: James Mak (Professor of Economics, University of Hawaii); Ken Tucker (Distinguished Professor of Travel Industry Management, University of Hawaii)
Duration: 0:26:00

[00:00:05] Randall Roth: I'm Randy Roth, host of the Price of Paradise radio show. My guests this week are two internationally recognized experts on the subject of tourism. James Mak is a professor of Economics at the University of Hawaii and has served as a consultant on tourism for numerous companies and governmental bodies, including states such as Hawaii and Nevada. Ken Tucker is the Mason distinguished professor of travel industry management at the University of Hawaii, on leave from the University of Queensland in Australia. Well Ken, as the Mason distinguished professor, you've been around. You've seen tourism as it's provided in various locations around the world. How would you say we stack up here in Hawaii?
[00:00:46] Ken Tucker: I think Hawaii has a great track record, Randy. And that that record has been a little bit blemished by recent times, and so people are concerned about the downturn in tourism numbers and what may be causing that. There's no doubt that a lot of other destinations have come on stream, and they're taking some of the business away. But the real question is, is there something that's being done here in Hawaii that could be done a little bit better and bring those visitors back again.
[00:01:17] Randall Roth: Well, is there anything in particular that comes to mind that we could be doing better?
[00:01:21] Ken Tucker: Yes, destinations depend on either increased numbers of visitors from old markets or or those from new markets. And maybe you're not attracting quite as many of either of those segments. The visitors from old markets normally like to try some new products or services while they are here. And those from new markets perhaps need a little heavier promotional effort to make sure that they do come. I'm thinking of for example, Taiwan and South Korea, where other destinations seem to be attracting larger numbers of those visitors, and the growth rate out of those countries is quite substantial.
[00:02:02] Randall Roth: Well, Jim, are we marketing now to those those folks?
[00:02:07] James Mak: Not as much, not as much as I think we ought to be. In fact, I in a study I did a few years ago, noted that Taiwan and South Korea were potential booming markets for Hawaii. I think we got into the market late in the game. Well, I think we are doing some making some effort today to catch to catch up, but there's no question that we are not getting our fair market share of the outbound travel coming from both of those countries.
[00:02:36] Randall Roth: Whose job is it to do that marketing or to decide how that marketing is going to be is going to be done, Jim?
[00:02:42] James Mak: There's no question that the state of Hawaii through the HVB is is responsible for marketing Hawaii Travel. That's the Hawaii Visitors Bureau.
[00:02:51] Randall Roth: That's correct. And so the the state is mostly funding that, and they're deciding how to market, where to market, all that sort of thing?
[00:02:59] James Mak: I'm not I'm not sure that the state is dictating where the money is allocated. I think the HVB ultimately decides where the market where the money is allocated.
[00:03:09] Randall Roth: Okay. Well, Ken, you were commenting that one of the areas where perhaps we could do a little bit better is is in the marketing. Uh, are there some other areas where perhaps we could do better?
[00:03:20] Ken Tucker: Yes, I think it so, but if I may make a comment on the allocation of funds that is that is designated for these new markets and the extent to which the HVB is liaising with inbound operators that are featuring those markets and their service packages. A study by graduate students at the Travel Industry Management School recently showed that the Taiwanese travel operators here in Hawaii had very little relationship with HVB and very little discussion of of their programs or their targeting. So, I'm not sure of the amount that's allocated to that market out of the total budget of of of the HVB, but at least it appears that there's not effective industry liaison with those inbound operators.
[00:04:11] Randall Roth: What else could we be doing better?
[00:04:14] Ken Tucker: I think I mentioned earlier that there are some new products or new service packages that could be offered and here I'm thinking of two that might be of interest in what we would call a high yield services. One is health related tourism. There are many people coming to Hawaii from the Pacific Asia area already for various types of elective or planned surgery bypass surgery, cataract surgery and so on. And there's no better place in the world to recover and recuperate and speed up the healing process so that we could perhaps combine much more of our standard recreational tourism with what we might call wellness or or fitness and elective surgery.
[00:05:06] Randall Roth: That that makes an awful lot of sense to me. Jim, is that something that that we have been doing here in Hawaii, at least to some degree?
[00:05:13] James Mak: Oh, we have been doing that to some degree, but not specifically targeted with that purpose in mind. I think I was in the hospital recently and it turns out that doing the Christmas holidays, you find that the hospital admission is quite seasonal, and a lot of the the hospital admissions in the St. Francis Hospital here, it turns out to be tourists. So, I asked the people in the hospital whether or not a large proportion of their of their inpatients are in fact tourists. And they said yes, indeed they are. So, we've been getting that business whether or not we have been trying to get that business by policy or not.
[00:05:32] Randall Roth: Well, is it HVB again, the Visitors Bureau, that would try to to create this new product or is that something that would come from our Department of Health or from some other place, Ken?
[00:06:03] Ken Tucker: I think perhaps the initiative Randy should lie with the industry itself because it's in the product development area. And some work that we're doing for Queens International Corporation currently and also for DBED, is to try and support a stronger strategic alliance between the hospitality industry, the medical profession and and the hospital, uh, healthcare providers or suppliers. So once that alliance is there, I'm sure that there will be some new products, the developments as well as the possibility then of the state to promoting and and supporting through the Department of Health and its other agencies, these developments.
[00:06:48] Randall Roth: Great. Well, I want to come back and and ask you about some other areas where we might see improvements. But so I don't uh seem too negative. Is there anything that we're doing here in Hawaii right now that we're doing particularly well that you're impressed by as compared to how other tourist destinations are dealing with it, Ken?
[00:07:05] Ken Tucker: I'm always impressed when I come to the USA at the level of customer service that is that is offered. And I think that if you can apply that to some new product areas whether it be health related tourism or ecotourism uh then you will very do very well with those new new products. I think also in your training, clearly the Travel Industry Management School here now 25 years old is the best in the world at turning out graduates who are very, very skilled and strategically oriented towards the future of the tourist industry.
[00:07:40] Randall Roth: Now are you saying that to be nice or is that something that people around the world uh also uh would would say?
[00:07:46] Ken Tucker: That is recognized internationally uh in Europe and in Asia and uh in the Pacific basin. So that uh I'm not saying that because I was invited to come here. I'm saying it because it has that reputation and deservedly so.
[00:08:00] Randall Roth: Great. Jim, uh what do you think? Is there anything that we're doing particularly well here in Hawaii right now?
[00:08:05] James Mak: I think we do a pretty good job of tying tourism to some of the other segments in the travel and in the economy. For instance, uh we have uh you see that when the tourists come to Hawaii they buy buy aloha wear for example. You don't see a lot of that in the other um Pacific islands uh for instance. In addition to that, uh we tie our tourism to the local culture better than I think many of the other Pacific islands do. So, compared to other Pacific islands, we we do a good job of incorporating uh the the local culture and tie our tourist industry to other segments of the economy better than I think in many other places.
[00:08:48] Randall Roth: Ken?
[00:08:48] Ken Tucker: Perhaps one exception to that is uh the design of the new Interisland Airport or Air Air terminal. [unintelligible — audio glitch] I hope that your convention center is not an exception to it as well because I think that having something that is distinctively Hawaiian in terms of its sense of place and the atmospherics, the music, the craft where, [unintelligible — audio glitch] flowers and leis and so on is something that is distinctive as Jim said, about the product here. But unless it's conveyed through every facility and every aspect of the tourist servicing chain, then of course some people say what's different about this place I've just arrived at? Uh I could have been in the Caribbean or or uh on a Pacific Island.
[00:09:35] Randall Roth: Or some would say a coal mine. You're listening to the Price of Paradise radio show. I'm Randy Roth, and my guests this week are Jim Mack, UH professor of Economics, and Ken Tucker, the Mason distinguished professor of Travel Industry Management at the University of Hawaii. Well, what about uh our our vision for the future of tourism here in Hawaii? What sort of strategic plan do we have in place, Ken, and how does it stack up against those in other locations?
[00:10:04] Ken Tucker: Yes, many destinations have a publicly articulated and agreed plan for their future. And most of those destinations are are what we would call newer or or less mature destinations than Hawaii. So they've looked at their target markets, they've looked at the sorts of services that they want to provide. The part private and public sectors have gotten together and said these are the numbers that we're going to try and achieve and this is the amount of money that we're going to spend trying to achieve this. This is the sort of infrastructure we need to support it. So those uh strategy plans if you like, are well known amongst the community. And not only in the tourist industry, but the community at large and widely supported. Take Singapore for example, uh it has grown to to have as many tourists as Hawaii but in a much shorter period of time, principally because they had this sort of strategic thinking about where their tourists would come from and how they would get them there and what they would do and how satisfied they would be when they left.
[00:10:59] Randall Roth: Why are you talking about their plan rather than ours?
[00:11:12] Ken Tucker: Well, um maybe although uh the industry thinks hard and long about these sorts of issues and there was a recent Congress where they were very very well discussed and carefully analyzed. Uh to convert that into a role both for the state because the state has other development interests for Hawaii besides tourism and a role for HVB in promoting those interests uh in terms of two different strategies, I think is probably going to be an important issue to face.
[00:11:43] Randall Roth: Are you telling me that we don't have a strategic strategic plan currently and I I mention that because on an earlier show a couple of weeks ago, we had some people who suggested that we really don't have a vision for the future of tourism right now. We don't have a strategic plan and I'm hearing you say that we certainly should. It's very important and people have done some talking, but there isn't a plan now?
[00:12:05] Ken Tucker: Well, I've heard figures for the year 2005 that range from 10 to 12.5 million visitors. I don't know that those are necessarily realistic projections and that we've looked at the footprint that those visitors might have on the community. And what I'm saying is that I think that that should be looked at in in more detail. It may well be that you could get by with seven 7 million visitors and not have a great expansion in capacity. If you could get visitors who would spend a lot more time here and to spend a lot more money doing certain things. So that that needs to be thought through very carefully.
[00:12:39] Randall Roth: Jim, would would you say we do have a strategic plan now? And and if so, do you think it's a pretty good one?
[00:12:45] James Mak: I don't think we have an operational strategic plan. What does that mean? It means that we have details about what markets we would like to target, what what kind of tourists we like to attract. Uh not just a numerical number like 7 million or 8 million or 12 million. We have been successful in spite of what we have not done in Hawaii. Yeah, Who should Who should be doing that and not to cast blame, but so in looking to the future, who should take a look at that?
[00:13:15] James Mak: Well, clearly, the state should be doing that, not the HVB because a strategic plan involves more than simply marketing, and the HVB's responsibility is primarily in the area of marketing and promotion. The state should be looking at tourism development.
[00:13:28] Randall Roth: And when you say the state, are we talking about the governor or DBED, uh the legislature? Just who are we talking about?
[00:13:36] James Mak: Collectively, uh all these entities should be looking at it with a with a final document that's agreed upon, passed by the legislature, approved by the governor and implemented by the executive branch of the government, basically.
[00:13:48] Randall Roth: Is one reason why that that hasn't been done in the past that we don't have a cabinet level person in charge of of tourism, that's been suggested by other guests. Is that an important point?
[00:13:58] James Mak: I don't think that's the reason not the I don't think that's not the reason. That's not the reason, excuse me, why I uh I believe we don't have a strategic plan. We've had an office of tourism since the mid 1970s and in spite of that, we don't have uh a tourism master plan. I think uh we've been spoiled by our own success. All these tourists have been coming in spite of not having a tourism development plan and so, well, we've been resting on our laurels but the times are today are not the same as the times before. We face far more competition in Asia and Pacific and other destinations and these people are aggressively looking at developing their markets and they are developing strategic plans. So we have to start thinking about how we're going to compete against these people. In addition to competing for tourists, we have to look at the impact of tourism on our local economy and our local residents, and that's another issue that the that the state of Hawaii has to address and that should be incorporated as part of the the strategic plan.
[00:15:01] Randall Roth: The feeling I have is that no one's doing that. That people are talking about 10 or 11 or 12 million tourists and and building the airport up to accommodate that, but I don't have the sense that somebody is looking at the impact on the community. Jim?
[00:15:15] James Mak: That is that is correct. Uh I think those numbers that they came up with were largely to satisfy federal requirements so that the federal government, so the state can continue to receive money from the federal government for airport expansion and infrastructure expansion. Uh those were to satisfied uh uh planning requirements, infrastructure requirements. They are not intended to be a a a planning document for overall uh development of tourist tourism in Hawaii.
[00:15:47] Randall Roth: Well Ken, in addition to some changes perhaps in in marketing and and new product development and and more work on a strategic plan and getting it into um the details operational form, what are some other things that we might do here in Hawaii to uh improve the health of our tourist industry?
[00:16:05] Ken Tucker: I think that uh training has to go on and uh it's commonly thought that employment in tourism is uh low level employment. Uh that's not the case. It ranges from executive managers or vice presidents of of hotels or or theme parks uh right through to the uh the proprietors of bed and breakfast outlets or nature based uh hiking enterprises. So training in management skills, um is I think going to be an ongoing requirement and that's something that no tourist destination can rest on its laurels in relation to. I would also say that uh one needs to look very carefully at what I would describe as the fragile ecology of some of your tourist assets. Uh I'm thinking of Hanuma Bay that that may be in jeopardy because of the numbers of visitors who regard that as as the preferred or or their top priority to visit. And whether or not you can create um uh other resorts or or other uh outlets for that sort of demand is yet to be seen. And whether or not you have to perhaps uh as some destinations are doing now, consider user fees, not only to ration demand and prioritize demand a little but to create the tax base that is necessary to reinvest and in maintaining the sustainability of those assets.
[00:17:42] Randall Roth: You're listening to the Price of Paradise radio show. I'm Randy Roth, and my guests this week are Jim Mack, UH professor of Economics, and Ken Tucker, the Mason distinguished professor of Travel Industry Management at the University of Hawaii. Well what about gambling? We've had several guests in the past say that they're opposed to the legalization of gambling for a variety of reasons. Uh we now have two tourists experts, or tourism experts. Jim, what's your thinking on gambling in Hawaii?
[00:18:13] James Mak: Clearly, the impact of gambling on Hawaii will depend on on its scale. And I've heard people talk about very different scales of gambling for Hawaii from uh shipboard gambling, which presumably will be a relatively small scale, to casino gambling along the scales of um Las Vegas uh Reno, and Atlantic City. Well clearly, the impact of gambling on Hawaii would depend very much on how large the gambling's impact would be in Hawaii, how how large we allow it to grow. Now, if I have looked at casino gambling in Las Vegas, there are lots of reasons why I think casino gambling of the Las Vegas
[00:19:00] Randall Roth: is type would not be good for Hawaii. First of all, casino gambling and the kind of tourism we have in Hawaii are really incompatible kinds of tourism.
[00:19:09] James Mak: Ken, do you agree with that? Just It seems to me that one of the distinctive features of Hawaii as a destination is that it doesn't have gambling, but it has a lot of other things. And it seems to me that if you added gambling, I don't think that you would necessarily attract a higher visitor expenditure or greater numbers of visitors. So I would say that it's going to be a very low-order dimension of attract attractiveness. Okay, Jim and that was one reason why you're opposed to it. Yeah, and the other aspect of that is that when I looked at the uh casino gambling Nevada, you know a lot of local residents in Nevada gamble as well. I estimated that between 10 to 20 percent of the total amount of gambling receipts in the state of Nevada came from local residents.
[00:19:54] Randall Roth: It came to about $500 per person per head for the entire population of the state of Nevada. For a family of four, that says a typical family of four let's say, would spend about $2,000 a head, excuse me, per family on gambling per year in the state of Nevada for 1986. That's a lot of money spent on the gambling. Right.
[00:20:15] James Mak: I come from a country where most people seem to be born gamblers, or at least risk takers, but I would make a comment about perhaps the leakages of spending offshore, and those leakages could in fact be partly attributable to gambling, but other sorts of expenditure as well.
[00:20:34] Randall Roth: The state hasn't monitored those what you what you might describe as imports of tourism services, or the other side of our balance of payments, with respect to travel services, and perhaps that needs to be done because from the statistics I looked at this week, what we have is greater numbers of Hawaiian residents leaving for other destinations. I'm not too sure about the purposes of those departures, but it needs to be considered.
[00:21:03] Randall Roth: Now the two of you are are experts on on tourism, but I and most of the people in the state aren't. Would you say that that most of us here in Hawaii have a pretty good understanding of the advantages and the disadvantages of tourism? asked another way, do do we overappreciate or underappreciate tourism here in Hawaii, Jim? The last survey, statewide survey was done by DBED in 1988, and from my reading of the results of the survey was that I think most people have a pretty good idea of the benefits and the disadvantages of tourism. In other words, most people feel that tourism is a mixed bag.
[00:21:43] James Mak: There are there are very good economic benefits from tourism, but they are but they recognize also there are some social consequences, social and environmental consequences. There's a trade off between those two.
[00:21:54] Randall Roth: You would agree, Ken? I certainly do agree, but I would say also that there is a perception in many tourist destinations where there are large numbers of visitors that somehow the local taxpayers are cross subsidizing access of the visitors to their resources or their infrastructure. The studies that I've seen suggest the reverse, and so that it really is the taxpayers who are getting the benefit of access to facilities that wouldn't otherwise be available, and those are being paid for essentially by the prices that tourists are charged.
[00:22:27] Randall Roth: What are the biggest threats to the health of tourism here in Hawaii? What are the things that we should be concerned about, whether or not we have control over it? What are the biggest threats, Ken? I think the biggest threats are whether or not you can contain some costs. Energy costs here are relatively high. There are other costs such as the levels of taxes that might discourage, not only tourists, but investment in tourist facilities. So one needs to look at that sort of, um, estimate of the cost competitiveness of your plant.
[00:23:02] James Mak: My feeling is that the biggest threat to the future growth of tourism in Hawaii is how local people respond to the growing volume of tourism. I think if people in Hawaii turn against tourism, it's clearly, it will clearly spell the death nail of tourism in in Hawaii.
[00:23:19] Randall Roth: And why would the people turn against tourism? I think if people are continually being crowded out from recreational areas, for example, that will be one of the factors that will turn people against tourism. I think, uh, in Hawaii, we've been thinking about how can we improve the tourist plant. I think at the same time, we need to come up with a recreational plan for the local residents in Hawaii. We haven't given enough thought recently to coming up with a master plan that will look at the recreational opportunities that opportunities for local residents. We hear about local residents being crowded out of Waikiki beach, crowded out of Hanauma Bay and the like. Well, people need to local people need to find alternative areas that they can go to and enjoy themselves.
[00:24:06] James Mak: I think if if we don't take care of these things, then I think local people will turn against tourism. And then that's the end of the tourist industry in Hawaii.
[00:24:15] Randall Roth: We're getting down uh to the end of our 25 minutes. Um, what would uh what would you say about the future of tourism? Are you optimistic about the health of our tourist industry here in Hawaii or do you feel differently? Ken, Hawaii has it has tremendous strengths by reason of its reputation and the customer service and the experience in dealing with the visitors here over so many years. I don't think that it will lose those strengths. It certainly needs to look at its competitors in terms of the sun-sand-sea destinations. It certainly needs to monitor very very carefully where its future growth is going to come from come from. And I would look again at the issue certainly that Jim Mack has raised about whether or not residents feel as if tourism is crowding out their access to uh to recreational resources.
[00:25:14] Randall Roth: Jim, you've got 10 seconds. Are you optimistic? I'm optimistic about tourism in Hawaii because it's still a beautiful place. Wherever I travel, when I come back to Hawaii, I I think this is a this is a beautiful place. So there's always a a future for Hawaii in tourism as long as we protect our resources here in Hawaii. Thank you.
[00:25:14] Randall Roth: Jim, you've got 10 seconds. Are you optimistic?
[00:25:18] James Mak: I'm optimistic about tourism in Hawaii because it's still a beautiful place. Wherever I travel when I come back to Hawaii, I think this is a beautiful place. So, there's always a future for Hawaii and tourism, as long as we protect our resources here in Hawaii. Thank you.
[00:25:37] Randall Roth: My guests this week were Jim Mak, UH professor of economics, and Ken Tucker, Matson distinguished professor of Travel Industry Management at the University of Hawaii. This week's show was produced by Jill Sinner with technical assistance from Rick Stanley. Next week my guest will be journalist Tom Kaufman. You've been listening to the Price of Paradise radio show. I'm Randy Roth. Aloha.
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