The toll of COVID-19 in Hawaii is being tallied in ways that include lives lost daily and claims of unemployment weekly. One major casualty, however, isn’t being well counted — namely, the untold number of businesses in the state that have perished from the ill effects of the coronavirus pandemic.
Just how many Hawaii businesses have closed permanently at least in part due to COVID-19 is hard to measure, but it’s growing as government restrictions and consumer fears over the virus persist.
According to an analysis by online business-rating platform Yelp, Hawaii had the second-highest rate among states for permanent business closures from March 1 to July 10, at 6.9 permanent closures per 1,000 businesses.
Hawaii’s rate, which trailed only Nevada at 7.3, suggests that more than 1,000 Hawaii businesses may have already folded, based on roughly 150,000 commercial establishments reflected in 2018 state data. About 33,000 of total businesses had employees while 113,000 did not, according to the data.
Yelp also said Honolulu’s permanent business closure rate of 7.9 was third-highest among U.S. cities, behind only Las Vegas and Stockton, Calif., and just ahead of San Francisco.
“Cities such as San Francisco and Honolulu, which have had some of the nation’s strictest stay-at-home orders, are now seeing the highest numbers of closures relative to the number of businesses in their respective cities,” the Yelp report said.
Nationally, Yelp said industries with the most failures were restaurants, followed by retail, beauty/spa and fitness establishments.
Hawaii government emergency orders aimed at mitigating COVID-19’s spread have restricted what kinds of businesses can operate, how they serve customers and how many customers they can serve.
Currently on Oahu, prohibited commercial operations include retailing of nonessential goods such as apparel and furniture, sit-down dining, bars, entertainment venues and golf courses.
A state mandate that all tourists quarantine for 14 days upon arrival, in effect since March 26 and set to be relaxed Oct. 15, also has been a major factor in business endings because so many companies here rely on the visitor industry.
George Watson, managing partner in Hawaii for Moose McGillycuddy’s, said the tourism clampdown, military personnel confinements and occupancy restrictions led the company to close its Waikiki nightclub April 30 after 40 years in business.
“We just decided is was not feasible,” he said.
The company, which continues operating a Maui location, announced online that the Waikiki Moose’s is permanently closed. However, Watson said one partner has ideas for possibly reviving the establishment.
“There is a glimmer of hope we could reopen,” he said.
Such glimmers reflect challenges determining whether a business has closed permanently, as many companies have shut down temporarily by choice or under government orders.
In Kalihi, the operators of Dillingham Saimin announced Aug. 26 on Facebook that they were closing “indefinitely” after 64 years.
“As with all businesses we have been hit hard by this pandemic and being a small mom and pop shop, we were unable to survive these trying times,” the announcement said, while adding the restaurant may open again once the pandemic is over.
At the state’s largest shopping mall, Ala Moana Center, many stores look abandoned, with bare shelves, but may be only temporarily closed.
Other spaces suggest final endings with frosted windows or dismounted signs.
Steepologie Teas, which operated in the mall near Target, posted a printed sign on its door stating “It Is With A Heavy Heart That We Close This Location Permanently.”
The company said in the note that it has been devastated by COVID-19.
A local Ala Moana representative said disclosing permanent tenant closure volume at the mall since March was up to corporate officials in Chicago, who did not provide a response by Friday.
David Cianelli, general manager of Pearlridge Center, said store openings and closings are a part of normal business, but he would not disclose how many permanent tenant closures have occurred since March at Hawaii’s second-largest mall.
Some permanent business shutdowns since COVID-19 arose aren’t materially related to coronavirus. Examples include brewpub restaurant Gordon Biersch, which closed Feb. 9 at Aloha Tower Marketplace; dairy processor Meadow Gold, which shut down on Oahu in April; and Walgreens, which closed its flagship Honolulu store in June.
At Royal Hawaiian Center, two tenants have permanently closed since March. Sam Shenkus, director of marketing at the Waikiki retail complex, said these tenants, ramen seller Ringer Hut and boutique retailer Vitra Eyewear, made decisions to leave before COVID-19.
Commercial real estate brokerage firm Colliers International forecast in a July report that the amount of vacant retail space at complexes leased to tenants on Oahu may grow by close to 400,000 square feet this year. That’s about the size of Kahala Mall.
Colliers noted that retailers were struggling with COVID-19 impacts but also said the industry had been showing signs of a downturn before the pandemic.
A broader expectation of permanent Hawaii business closures is suggested in a July survey of 464 business owners across the state produced by the University of Hawaii Economic Research Organization and several local industry trade associations.
About 17% of survey respondents said they believed their business would not survive the coronavirus crisis even with a return in tourism starting Oct. 1, a date that has since been pushed back to Oct. 15. A similar survey in May found that 6% of businesses had the same doomed view if more tourists started coming Aug. 1.
The 17% figure could equate to around 25,000 businesses.
“Depending on when the pandemic is brought under control and when the tourist economy can safely reopen, our data suggest that between 6% and 15% of businesses may need to close permanently,” UHERO reported.
Another estimation of permanent business closures was produced in a July report by Ryan Tanaka of Island Business Management LLC on behalf of commercial property owners and others urging the city to convey $100 million in federal aid to business landlords to reduce tenant rent delinquencies.
Tanaka’s report said the number of businesses in Hawaii dropped by 1,600 during the 2008 recession, representing 5% of employer establishments, and that the state could now face over 5,000 additional closures compared with the last recession.
The Chamber of Commerce Hawaii has said restrictions on business operations and tourism are pushing more companies to the brink, and that government leaders should be doing more to reverse economic harm.
“We have yet to see any comprehensive, statewide plan to support businesses in need,” Sherry Menor-McNamara, the organization’s president and CEO, said last month.
The federal government has helped many Hawaii businesses via several loan programs, the biggest of which was the Paycheck Protection Program that provided nearly $2.5 billion in forgivable loans to about 26,000 Hawaii businesses to cover payroll, rent and utilities.
Honolulu Mayor Kirk Caldwell established grants for Oahu small businesses in May, and on Thursday added $75 million to the program that had distributed about $50 million to around 5,500 businesses. Grant amounts that initially were capped at $10,000 to reimburse paid expenses can now be up to $50,000.
Still, all available aid may not be enough to prevent more permanent business shutdowns.
James Titcomb, founder of Puna Noni Naturals, a 20-year-old, family-owned body care products firm based in Kailua, said in written testimony earlier this month to the City Council that he received a July 14 eviction notice from the company’s landlord.
“We desperately need some assistance, or we may soon join the ranks of so many other local businesses forced to close their doors,” he said.