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Hawaii business owners bracing for revenue crash

  • JAMM AQUINO / JAQUINO@STARADVERTISER.COM
                                The Honolulu Club, which has been open for over four decades, announced its closure on Oct. 12.

    JAMM AQUINO / JAQUINO@STARADVERTISER.COM

    The Honolulu Club, which has been open for over four decades, announced its closure on Oct. 12.

More Hawaii business owners have a dismal view of their finances than they did three months ago, a new survey suggests.

The survey released Tuesday found that 41% of business owners statewide expect revenue to tank by more than half this year, up from 28% who conveyed the same expectation in a similar survey in July.

Business owners also were asked if they expect a more than 20% revenue decline next year, and 70% answered yes in the new survey. A similar question was not in the earlier survey.

Both surveys were produced with support from a coalition of local industry organizations, including the Chamber of Commerce Hawaii, and led by local financial consultant Ryan Tanaka.

The new survey included responses from 1,474 Hawaii business owners, compared with 1,234 business owners in the July sample.

“The results … reveal that even more Hawaii businesses are suffering financially as the COVID-19 pandemic drags on,” survey organizers said in a statement.

A primary aim of the coalition behind the survey is to persuade local government leaders to provide Hawaii businesses with more financial aid — with a particular emphasis on help for commercial property landlords.

“The hope is the stark data will paint a clearer, data-driven picture prompting city and state officials to allocate more federal funding to help businesses survive,” Tanaka, president of Island Business Management LLC, said in a statement. “There isn’t a lot of help out there for commercial property owners, but they are a big part of the economic recovery framework.”

The coalition, which also includes the Hawaii Restaurant Association, Retail Merchants of Hawaii, Hawaii Lodging and Tourism Association, financial institutions and shopping center owners, promoted a plan earlier this year to direct $100 million in federal coronavirus aid held by the city to benefit commercial property landlords and tenants.

Under this plan, landlords would be able to apply for grants to cover unpaid rent on behalf of tenants and help avoid what supporters said could be a drain on city property tax revenue from financially strained landlords.

The Honolulu City Council unanimously adopted Resolution 20-208 endorsing the plan Sept. 9. However, Mayor Kirk Caldwell didn’t embrace the initiative.

Gary Kurokawa, Caldwell’s chief of staff, told resolution supporters Sept. 18 that he appreciated the group’s approach but that the city’s efforts are focused on directing relief to individuals and small businesses.

“The city’s position has been to provide assistance to tenants directly and give them the flexibility to determine their priorities,” Kurokawa said in a statement to plan proponents.

City aid programs using federal CARES Act money include $133 million made available to businesses earning up to $5 million a year. This program, the Small Business Relief and Recovery Fund, offers reimbursements up to $50,000 to cover expenses including rent for qualified businesses.

At the state level, $75 million in CARES aid was recently conveyed to thou­­sands of unemployed Hawaii workers in the form of $500 debit cards good at restaurants statewide.

On Tuesday, Gov. David Ige announced a new program to use an additional $25 million in CARES aid to provide 2,500 Hawaii businesses with grants up to $10,000 to cover expenses for changes made in response to COVID-19.

Federal lawmakers helped the most with a program for small business relief that delivered about $2.5 billion to roughly 25,000 Hawaii companies to mainly pay employees but also cover other expenses, including rent.

Tanaka said the survey results show that more help is needed.

According to the new survey, 24% of owners said they closed their business earlier this year during the coronavirus pandemic and remain closed. In the July survey, 16% of business owners said they were closed, meaning business closures increased by half over three months.

Tanaka noted that responses to the recent survey were received Sept. 15- 30 while many businesses on Oahu were prevented from operating under enhanced coronavirus safety restrictions in effect from Aug. 27 to Sept. 24.

The new survey also showed that 9% of business owners said they didn’t pay any rent from April to September.

Another 31% said they paid only partial rent during the same period, and 50% said they expect to miss one to three months of rent from October to December.

“The demand for rent assistance climbs as businesses anticipate more staff cuts and other reductions to survive,” Tanaka said. “It’s all about keeping small business owners healthy, because small business is the engine for our economic recovery and to maintain jobs.”

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