Happy 60th Birthday to Outrigger Hotels. The company hit that milestone this year, around the same time it reached another major marker in its history: the completion of the fancy $535 million Beach Walk development along the once-seedy Lewers Street in Waikiki.
At a Pacific Asia Travel Agents luncheon, I listened to CEO David Carey speak about the lessons his company gleaned from the past six decades, and how he has incorporated them into the vision for the future.
He begins by tracing the origins of the tourism industry in Hawaii. Hotels, he says, sprung up as a way to serve Matson's upscale cruise customers with a lot of money and a lot of leisure time. But the advent of affordable air travel in the 60s changed that picture. "More frequency and more capacity meant a major influx of tourists," he explained.
That's where Outrigger came in. It was founded to cater to budget travelers coming on cheap hotel-air packages. "This was the era of mass travel. Waikiki went gangbusters," he says, "and the marketing was all price oriented."
The masses changed the face of Waikiki. All properties were built the same: narrow rooms, small bathrooms, functional but boring restaurants, and touristy retail outlets. Carey says, "There was no thought to urban planning. In a knee jerk reaction, the Waikiki Special Design District was set up to restrict zoning of more hotels. Ironically, there was a glut of projects started up quickly to try and finish before the zoning took effect."
Carey continues to recount the economic crash, followed by the artificial bubble economy sustained briefly by Japanese investors of the 1980s, succeeded by the bubble bursting. "All the major markets crashed, including Japan's. Add to that the fact that some airline routes started changing due to the advent of larger jets. Some of the flights bypassed Hawaii entirely. Waikiki was dying a slow death," states Carey.
Fast forward to this March. Carey unveils some charts that show Oahu lagged behind the rest of the state in the average daily rate (ADR) for a hotel room. Maui led the way with a $266 ADR. The statewide average is $200 ADR. Oahu is only at $167 ADR. "Where is Oahu's product?" he asks rhetorically.
It's on the rebound, led by a number of revitalization projects, the biggest of which has been the Outrigger Waikiki Beach Walk. The revitalization began in 2001 "to reverse what was perceived as a slipping of Waikiki's status as a premiere visitor destination," explains Waikiki Improvement Association president Rick Egged. Over the last seven years, private industry has poured $1.7 billion into revitalizing Waikiki - a move the association says is paying off.
Carey draws four lessons:
1) Invest in public infrastructure. He credits former Mayor Jeremy Harris as being the first catalyst for change, leading the way for private investors.
2) Market Hawaii as a globally competitive destination. This requires the help of Hawaii Tourism Authority and legislative funding.
3) Enable private investment by changing zoning.
4) Get capital markets to help.
The results, he promises, will be better public spaces, higher spending customers, broad-based restaurants and stores, and a higher tax revenue for the state – a pay back for its investment in infrastructure.
Carey says the Beach Walk is an example of all these principles put into motion. In addition, Outrigger wants the promenade to celebrate the uniqueness of place. "We want to deliver an experience," entices Carey. "We want people to stroll here and enjoy themselves."
What does this mean for you? If you are looking to take a vacation in Waikiki, this may be a great time. The Beach Walk, the largest development in the history of Waikiki, boasts nearly 50 new shops, restaurants, and local entertainment. In fact, more than half the vendors are restaurants or bars, because food travel "is the experience," says Carey.
You'll also find a variety of hotel brands to fit your budget. The Outrigger Reef can offer you a deluxe hotel on the beach, Embassy Suites target families, The Wyndham Waikiki Beach Walk has timeshare units, Trump Tower is a luxury condominium hotel, and a luxury boutique hotel is coming soon.
Look for key themes of better room and bathrooms, more upscale finishes, and more connectivity and entertainment options.
Egged ticks of a list of Waikiki improvements, including the Beach Walk, and beams, "We've made Waikiki a gathering place again."
http://www.waikikibeachwalk.com/details_updates.aspx
CELEBRITY SUITCASE
Honolulu Mayor Mufi Hannemann
1) Cell phone
2) Ipod: "I love music. I have about 5,000 songs uploaded, of all genres."
3) Book: "Right now I'm reading Team of Rivals, The Political Genius Of Abraham Lincoln by Doris Kearns Goodwin. It looks at the political career and leadership abilities of Abraham Lincoln by focusing on his cabinet."
Mufi Hannemann is the 12th mayor of the City and County of Honolulu, the 13th largest municipality in the United States. He took office on January 2, 2005, Honolulu's first native-born mayor in almost 40 years.
This Harvard-educated leader and former star athlete served in the administrations of four U.S. Presidents: Jimmy Carter, Ronald Reagan, Bill Clinton, and George W. Bush. Before his election, the Kalihi-born Hannemann held posts as director of Hawaii's Department of Business, Economic Development & Tourism, chief of the state's Office of International Relations, and chairman of the Honolulu City Council.
He likes to travel and logs anywhere from 25,000 to 50,000 miles a year on the road for business and pleasure.
