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Cachet and cash

APEC visitors are forecast to spend, on average, more than $350 per person daily

By Andrew Gomes

LAST UPDATED: 09:57 a.m. HST, Nov 07, 2011

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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HonoluluHawaii wrote:
In other words, money, money, money, for us in Honolulu and all of Hawaii. Thanks eh ! ! !
on November 7,2011 | 01:41AM
1local wrote:
where does the 20,000 number come from? As reported in the article 11,000 including delegates and guests + 2500 from the media adds up to 13,500 - where is the additional 6500 come from? Sounds like fluff to the numbers. There will be no additional taxes collected from delegates and those carrying tax exempt cards. There should be spending coming from the federal government for additional agents stationed in a 'big brother' capacity as well as unlimited OT for HPD sponsored by the Hawaii taxpayers. HTA and Omnitrak provide data that should be subject to an independent audit. APEC $$$ should be calculated separately from what the normal November spending is. With State government encouraging locals to avoid Waikiki and the loss of freedoms to existing tourists + the inflated APEC visitor numbers businesses in Waikiki will suffer...
on November 7,2011 | 04:58AM
HonoluluHawaii wrote:
I do not know, as far as the 20,000. I am not the Hawaii Tourism Authority. We all know one of them will be Barack Obama and I do not think he is going to spend $350 per day.
on November 7,2011 | 07:04AM
LemonySnickets wrote:
Body Guards and Security for each Country's Leader. I assume.
on November 7,2011 | 08:57AM
Kuniarr wrote:
on November 7,2011 | 09:52AM
Maneki_Neko wrote:
So, after all the baloney and fudging, this will cost more than it brings in. Brilliant.
on November 7,2011 | 06:55AM
CloudForest wrote:
So it's OK to buy the Island and force the locals to the fringes of society so that the important people can keep all of the good stuff to themselves!? It's Ok, some animals are just more equal than others. Keep the money if this is what it takes to get it into our hands. By using this logic, every week should be APEC week and all access to all things should be permanently banned from the indigenous population - sounds like the old USSR. Save our aina from this type of function ....... please!
on November 7,2011 | 02:26AM
Kapakahi wrote:
Actually, I think it sounds like the NEW Russia. The old USSR created ideal conditions for the rise of a kleptocratic elite, who concentrated power and wealth in their hands through their connections and the ruthless application of state power. All justified under the same neo-liberal "free market" rhetoric which masks the corrupt practices being promoted by APEC and the WTO.
on November 7,2011 | 08:01AM
LittleEarl_01 wrote:
How many of these 20,000 are going to be carrying around "tax exempt" cards, exempting them from local exercise taxes.
on November 7,2011 | 02:55AM
Meena wrote:
Guessing .... at least 10,000 will be legally tax exempt and then there will be another 5,000 that will find loop holes to exempt themselves.
on November 7,2011 | 05:49PM
bender wrote:
Earlier this newspaper reported that the city and state will spend $137 million to attract and support APEC and expected to receive $120 million in spending. Even with an adjusted estimate on visitor spending we are still coming up way short. Even with an optimistic 10% recovery rate on the $120 thats only $12 million. We can't afford to host too many more of these money losing conferences.
on November 7,2011 | 04:56AM
Kapakahi wrote:
Its like the old joke about the business man. When asked how much money he made from each item he sold, he admitted he lost money. He quickly added, "But I expect to make it up on volume!"
on November 7,2011 | 08:04AM
Kapakahi wrote:
So even if it turns out we lose money on this, they will reassure us that we have increased the odds we will be able to host many more of these gatherings in the future. Yayy!
on November 7,2011 | 08:15AM
Maneki_Neko wrote:
Trust me...victory will be declared no matter what happens. All these politician guys have to declare a big success after spending your money. Spend $137 million; get back $120 million. Glorious economics!
on November 7,2011 | 01:13PM
sollie wrote:
on November 7,2011 | 05:04AM
Bdpapa wrote:
No money for improvements, no money for schools, but APEC is bringing in big bucks, especially from federal spending. In these austere times, letʻs be thankful we are getting something!
on November 7,2011 | 06:05AM
toomuchpilikia wrote:
Will C&C taxpayers be compensated for HPD's OT?
on November 7,2011 | 06:07AM
Bdpapa wrote:
Good question, but i believe so!
on November 7,2011 | 06:10AM
Bdpapa wrote:
Actually I should say I would think and hope so!
on November 7,2011 | 06:17AM
Kapakahi wrote:

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!"

on November 7,2011 | 08:23AM
jusmetwocents wrote:
Complaining will not change the situation... Be cool in traffic and work from home if you need to. I'd stay away from Atkinson Drive, the Hawaii Convention Center and Kalia Road. That's the best advice I can offer you!
on November 7,2011 | 06:26AM
Bdpapa wrote:
Good advice!
on November 7,2011 | 06:55AM
CloudForest wrote:
That's correct, be quiet and stay in line.
on November 7,2011 | 08:53AM
tiwtsfm wrote:
Please just tell me why the rich foreign visitors should be exempt from Hawaii excise tax and hotel and room taxes?
on November 7,2011 | 07:00AM
Bdpapa wrote:
Foreign dignitaries have been exempt from local taxes for a long time. This is only for a select group of foreign dignitaries. Not all foreigners are exempt. You are probably looking at about 2 - 5% of the total of the people coming.
on November 7,2011 | 07:14AM
Kapakahi wrote:

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.

on November 7,2011 | 08:12AM
kawika72 wrote:
Sounds GREAT, doesn't it! Really can't compare APEC to the other big events, cause much less tax money will enter the State's coffers with APEC. If these people didn't have tax exempt cards, it would be a different story. Good for businesses that deal directly with them, bad for the rest of businesses (due to security measures for APEC). If you add up all the losses and compare with the profits, I don't know if APEC benefits our businesses overall. For the average tax payer, we will only see APEC bills (by way of rising future taxes and fees) and very little benefits in our pockets.
on November 7,2011 | 07:15AM
Kapakahi wrote:

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.

on November 7,2011 | 08:52AM
Manoa_Fisherman wrote:
When the American Dental Association held its conference here, over 34,000 people attended and resulted in a larger economic impact by the ADA attendees. Additionally, the ADA folks went on to stay at the neighbor islands in larger numbers than APEC and brought dental professionals from Japan and other countries as well. With some luck, and the support of the Hawaii Dental Association members volunteering their time and resources, the ADA will return again, not so likely with APEC.
on November 7,2011 | 11:02AM
butinski wrote:
Just imagine if we had a casino in Waikiki.
on November 7,2011 | 01:49PM
Anonymous wrote:
Not in a million years......now if it was on Koolawe or Lanai and OHA was running it....then maybe?
on November 7,2011 | 06:12PM
HD36 wrote:
You forget that the government beuarocrats are spending their citizens money. Like all government officials you can't expect any kind of efficiency and eventually their citizens pay the price.
on November 7,2011 | 08:02PM
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