Dave Moskowitz was eating lunch Friday when he got the dreaded call that his employer BLT Steak Waikiki was laying him off in response to a sharp drop in demand related to the new coronavirus pandemic.
“My hours had already been cut a few weeks ago. I was expecting the layoff,” Moskowitz said. “Hotel occupancy and visitor arrivals have plummeted. Employers are trying to keep workers on the payroll, but there’s only so much they can do. It’s somber in Waikiki — workers are very scared. Before this is over, I think lots of people will be out of work, and that’s going to have a trickle-down impact throughout the whole economy.”
Job losses, reduced hours and other work disruptions are mounting as the drop in visitor demand shakes Hawaii’s tourist economy, which last year employed about 216,000 people statewide, brought in nearly $18 billion in visitor spending and contributed another $2 billion in statewide tax revenue.
Volatility in Hawaii’s tourism industry has increased as new developments have made some travelers anxious. The U.S. State Department’s warning for older adults and travelers with underlying health problems in the U.S. to avoid traveling on cruise ships and long flights hasn’t helped, either.
President Donald Trump also recently banned flights to and from Europe, excluding England, for a month and tweeted Friday that Carnival, Royal Caribbean, Norwegian and MSC Cruises have agreed to suspend trips from the U.S. for 30 days.
In this climate it’s hardly surprising that there have been significant cutbacks in flights from the carriers that serve Hawaii, and more are expected.
But the economic dampening isn’t only due to Hawaii’s tourism decline. There’s been an unprecedented drop in local customers as Hawaii residents and businesses jump on the coronavirus containment bandwagon. People are still out shopping for toilet paper, soap and hand sanitizer, but with cancellations of major events, not much else is getting them out of their homes other than the need to work.
Businesses are choosing to err on the side of caution, too, with many offering telecommuting opportunities and some closing down operations for health reasons.
Polynesian Cultural Center, an attraction on Oahu’s North Shore, will close Monday through the end of March to practice social distancing related to the new coronavirus. The decision was mostly based on the nonprofit’s desire to support the policies of Brigham Young University-Hawaii, which supplies its student employees.
All 1,467 full- and part-time PCC employees will have the opportunity to continue working during the closure in various jobs and assignments to be determined by management. However, PCC is not requiring employees to work during the closure. If they wish, they can take paid time off or leave without pay.
Patagonia also has announced that it would temporarily close its stores, offices and other operations at the end of business Friday and planned to update the closure timeline March 27 in a website post. During the closure, Patagonia said all employees will receive their regular pay, and those who could work from home would do so.
The Hawaii Children’s Discovery Center also has decided to close to the general public from Sunday to March 30. During this two-week closure, the center will remain open only to children enrolled in its spring break camp program.
More announcements of business disruptions are expected, said Sherry Menor-McNamara, Chamber of Commerce Hawaii president and CEO. Some businesses are using technology and other creative approaches to allow people to keep working, Menor- McNamara said. However, economic health concerns also are prompting business responses that run the gamut from encouraging employees to take vacation or other kinds of leave to reducing hours to freezing positions to cutting salaries to eliminating jobs, she said.
Preliminary results from a survey sent by the chamber to its 2,000 members Thursday shows the depth of business disruptions, Menor- McNamara said.
As many as 80% of those who have turned in their survey results reported a downturn, and 88% said they were concerned about economic impacts, she said.
If they had to stop operations, Menor-McNamara said, 27% of those surveyed said they would lose $10,000 or more per day, 8% said they would lose from $7,000 to $10,000 per day and another 8% reported they could incur daily losses of $3,000 to $5,000.
Some 40% of businesses surveyed said it was too soon to evaluate the impact of a work stoppage, she said.
“Large businesses are adjusting accordingly, but small businesses seem to need more resources,” Menor-McNamara said. “Everyone is in rapid- response mode.”
Hawaiian Airlines, which employs more than 7,400 people, announced Friday that it was instituting a hiring freeze and has told employees that it will allow voluntary unpaid leave, with benefits, in per-pay-period increments. Hawaiian’s senior executives and board members also are taking 10% to 20% voluntary pay cuts, effective immediately through at least June.
Tina Yamaki, Retail Merchants of Hawaii president, said the declines have hit Hawaii retailers hard, and many are having to make tough adjustments.
“When it first started, people were seeing their hours cut. Since then some employers have been looking at layoffs or cutting salaries to keep everyone employed,” Yamaki said. “It’s still pretty recent. Some employers are evaluating their budget. I’ve heard from others that were barely hanging on that if this goes on for a few more months, they’ll probably have to shut their doors.”
Ben Rafter, CEO of OLS Hotels & Resorts, said the visitor industry is likely to see more employment disruptions and reductions in the coming weeks.
“Anything seen today, we’ll see far more,” Rafter said. “It’s a difficult situation. I’m glad to see the state ramping up its ability to process unemployment claims. The losses won’t just come from hotels and local attractions; they’ll come from all over.”
Bill Kunstman, a spokesman for the state Department of Labor and Industrial Relations, said the agency reported Thursday to the House Select Committee on COVID-19 Economic and Financial Preparedness that there had been an increase in claims since the beginning of March. Through Wednesday the department saw a roughly 19% increase in unemployment claims for the week and expects more, Kunstman said.
“There does appear to be a significant uptick. We are still only in the middle of March, but from what we’ve been seeing from the numbers, it certainly looks like a number of people in the labor force are going down in large part because of the number of claims,” he said.
Kunstman said workers can file full unemployment claims if they are laid off or partial unemployment claims if they still work somewhere but have lost hours.