Tourism in Hawaii
Price of Paradise · Hawaii Public Radio · aired 1994-03-01
Guests: Richard Kelley (CEO, Outrigger Hotels); William Speicher (Senior Vice President Emeritus, United Airlines)
Duration: 0:29:51

[00:00:05] Randall Roth: Good morning. I'm Randy Roth, host of the Price of Paradise radio show. My guests this week are Bill Spiker, Senior Vice President Emeritus of United Airlines, and Dr. Richard Kelly, Chief Executive Officer and Chairman of Outrigger Hotels, Hawaii. Hawaii's economy revolves around tourism. Other components such as military expenditures and agricultural output pale by comparison. Directly or indirectly, tourism is responsible for most of the jobs in Hawaii. But many in our community complain about tourism and seem to believe it is responsible for a decline in our quality of life. Doc, what do you say to these folks?
[00:00:43] Richard Kelley: Well, I think it depends on your point of view, obviously. And all I can do is to relate to what life was here in the 1950s when I graduated from high school. And at that time, a young man had his choice of three things. You could go to the mainland, or you could go into one of the professions, or you could work in the fields or with one of the agricultural companies. And, in fact, that's how I got into into medicine, because I didn't want to go to the mainland and I didn't want to work for AMFAC. So, I think today, tourism provides a tremendous amount of opportunity for a wide range of people, of talents, and I think uh it is really everybody's business here in Hawaii.
[00:01:27] Randall Roth: Well, Doc, I think a lot of people believe that tourism provides mostly low paying jobs. What do you think?
[00:01:33] Richard Kelley: Well, you know, one of our leading politicians once made a statement and he said that, you know, a majority of the people who work in the tourism industry make under $10,000. So I went to our personnel office and I checked and not one person who is full-time in a non-tipped area makes less than $10,000 in our company. And I think this is something that you'll find throughout the visitor industry.
[00:01:59] Randall Roth: $10,000 doesn't sound like a lot of money.
[00:02:02] Richard Kelley: No, it's not. And with the cost of living here in Hawaii, it uh it doesn't go very far. And I think the point is that uh that we pay market wages and within our company, within the tourist industry, there's all sorts of very exciting and challenging jobs from uh management to sales to uh technical jobs. We got some computer people in there who know how to turn a computer on its ear.
[00:02:27] Randall Roth: Bill, I know that United Airlines in 1991 indicated an interest in expanding their inter-island flight schedule. Uh and they got what uh an author of uh the Price of Paradise Volume two, Bud Smizer, said was uh a rude treatment by the politicians. In fact, he said they were basically told to take a hike. Uh is that an accurate description of what happened?
[00:02:49] William Speicher: Well, more or less it is, Randy. I believe the um the actual words were um, we don't believe we need we need your service here. And uh, in looking at the whole um the whole idea of uh United flying Inter-island and and increasing service from the mainland, uh we have to go back uh 30 or 40 years, actually 47 years when United started flying here. We had uh tremendous commitment to Hawaii and, as Doc Kelly knows for sure, we have maintained a strong commitment to Hawaii over the years. When we came in in 1991 and said we wanted to increase our service, we just didn't say we just are going to fly Inter-island and take a a big piece of a small pie. We said we would come in and increase service from the mainland here and from other points and increase the size of the pie, which we thought would be good for the state of Hawaii. And um we were met with uh some folks who really just said, we we really don't need your service.
[00:03:55] Randall Roth: Why would they say that?
[00:03:57] William Speicher: Well, I think there was a lot of concern uh about the local airlines who fly Inter-island. And and I I think that um there was a strong feeling at that time with one carrier who was not in very good financial condition that we would absolutely force them into bankruptcy. Well, that happened without us. So, uh who's to say. But, at any rate, uh you either believe in the free marketplace or you don't.
[00:04:28] Randall Roth: I see. Doc, do you have any thoughts about uh that particular experience?
[00:04:31] Richard Kelley: Oh, I thought that was a sad chapter because United has been such a good friend of Hawaii over the years, and they not only bring people here, but they bring marketing expertise, marketing dollars. You know, their support of the Hawaiian open over the years has been absolutely fantastic. One of the great events that we have here in Hawaii, and I uh I think that we really deserve to uh have the free market system here. Hawaiian Airlines uh obviously flies to uh the mainland, they're in competition uh over there, and I think that we should have open skies down here just like we have open uh business for hotels. I don't object if Marriott comes down here or Hilton or Sheraton or Hyatt.
[00:05:13] Randall Roth: Uh Bill, you mentioned that that United wanted to expand not only the inter-island flights, but more flights to um to the islands. Uh there's a chart in Bud Smizer's chapter that indicates that that at exactly the time that Hawaii or that United Airlines was told to take a hike, the number of seats uh flown from the mainland to Hawaii was drastically reduced. Uh was that related to the reception that you folks got?
[00:05:37] William Speicher: I think to some degree it was. I I think overall the the market started turning down, but one of the things that United had on the drawing boards at the time when we talked about increased flights here was not just increasing flights from cities that we already served, like San Francisco, Los Angeles, Chicago. We were looking at what we call thinner markets uh like San Diego, Portland, and some other cities on the west coast that might be able to support some non-stop flying to the islands. And we had a whole package that we were looking at putting together uh that would support uh increased inter-island flying as well. Now, you can say, well, it was bad timing because the downturn and tourism started, we had the Gulf War and everything else. Uh and maybe that's true, but I think we will never know what could have been.
[00:06:21] Randall Roth: You know, right now there's discussion of of re-regulation, and yet what you're describing to me sounds like regulation. You came in and wanted to do something and the government unofficially said, no, we don't want you to, and you didn't do it. Uh why wouldn't you go ahead and do it anyway?
[00:06:50] William Speicher: Well, uh there's a very good reason for that, and believe me, we discussed it in the boardroom in Chicago at great length uh after our Chairman's visit here. Uh we really got the impression that there were a lot of people who did not want us here and uh and a few politicians who did not want us here. And so our chairman said, in fact, he was quoted in the paper, United is not going to force it force its service on someone or some community where we're not wanted.
[00:07:23] Randall Roth: Did you feel that it was the community or just the the politicians who were saying don't come?
[00:07:29] William Speicher: Well, outside of uh Doc Kelly here, not a lot of people jumped out and said, yeah, come on in. We support you. What were they afraid of? Uh I can't answer that question. [unintelligible — audio glitch]'s a very good question. It was very perplexing to us at the time, because uh privately, we seem to have a lot of support, but publicly, we did not.
[00:07:49] Randall Roth: Doc, you recently wrote a column where you were rather critical of the the relationship that exists right now between government and private enterprise. Can you tell us a little bit about what you said and why?
[00:08:01] Richard Kelley: Well, I think the United Airlines situation was just one of it. Uh but I think we've had a more recent situation, and that's the whole relationship of government, the Hawaii Visitors Bureau and private enterprise. Where I think that people are forgetting the real purpose of the Hawaii Visitors Bureau, and that is to generate income, generate visitors uh to the state of Hawaii so that we can have uh our tax base and enjoy so many of the other things that we do have here. And and I think this uh this recent situation where government uh people have uh been uh critical uh talking about points that really have nothing to do with marketing, I think uh it it sends a very bad message to the world about the relationship of business and government here in the state of Hawaii.
[00:08:58] Randall Roth: You're listening to the Price of Paradise Radio Show. I'm Randy Roth, and my guests this week are Bill Spiker of United Airlines and Dr. Richard Kelly of Outrigger Hotels. Well Doc, you specifically were talking about Tom Kylie and his own situation. Can you tell us a little bit about that?
[00:09:16] Richard Kelley: Well, as you know, uh Tom Kylie and his company were hired to do a marketing job after the uh head of the Hawaii Visitors Bureau and several of the people below him uh left the bureau, leaving a tremendous vacuum, and Tom Kylie stepped in and has done an absolutely magnificent job in six months. And then people started to say, well, the there was a perception that uh this was illegal and that uh he was making personal uh decisions that could affect his business. But this had nothing to do with the important job of marketing the state of Hawaii.
[00:10:05] Randall Roth: What what do you think was motivating it then?
[00:10:08] Richard Kelley: I have I have no idea what the motives were behind it, but I think the the uh comments were were inappropriate. I think you first have to understand that we are in a hardball game when you're talking about marketing our community, our resorts here against the world, against people like Las Vegas, against people in the Caribbean, against the Mexican uh government who understands very clearly the position of tourism down in uh in Mexico and they spend over $100 million a year supporting the industry whereas uh we're totally outgunned with the the amount that we spend and how we spend it.
[00:10:54] Randall Roth: Now, you wrote about uh government interference and micromanagement by bureaucrats, but it's almost exclusively government money, isn't it? As opposed to money coming from the industry?
[00:11:05] Richard Kelley: No, I don't think so. I think first of all, you have to go back in in history and you understand that the majority of the money that is coming to the state of Hawaii is coming directly or indirectly from from tourism. I mean, what have you got other than this? You've got agriculture, you've got military spending, which is uh is cutting back. And on top of that, um the hotel industry specifically agreed to a uh a hotel tax several years ago with the concept that a portion of it would go to fund the Hawaii Visitors Bureau, a portion would go to fund the Convention Center, and a portion would go to fund infrastructure. So these are really visitor dollars that are being uh generated, and they need to go back into the system, otherwise the system is going to go away.
[00:11:57] Randall Roth: Bill, what do you think about the relationship of government and private enterprise in Hawaii?
[00:12:01] William Speicher: Well, I I think there's been um uh more than a little bit of too much government and and a little bit too much involvement. Um one of the things that I certainly agree with uh uh Richard on the uh on the tourism side. We are spending dollars that are coming into the state from from the tourist vacationers here, uh visitors here. And I think that that's something that everyone kind of tends to overlook and forget. And as we've seen, the visitors drop from uh 6.8 to 6.1 million, uh you see a corresponding drop in dollars that affects everybody. It it it affects uh education, whatever. And I think uh having served as Chairman of the Marketing Committee last year with the HVB and working with the uh officers that were there then, uh I felt that we started a lot of good programs and we were getting joint advertising dollars from the private sector uh as well as using the the dollars from uh HVB. And when Tom Kylie and and the new guys came on, for whatever the reasons were, uh we had a change in in command there in the marketing area and I felt they continued the programs too, the major programs that we already had started, they continued. And Tom is a is a very capable marketing guy and and I just feel that we probably made a somewhat of a mistake here.
[00:13:38] Randall Roth: Now, you mentioned that the number of tourists has has dipped. What's the master plan? What does HVB or DBED or the governor or whomever it is who's out there looking at the big picture, what's the master plan? How many tourists do we want to have coming to Hawaii in any one year? Doc?
[00:13:56] Richard Kelley: Well, I think one of the problems is that we haven't defined that very clearly, and this goes back to a statement that I've made a number of times, is that we need to make tourism one of the highest priorities in our state. And this starts with having somebody on the governor's cabinet who is dedicated to tourism, dedicated to nurturing tourism, to make sure that it blends in very well with the with the community, and to do those kinds of studies which will evaluate the progress of tourism with everything else that is going on in the state.
[00:14:36] Randall Roth: Well now, the airport uh we had uh up to $2 and a half billion dollars that was scheduled to be spent improving the airports in the state. The impression that that I have is that that was in order to accommodate more visitors than we what we have currently. Bill, is is that generally the thinking?
[00:14:54] William Speicher: Uh I think without question, it is. Uh there's there's been a lot of uh speculation going back into the uh early and mid-80s as to how far we were going to go, particularly with with visitors uh with eastbound visitors from Asia uh and and from the South Pacific. Uh actually, um as we all know, uh they have business cycles in those countries as as we do in this country. And when the business cycle turns down, we see fewer of those visitors. We overbuilt. I think everyone would agree we overbuilt. We do have uh kind of a hold on some of the planned expansion here in Honolulu right now, and I think the airlines are trying to work with the state to determine what really is needed for the future and and how quickly we need it. And without having a master plan and saying we're going to have X number of airline seats and X number of visitors by the year 2005, we don't really know what to build yet, and I don't think anyone in the state knows what to build yet.
[00:16:03] Randall Roth: So we really don't as a state have a vision for the future of tourism. Doc?
[00:16:07] Richard Kelley: Well, I think whatever plans that are out there are very much obsolete. Even the uh even the the state uh marketing plan. So I I think that uh this deserves a great deal of of study, a great deal of effort.
[00:16:21] Randall Roth: Now, Bill mentioned the the eastbound visitors, mostly from from Japan, at least currently. Um Doc, will we eventually have mostly eastbound visitors?
[00:16:30] Richard Kelley: Oh, no, I don't think so. I think that we're going to get visitors from all over the world. I uh I think you're going to see an increase in visitors from uh places like Korea, and Taiwan, and hold on to your hats when the People's Republic of China starts to uh to travel in in large numbers. But, we still have a uh a great affinity for this place from uh North America, and again, you have a totally newly developing economy down in Mexico with NAFTA, and in fact, throughout Central and South America. So, I I think you're going to see people from all over the world here.
[00:17:09] Randall Roth: Ken Tucker, our distinguished visiting professor in the TIM School, at University of Hawaii, has said that it's essential that we have a a strategic management plan for tourism, and I hear you saying that that we really don't have that. Uh Bill, whose responsibility is it to develop this this vision for the future of tourism?
[00:17:28] William Speicher: Well, I I think it really is uh the state's job and and I under today's uh uh organizations within the within the state administration, I'm I'm not sure exactly where that lies. There's been a uh a so-called master tourism committee uh that's uh been charged with developing a plan. Um as was said earlier, I believe it it basically is obsolete now because it didn't take into consideration the fact that we were going to see a major downturn that we have and also see the burgeoning, increased competition from all over the world. And this is something that uh has got to be given a little more attention or or we are definitely going to be looking at declining visitors for some time.
[00:18:19] Randall Roth: You're listening to the Price of Paradise Radio Show. I'm Randy Roth, and my guests this week are Bill Spiker of United Airlines and Dr. Richard Kelly of Outrigger Hotels. Well, the Hawaiian culture has been described as one of mankind's greatest treasures, and a number of people have suggested that it's at the heart of what makes Hawaii special as a tourist destination. And yet, we've got some native Hawaiian groups standing on the sidewalk in Waikiki, handing out brochures that say, Go home. Doc, where do we stand on this?
[00:19:00] Richard Kelley: Well, I think it's a very complex issue that deserves an awful lot of discussion. But uh I think at the same time that they asking people to go home, I think they have to consider what the alternative is. And again, you go back to to my experience as a as a young man here when there was no industry and uh and and you even look at uh the the recent protest where uh on one hand, you had uh people setting up beach stands to serve the tourists and uh on the same beach, you had people going around distributing leaflets saying uh go home.
[00:19:29] Richard Kelley: I think we need to think this whole thing through and find out how uh the the needs of the Hawaiian people uh can be met uh with the dose of reality of today's marketplace.
[00:19:43] Randall Roth: Bill, where does gambling fit into all of this? Would gambling be good or bad or would it not really matter in terms of uh Hawaii's attractiveness as a tourist destination?
[00:19:54] Richard Kelley: Well, you know, I guess you could go ask somebody in Las Vegas and they'd say it's it's it's pretty good. Uh the uh the article I read in the paper this morning uh said that you know, maybe good in the short term. Uh long term, they're not so sure it's it's what we need in Hawaii.
[00:20:12] Richard Kelley: And I I guess I kind of tend to come out uh on that side. I I really feel that Hawaii has an awful lot to offer. I don't feel that we've done enough of uh really using the Hawaiian culture, really using what we have here uh to bring tourists here. And and I I've really coming out saying I'm not sure we need gambling.
[00:20:36] Randall Roth: Are we stretching the Aloha spirit uh too thin? Uh 6 or 7 million visitors a year. Can we maintain the Aloha spirit, Doc?
[00:20:46] Richard Kelley: Oh, absolutely. I think we can and I I think it's it's a matter that everybody has to uh work at it. And uh I know in our own organization, uh we have a uh program called Ke Oa, which is uh bringing hospitality in true Hawaiian terms to every single one of our guests and practicing it within our our own organization. And I think that uh it has been said that uh tourism is the keeper of the culture and I think uh the culture is also the keeper of tourism.
[00:21:20] Randall Roth: Bill, I know United flies to a lot of tourist destinations. I was once told that every tourist destination is on a bell curve that the exact dimensions will vary, but eventually it does peak as a tourist destination. Has Hawaii peaked?
[00:21:36] Richard Kelley: I really don't think Hawaii has peaked uh yet. I think that um we have seen a what the stock market guys would call a major correction uh in the visitor uh count. But I think um what some you said earlier about uh increasing the uh the yield uh increasing without increasing the numbers so much, increasing the amount of uh of tax dollars and the amount of jobs we can create in the state. Uh there's still a lot of room left to grow. And and I really feel that uh if we do it right, uh Hawaii can can have a lot of success without uh stretching the Aloha spirit too far.
[00:22:21] Randall Roth: Doc, there are some people who feel that uh Waikiki has has grown far beyond uh a point where it's attractive. What do you think?
[00:22:29] Richard Kelley: Well, I think to the extent that it is not as attractive as it could be is a direct result of our resolve to make it a better place. You take some of the current issues that we have of uh prostitution of the street vendors, the needs for refurbishment along the beach. I think these are all issues that uh that we can solve here. They've been solved in other areas and we just have to have the resolve to go after them.
[00:22:58] Randall Roth: Doc, what would it take to make the community more supportive of tourism?
[00:23:02] Richard Kelley: Well, I think we need an awful lot more involvement of everybody, education. I don't think the tourism industry has done a good job of marketing itself to its own uh its own community. And uh and I think a lot more needs to be done along that line.
[00:23:17] Randall Roth: I was asking Bill earlier, whose responsibility is it to develop a vision for the future of tourism. What would your answer be?
[00:23:24] Richard Kelley: Well, I think the the leadership has got to be uh government. I think uh also government has got to be receptive of uh input from the from the private sector. And I think we as a community have got to get together because the the stakes are too high. The results of errors are too costly in this community where tourism is everybody's business.
[00:23:47] Randall Roth: Bill, what's your biggest fear as you think about the future of Hawaii?
[00:23:52] Richard Kelley: Well, I guess my biggest fear is that the um the naysayers will uh will continue to get the loudest voice and um and that we're always going to be on the defensive with tourism. Uh, I don't think we should be. I think if we do a good job of communicating and I do think with the good leadership of pulling the public and private sectors together, uh get everyone working in unison, get everyone agreeing that hey, we have may hiccup once in a while but we have some some really positive things for the state if we do it right.
[00:24:28] Randall Roth: Doc, what do you say about that?
[00:24:30] Richard Kelley: Oh, absolutely. I I agree. I'm I'm terribly impressed with the uh with the future, the potential and uh and I think that uh we will work our way through it if we all stick together.
[00:24:43] Randall Roth: What about uh uh the future of tourism 50 years from now? What do you see?
[00:24:48] Richard Kelley: Oh, I think if you don't even have to look 50 years out there, I think you're going to see tourism continue to grow in numbers, um not only uh uh not only to our area, but throughout the world. They say that tourism, worldwide tourism may well double uh by the year 2010. And um that doesn't mean we're going to have a double uh growth here, but I think we're going to see uh better uh returns from the investment that we do make in tourism in terms of uh dollars, in terms of people, in terms of uh of our community.
[00:25:26] Randall Roth: If it does grow, we better develop that vision pretty quickly to deal with it, don't you think?
[00:25:30] Richard Kelley: Oh, absolutely. It's uh it's got to be a priority because if you don't know where you're going to go, you might end up in Chicago, maybe Mexico City, or maybe Tokyo.
[00:25:41] Randall Roth: Thank you, gentlemen. My guest this week were Bill Spiker of United Airlines and Dr. Richard Kelly of Outrigger Hotels Hawaii. This week's show was produced by Jill Sinner with technical assistance from Mark Wagner. Be sure to tune in next week when my guest will be Diane Chang, editorial page editor of the Honolulu Star Bulletin, and Jeff Portnoy, a practicing lawyer who specializes in media law. They'll be talking about sunshine in government and recent assaults on the First Amendment. You've been listening to the Price of Paradise Radio Show. I'm Randy Roth. Aloha.
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