Hawai‘i Convention Center anticipates more robust 2019

Business at the Hawai‘i Convention Center, which turned its first profit in 2016, has softened as the facility celebrates its 20th anniversary.

While bookings in 2018 were expected to yield less robust results, Hawai‘i Convention Center general manager Teri Orton said the facility has felt the burn of January’s false missile alert, April flooding, the Kilauea Volcano eruption in May and an active hurricane season.

However, new investments and the early return of the American Dental Association, which is slated to bring up to 17,000 attendees to Hawaii from Oct. 18-22, is expected to help bolster momentum.

“ADA is our largest group of the year and it’s a good way to end 2018, especially since we’ve seen softening in the group market,” Orton said. “If we didn’t have them here this year, it would severely impact our economic impact for the state — they fill almost every hotel in Waikiki.”

Orton said the ADA meeting is expected to generate roughly $71 million in statewide visitor spending.

The group’s average length of stay was over 11 nights per reservation in 2009, its last visit to Hawaii, said Jim Goodman, ADA senior vice president for business and conferences. The organization has more than 160,000 U.S. members.

Goodman said ADA fielded calls and emails from members concerning the escalation of tension between the U.S. and North Korea, natural disasters and the Kilauea eruption, but ultimately decided to come.

“It’s amazing to me how many people don’t know Hawaii island is not where Honolulu is — even with our own highly educated population,” he said. “Risk in business travel is more of a concern. What-ifs mean that people are less likely to pull the trigger and come. However, we have more attendance than we anticipated.”

Duke Ah Moo, vice president and commercial director for Hilton Hotels in Hawaii, said ADA’s arrival coincides with a downturn in booking demand.

“It comes at an opportune time and it gives us a strong base of occupancy to work with and requires us to have to fill less transient rooms,” Ah Moo said. “Events like these create a trickle-down economic impact that’s good for everyone. The higher the occupancy, the more staff we have on duty. Restaurants, shops and activities outside of Waikiki also will benefit.”

The center’s projected occupancy was off about 4 percentage points through July and $691,800 in estimated net income during the first seven months. It is now forecast to lose nearly $2.7 million in anticipated net income for the year. That’s about $700,000 more in net income losses than was originally projected for 2018.

While the center has cut its projected gross expenses for 2018 by more than $1.1 million, to $15.9 million, it has lost an estimated $1.8 million in budgeted gross revenue, which is expected to come in at just over $13.2 million for the year. Part of the reason is that 17 of the projected 205 events for 2018 did not materialize. That has caused the center’s estimated year-over-year occupancy to drop 2 percentage points to 31 percent from the year-prior 33 percent.

“It’s been quite a year with the Korea issues, Kilauea eruption and natural disasters. We saw some cancellations and some of our anticipated bookings weren’t realized,” Orton said. “But we’ve got a good base of group business on the books for 2019.”

Orton said investments in the center, including its $1.1 million sports court program and Ho‘omaluo, a sustainability program that will kick off in time for ADA, also are expected to contribute to a turnaround that is anticipated to bring a more robust 2019 and 2020.

Ho‘omaluo, which means to conserve or use wisely, will expand on the center’s designation in August as a U.S. Green Building Council Gold LEED operations and maintenance certified center. It also will continue to support the center’s “One Million Trees” program, a commitment to partner with the Hawaiian Legacy Reforestation Initiative to plant a million endemic legacy trees.

“One tree in its lifetime offsets enough carbon for a family of four to go on vacation for a week,” Orton said. “We’re also excited about the Ho‘omaluo program, which is our commitment to helping to preserve Hawaii’s natural resources. I feel like the Ho‘omaluo program and our LEED certification will certainly help us in attracting meeting planners that are looking for venues that are sustainable.”

The center also is in the process of turning its ground-floor kiosk stand into a pop-up food and beverage outlet, which will serve grab-and-go foods in the morning and afternoon and transition into a lobby bar that’s open to the public in the evenings.

“We hope to generate some new revenue and create a service that wasn’t there before,” Orton said. “People want a space where they can have quick meetings with attendees and enjoy tapas and pau hana cocktails before they head out to dinner somewhere. We think it could also serve our surrounding community, which recently lost the 7-Eleven and several area eateries.”

She said she expects the new strategies will be enough to turn around some of the weakness that emerged this year.

Orton said in 2019 the center already has the potential to host 30 offshore events and nine sports tournaments. The sales team also was able to secure six new group events that have not been to the Hawai‘i Convention Center before, she said.