Step 1 to Re-Opening the Tourist Economy Starting August 1st

Jessika Fodor | July 8, 2020

This first week of July had the single highest visitor arrival days since March, but even the best day was still less than two percent of our usual daily visitor arrivals this time of year. Retail stores in Hawaii were permitted to open for business on May 15th, but only fourteen retail stores in Waikiki opened on that day (Louis Vuitton, Shoe Palace, Armani Exchange, Skechers, San Lorenzo, Night Rider, MCM, Noa Noa, Hawaiian Islands Creation, Hurley Women, Anthropologie, Free People, Tricked Out Accessories, and Zumiez). Since then, several more have opened, with lines forming in front of Apple and lululemon and other taking customers by appointment only. Most hotels in Waikiki remain entirely closed, and the majority of retail stores off Kalakaua Ave remain closed.

Governor David Ige proclaimed any a two-week mandatory quarantine for any in-bound resident or visitor to Hawaii until June 30th and then extended to July 31st. The restriction left incoming visitors, either hotel room bound or in violation of local law. A recent lawsuit filed arguing the quarantine to be unconstitutional of free travel between states was rejected by Hawaii courts on the premise that a pandemic justifies the protection of public health.

Starting August 1st, 2020, visitors with a negative Covid-19 test result will be able to come to Hawaii and not quarantine after landing. Those in the travel and pharmacy industries are scrambling to put into place a shared database, so passengers’ negative status is verifiable before boarding flights to Hawaii. The caveat is that the test cannot be more than 72 hours old before boarding.

There have been a rare few local entrepreneurs who have pivoted their business fast enough to keep customers buying in the strange new anti-social environment, and all of those success stores have been locally owned and operated businesses. There is a lesson here, which is the same hard-learned lesson in the 2008 crash. Necessity drives innovation, and local stores tend to tough out the hard times because those owners depend on that income for their livelihoods.

My most successful clients seized the Great Recession as an opportunity to re-imagine and re-configure their properties to make them competitive for the coming decade – Waikiki Shopping Plaza, Sheraton Waikiki, Royal Hawaiian Hotel and the Waikiki Business Plaza. All of those properties realized significantly higher returns than they did before the Great Recession. Covid-19 seems to have all the tourist ramifications of our prior down-turns combined: Great Recession, Asian Bird-Flu, and 9/11. The one constant remains true despite this: people want to come to Hawaii, and when they feel safe and have enough money to, they will return.

It’s a rare time for property owners to take a step back, look at the big picture, and ask: Is there value I can unlock? Can I make improvements that were impossible when my property was full? How can I balance my risk for a future downturn? How can I attract and support local tenants who remain open in down-turns? Where are the customers right now? There will be more vacancies in the coming months from those who can’t, won’t, or don’t innovate and prepare for the next decade. Contact us if you want to be proactive and make a plan for how to emerge stronger.