Sunday, May 19, 2013
Cachet and cash
APEC visitors are forecast to spend, on average, more than $350 per person daily
POSTED: 01:30 a.m. HST, Nov 07, 2011
LAST UPDATED: 09:57 a.m. HST, Nov 07, 2011
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The roughly 20,000 people visiting Hawaii for the Asia-Pacific Economic Cooperation forum this week bring with them some pain, in the form of restricted access to roads, parks, beaches, the ocean and airspace. But the event also will be a source of financial gain for many local residents and businesses.
Each APEC visitor is expected to spend on average $363 a day over seven to 12 days for total spending of $73.7 million on everything from tours to hotel rooms. That’s more than the average vacationer ($178), conventioneer (around $200) or Japanese tourist ($275).
Only Chinese visitors — who are coming to Hawaii in small though growing numbers — have higher per-person spending ($368), according to figures from the Hawaii Tourism Authority.
Honolulu-based research firm OmniTrak Group produced the APEC visitor spending projections with the HTA and state Department of Business, Economic Development and Tourism.
The report includes spending estimates for different participants in APEC such as delegates, support staff and media, in part based on spending at past APEC meetings.
Most of the money left in Hawaii from APEC visitors will be from an estimated 11,000 people coming with the delegates. They are expected to each spend $283 a day, or $37.4 million in total. OmniTrak assumed that this group would spend as much as an average Hawaii convention visitor.
The approximately 3,500 delegates are expected to spend the most per person at $745 per day, dropping $28.7 million.
The contribution from 2,500 media personnel is pegged at $218 per person per day, totaling $6.5 million. OmniTrak assumed that this group would spend as much as an average Hawaii tourist.
Total estimated spending for all APEC visitors, at just under $74 million, will expand to $122.5 million when considering that recipients of APEC spending will in turn spend some of that money, the report said.
On top of direct and redistributed spending, $35 million in personal income will be generated indirectly to support all the goods and services consumed by APEC visitors, OmniTrak said in the report.
Another $4 million was budgeted by the local APEC host committee for gifts, uniforms, signs and other materials. And state tax revenue from direct APEC spending is estimated to be $7.6 million.
The tax revenue figure might be overstated because diplomats are exempt from paying taxes, including Hawaii’s general excise and hotel room taxes. A state Tax Department official said delegates can use the exemption on any spending related to their diplomatic mission, though there’s no good estimate of how much in taxes will be exempted.
OmniTrak’s economic impact assessment didn’t include more than $100 million in other spending related to APEC, such as federal spending to prepare for the event and city spending on security and traffic measures.
Some observers think APEC will be the biggest tourism-related event Hawaii has experienced from an economic standpoint — bigger than the Pro Bowl or the Honolulu Marathon or any giant convention.
“Hawaii residents are well aware of the type of economic impact created by major events such as the Pro Bowl and Honolulu Marathon,” said Mike McCartney, president and chief executive officer of the Hawaii Tourism Authority. “But the real benefit is the long-term opportunity for Hawaii to solidify its position as a place for business, innovation and investment.”
The Honolulu Marathon attracts close to 25,000 visitors, mostly Japanese, estimated to spend roughly $100 million. This year’s Pro Bowl in Hawaii brought 21,204 visitors who spent an estimated $28 million, while a national TV audience was exposed to alluring images of the state’s beaches and other attractions. The ADA convention was held in 1999 and brought 25,000 visitors who spent an estimated $116 million.
Of course, the net positive effect of APEC and its worth compared with other big tourism events is hard to measure.
Like the marathon in December and Pro Bowl in January, APEC is being held during Hawaii’s off-season for tourism. So the visitor industry receives a definite boost. Yet some visitors from such big events displace other would-be visitors who can’t come to Hawaii at the same time because the availability of hotel rooms and airline seats becomes constrained. With APEC the displacement effect is likely bigger because some hotel rooms will be empty as part of security boundaries.
APEC is imposing many road closures and even pedestrian-free zones because of the presence of international political leaders and President Barack Obama, who arrives late this week. The restrictions will cause many people to steer clear of Waikiki during APEC, with a few businesses deciding to shut down.
State economist Eugene Tian said it’s debatable whether one visitor event or another is more beneficial to Hawaii, especially because of intangible long-term impacts.
The OmniTrak report said Hawaii stands to benefit from international media exposure, which could bring more meetings and foreign investment.
News organizations are deploying an estimated 2,500 media personnel to Hawaii to cover APEC.
“This is media that we could not otherwise afford or attract and, therefore, represents a large opportunity gain for the state,” the report said.
The exposure won’t be similar to what the Pro Bowl’s TV coverage provides to football fans in freezing mainland locales, but instead will largely focus on global issues such as trade pacts. Headlines in 2009 when APEC was held in Singapore included “APEC leaders reject climate deal possibility” and “APEC Praises China’s Role in Stoking Growth, Dodges Yuan Debate.”
APEC organizers lastly tout the potential for Hawaii to attract foreign investment.
OmniTrak noted that China invested $6 billion in Peru’s mining industry after Peru hosted APEC in 2008, while key groundwork for the deal was laid at an APEC meeting in 2004. And in Vietnam, $2 billion in contracts were signed a day before an APEC summit there in 2006, the report said.
OmniTrak said several industries in Hawaii have potential to attract investment from APEC participants, including astronomy, ocean sciences, tourism and alternative energy.
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When the Asian Development Bank gathering was held here in 2001, both the State and city were assured they would be compensated for all the added security expenses. They ended up getting shafted millions of dollars.
But hey, we'll have lotsa RoboCop, Darth Vader Evil Empire costumes on hand if they ever film a Star Wars sequel? We gotta work on increasing the tax credits! I can envision a plot where they are having an epic battle on the slopes of Kualoa Ranch. Maybe chased by raptors! It would probably require a lot of computer generated animation, which would mean hiring fewer local actors. But fortunately, the proposed Hollywood tax credit bills are even higher if they qualify as "high tech"!
"We lose money on each transaction, but we'll make it up on volume!"
I seriously doubt your figure of 2-5%. I suspect any visitor who is here in support of the "diplomatic mission" will be exempt. So not just a finance minister, but all of his support staff as well. The spouses? I dunno.
But we deserve a hard-nosed, post-event cost-benefit analysis. I doubt we will get one. The political and business leadership of the State have all entered an agreement to serve as uncritical boosters of this gathering. The pressure to suppress troubling questions is palpable. So far, the corporate media is playing their role as per the script.
The writer speaks of "money left in Hawaii from APEC visitors," but I question how much will actually be "left" here. Years ago, it became obvious most Japanese tourists, for example, came here on packages they purchased in Japan, flew here on JAL, stayed in Japanese owned hotels and spent much of their money on expensive imported items from high-scale boutique shops. For those paying attention, it became obvious very little of the money they spent was actually "staying here" and much of it was not even subject to the general excise tax.
It was partly in response to this new reality that the TAT, the so-called "room tax," was implemented to ensure at least SOME money actually DID "stay here."
Looking at the APEC visitors, how much will Hawaii's people benefit if the Thai Finance Minister's wife buys a Gucci bag or a South Korean banker buys a Rolex? Particularly if the sale is exempt from the GET? Clearly, some of the high-end hotel chains will profit from the influx of these wealthy kleptocrats and their entourages, but none fo these hotels are locally-owned, so few of those dollars/yen/yuan/baht will remain here for more than a few hours. Indeed, the major hotel chains are increasingly owned by Wall Street investment firms like Goldman Sachs, who --SURPRISE-- are big advocates for APEC, the WTO and other schemes which advance THEIR interests.
Hawaii's people should demand an honest, cost-benefit analysis of APEC. There has been too much uncritical "cheerleading" for this gathering from the political and corporate elite which controls this state. The article, unfortunately, is largely in that vein. I don't blame the reporter. He is just recapitulating the shallow arguments being advanced by APEC's organizers.
