Tourism tops the list of year-end stories

It was a year of milestones, economic growth and controversy in Hawaii business as visitors kept flocking to the islands in record numbers; the state’s largest shopping mall, Ala Moana Center, got even bigger; high numbers of residents using solar prompted the state Public Utilities Commission to end a popular incentive program; Oahu’s housing prices remained on pace to hit an all-time yearly high; and the state unemployment rate plunged to a seven-year low.

As is often the case, Hawaii tourism topped the list of business stories as visitor arrivals and spending closed in on their fourth straight record year and the state’s tourism agency, the Hawai’i Tourism Authority, underwent a change of leadership.

1. Tourism approaches fourth straight record

Typically, major leadership changes don’t take place in a year like 2015, which is on track to set tourism records in arrivals and real spending.

The industry is expected to finish the year with nearly 8.7 million arrivals and nearly $15.4 billion in visitor spending. Through the first 11 months of 2015, arrivals were up 4.2 percent year over year to 7.9 million — the ninth straight monthly record — and spending was ahead 2.2 percent at $13.6 billion.

At the same time, the Hawai’i Convention Center was on the way to achieving its highest gross revenue and its lowest net loss since opening in 1998. Even so, it has been a year of significant personnel movement.

In May, George Szigeti became president and CEO of the Hawai’i Tourism Authority, filling the role left vacant when Mike McCartney left to become Gov. David Ige’s chief of staff. Szigeti’s departure left a gap at the Hawai’i Lodging & Tourism Association, where he had served as president and CEO. Mufi Hannemann, who had held the position prior to resigning to pursue an unsuccessful 2014 independent party run for governor, returned to that job.

The shuffling continued as HTA Chairman Aaron Salas resigned and Honolulu attorney Rick Fried assumed leadership of the agency’s board. Szigeti hired Chief Operating Officer Randy Baldemor to fill the void left when Doug Murdock became Ige’s comptroller and quickly began shifting other HTA leadership positions due to an inherited budget cut of $1.3 million. David Uchiyama, HTA’s former vice president of brand management, and Brian Lynx, former vice president of meetings, conventions and incentives, were laid off along with one marketing and two administrative workers. Shortly after, Mike Story, director of brand management for Oceania and sports marketing, departed.

2. Ala Moana Center has $570M expansion

The opening of Ala Moana Center’s long-awaited Ewa wing drew thousands of tourists and locals to the state’s largest shopping mall this holiday season.

The $570 million project expanded the former Sears space to 650,000 square feet on three levels, and made way for the first Bloomingdale’s in Hawaii and other large retailers and restaurants, as well as 200,000 square feet for smaller tenants.

This was one of the largest redevelopment projects for Ala Moana, which has nearly 300 stores and restaurants. The expansion also included the state’s first Zara, Magnolia Bakery and Ted Baker London.

The center completed the two-year construction project in November, though smaller renovations are still underway.

Nordstrom will relocate to a new 185,000-square-foot space in March, while Foodland Super Market Ltd. — one of the center’s original tenants — is returning to the shopping mall with the opening of Foodland Farms in July. Shirokiya will open a $35 million Japanese food village in June.

3. PUC ends popular solar program

The solar industry’s growing pains reached a disabling high this year when the state Public Utilities Commission ruled in October to end a popular incentive program, net energy metering, which credited solar owners the full retail rate for the energy their systems send to the grid.

Not entirely ending solar incentives for interested utility customers, the PUC introduced two new incentive programs. One was structured similar to net energy metering, crediting customers 15 cents per kilowatt-hour — an approximate 10-cent reduction from the previous program. In that same ruling, the PUC put a cap on the number of homeowners who could qualify — approximately 4,500 homes.

The other program requires homeowners to link their solar systems with energy storage batteries. This program has no limit of residents who can qualify.

The PUC’s order was met with frustration and concern.

Different representatives from the solar industry, clean energy organizations and environmental groups spoke out against the PUC’s decision, saying the ruling would end solar. One solar advocacy group, The Alliance for Solar Choice LLP, filed a lawsuit in Hawaii state Circuit Court against Gov. David Ige and the PUC, challenging the state agency’s decision to end net energy metering.

Some groups in the solar industry said the move was not the end of solar but a way to encourage more energy storage — a key tool Ige repeatedly has said would help solve some of the grid problems the utility faces with high levels of intermittent renewables connected.

The PUC also is tasked with deciding on the proposed $4.3 billion purchase of Hawaiian Electric Industries by Florida-based NextEra Energy Inc. NextEra initially made a proposal in December 2014 and the process played out throughout 2015 with hearings ongoing as the year came to a close.

4. Oahu housing prices continue climbing

An exact figure won’t be known until next week, but Oahu’s housing market set a record this year for the median sale price of single-family houses.

Through the first 11 months of 2015 based on data from the Honolulu Board of Realtors, the median sale price was $700,000. That compared with $675,000 for all of 2014.

Oahu median prices for single-family residences have risen to new records now for three consecutive years with moderate increases between roughly 4 percent and 5 percent.

The University of Hawaii Economic Research Organization projects that the increases will continue, in part because of relatively little new home construction, low interest rates along with rising personal incomes and low unemployment.

UHERO forecasts that the median price will rise to $772,000 in 2016.

Condominium prices also are expected to have set a record this year, though by how much exactly is not yet known. Through the first 11 months of 2015, the median sale price was $360,000. That compared with $350,000 for all of 2014.

Like single-family homes, condo median prices have set records for three consecutive years with moderate increases, and UHERO expects this to continue with a median of $395,000 in 2016.

5. Unemployment rate keeps plunging

Hawaii’s labor force is at an all-time high and the state’s unemployment rate was nearing historic lows as the year wound down following a long-anticipated resurgence in the construction industry.

The jobless rate declined for six months in a row heading into December and at 3.2 percent was at its lowest level since January 2008, according to the state Department of Labor and Industrial Relations. It was 4.1 percent in May before beginning its downward trend in falling to 4.0 percent in June, 3.7 percent in July, 3.5 percent in August, 3.4 percent in September, 3.3 percent in October and then 3.2 percent in November.

Hawaii’s lowest unemployment rate ever was 2.3 percent in October, November and December 2006.

One of the main catalysts for the economic growth has been the construction industry, according to Eugene Tian, chief economist for the state Department of Business, Economic Development & Tourism. In the latest data available, construction jobs totaled 35,200 in November, up 3,900 from the year-earlier period.

It’s no surprise then that the labor force has been hitting records.

The labor force, which includes people who are employed and people who are unemployed but actively seeking work, was a record 679,900 in November, up 9,200 from the year-earlier period.

There were a record 657,800 people employed in November, up 14,400 from the year-earlier month.

And the number of people unemployed was 22,100 last month, down 5,200 from 27,300 in November 2014.