Trump travel ban, N. Korean threat erode convention center earnings

San Francisco resident Cindy Crivello said she’s been visiting Oahu twice a year for the past 30 years and doesn’t intend to break that run even if tensions between the U.S. and North Korea have heated up enough for Hawaii to reinstate the nuclear siren testing that it discontinued after the Cold War.

“I feel safe and comfortable here, and with all the military bases I’m not worried about North Korea,” Crivello said as she floated in the Sheraton Waikiki’s pool on Wednesday. “Hawaii is the best.”

But not all visitors are as dismissive of Hawaii’s proximity to North Korea’s expanding missile reach or the heightened global tensions that have led President Donald Trump’s administration to propose travel bans. Concerns about the travel ban from meeting planners, who book group meetings, convention and incentive travel, so far this year have cost the Hawai‘i Convention Center more than 40,000 future room nights, said convention center General Manager Teri Orton.

Travel ban woes lost the center its bid for the 2025 International Union for Nutritional Science, which went to Paris, and for Women Deliver 2018, which went to Canada, along with an electrical engineering conference slated for 2018 and an international medical association conference that would have come to Hawaii in 2022, Orton said.

“With the travel ban in place, some associations are telling us that they feel the U.S. is not friendly,” she said. “Canada is actually using the ban to (its) advantage by marketing Canada as a very welcoming country.”

The center also lost 10,000 room nights from its 2017 totals when Art Hawaii rescheduled its event from this year to next year due to unease over possible disruptions from the nuclear siren testing that resumed Friday, she said. Orton will attend the international fair Art Basel this week in Miami where she hopes to reassure planners and exhibitors that Hawaii is safe and ready for their 2018 business.

“Meeting planners have started to ask questions about North Korea, but they are even more concerned about the travel ban’s impact on international travelers,” Orton said. “We’ve lost a good piece of business. To put it in perspective, 40,000 room nights is about 17 percent of the Hawai‘i Convention Center’s annual target. Holding Art Hawaii this year also would have bolstered our 2017 profit.”

Heightened concerns are worrisome for the circa-1998 center, which just turned its first profit last year, she said.

After sustaining more than $55.3 million in losses since its opening, the center ended 2016 with a small profit of $611,500. This year, the center is expected to return a profit of $873,100. Orton said the forecast would have been higher save for negative publicity regarding North Korea and the travel ban.

“The meeting planners are showing us headlines from the New York Times,” Orton said. “The concerns have certainly impacted us this year.”

During the first 10 months, the center hosted 151 events; it is expected to finish the year with 180 events, down from 205 events last year. Through October, the center occupancy was 34 percent. On average, occupancy at successful centers falls between 40 and 60 percent, Orton said.

Still, Orton said the convention center is within 35 percent of its year-end goal to book 232,000 future hotel room nights — the number of nights that hotel rooms are booked by guests attending convention center events. She said center staff must convert another 61,144 tentative bookings into actual bookings by year’s end. Since most signings for future events take place at year’s end, Orton said the center has offered more than $200,000 in signing bonuses for 2017 contracts.

Though the travel ban has hampered the center’s bids for meetings, convention and incentives business from international association groups, Orton said the center and the Hawaii Tourism Authority are working to offset losses through national association business.

“Our focus will then be to grow their delegate or attendance to their event from international markets. This strategy will be for new and confirmed groups,” she said. “I’m hoping our sales efforts and initiatives will turn the tide.”

The center also is raising revenue through additional food and beverage sales, which rose to $10.6 million through October. It’s expected to reach $12.5 million by year’s end, a $1.6 million increase over its $10.9 million goal.

Orton said Hawaii is not the only convention destination grappling with international association losses.

“Every major convention center, including New York, Los Angeles, San Francisco and San Diego, is dealing with this, too,” she said.

Group business isn’t the only travel market at risk, either.

On Wednesday, U.S. Travel Association President and CEO Roger Dow raised the alarm when new government data showed that the U.S. lost nearly 4 percent of its international inbound travel market during the first half of the year. According to the data from the U.S. Department of Commerce’s National Travel and Tourism Office, fewer travelers came to the U.S. from Western Europe, Eastern Europe, Asia, the Middle East, Africa, South America, Central America and the Caribbean.

“These numbers are an undeniable wake-up call, and correcting this troubling trend needs to become a national priority,” Dow said in a statement.

During the first 10 months of this year, overall visitor arrivals to Hawaii rose almost 5 percent to nearly 7.8 million visitors. However, the number of visitors who came for meetings, conventions and incentives through October dropped just over 3 percent to 414,714. Year-to-date arrivals also were down from several international markets including Australia, China, Korea, Europe and Latin America.

Danny Ojiri, vice president of market development for Outrigger Enterprises, said Hawaii’s international declines mostly have been related to unfavorable exchange rates and competition from destinations that visitors perceive as closer and better priced. However, Ojiri said Hawaii must closely monitor sensitivities to the travel ban or North Korea.

“Everyone is looking at Hawaii tourism, partly because of what has happened in Guam,” Ojiri said. “Japanese travel to Guam is down about 40 percent due to the North Korea missile issue. It’s not a real danger there, but Japanese travelers are very sensitive to these sorts of things.”

Some North American travelers also need reassurance, said Jack Richards, president and CEO of Pleasant Holidays LLC, the largest wholesale travel seller to Hawaii.

“We’ve got people who are afraid to come out to Hawaii since (Gov. David Ige’s) press conference about the siren drills aired on Southern California TV stations this week,” Richards said. “I don’t know if this is negative for tourism yet, but I know it’s not positive. I think the majority of travelers are rather immune, but it could have a chilling effect on people who tend to be super bothered by things.”