Before the COVID-19 pandemic the payroll at Kilohana Kauai, a popular Kauai attraction, was 168.
Fred Atkins, Kilohana’s general partner, said Friday that he signed checks for just seven employees.
“I’m kind of numb,” said Atkins, who also serves as a Hawaii Tourism Authority board member.
Since opening to the public in 1986, Kilohana has grown from 36 acres of gardens to a 104-acre visitor destination, including an agricultural park, Plantation Railway, Gaylord’s Restaurant &Mahiko Lounge, Lu‘au Kalamaku, Koloa Rum Co. and more.
Kilohana managed to survive two hurricanes. But it’s now on the precipice like so many other businesses on Kauai, where travel restrictions are the tightest in the state.
Much of the state entered 2021 with the expectation of realizing at least some economic improvement. Atkins said it’s different on Kauai, where conditions are still “about as bad as it’s been since the beginning.”
“Especially when you see it start to open up and you see there’s some light at the end of the tunnel. This has been kind of a dark period,” he said. “Now we are going to try something no one else is trying, and we hope it works. That was like 10 days ago, and not to see the numbers go up at all is concerning.”
Travel to Kauai plummeted after Kauai Mayor Derek Kawakami opted out of the Safe Travels program, effective Dec. 2, requiring all travelers to Kauai to undergo a mandatory 10-day quarantine with no option to test out.
Starting Jan. 5, Kauai ended the monthlong tourism shutdown by allowing interisland passengers to participate in Hawaii Safe Travels and introducing its own trans-Pacific entry program.
Trans-Pacific travelers can now avoid quarantine on Kauai if they first go to another Hawaii island using the Hawaii Safe Travels pre-arrival testing program and spend at least 72 hours on that island before traveling to Kauai. But before entering Kauai they would still need to take a test from one of the state’s trusted interisland travel partners.
A second option to avoid the 10-day quarantine on Kauai is for visitors to stay in “resort bubbles.” In this case the visitors must have a negative COVID test before arriving on Kauai. That test doesn’t have to come from the list of trusted testing partners put out by the state. After they arrive, they must go directly to a designated resort bubble for at least three days. While at the resort they can use swimming pools and walk the hotel grounds, but they aren’t allowed to leave the resort, including using the nearby public beaches. After three days, if they take a second COVID test and the results are negative, they can leave the bubble.
The changes are hard to explain to visitors, and even harder to sell, said Mufi Hannemann, president and CEO of the Hawaii Lodging &Tourism Association. If Kauai tourism doesn’t improve soon, Hannemann said, many businesses are expected to fall off a cliff, taking their employees, contractors and vendors with them.
Just how dire is it? Hannemann said a recent survey of Kauai businesses, conducted by the Kauai Chamber and the Hawaii Lodging and Tourism Association — Kauai Chapter, paints a bleak outlook for Kauai’s employment opportunities, health care benefits and business survival rates.
“Survey results are definitely alarming for the small- business community. Federal relief and state assistance will not be enough to spur economic recovery on the Garden Isle. It also overlooks the fact that travelers are the lifeblood of small business, restaurants, retailers and, of course, hotels,” Hannemann said. “I am hopeful that Mayor Kawakami will amend his directives without compromising his healthy objectives if the current economic downturn worsens.”
The survey, which was conducted Dec. 11-18, garnered more than 100 responses from visitor industry-dependent small businesses, large corporations and those in between. Some 49% of respondents said they did not expect their businesses would survive more than 90 days without the significant return of tourism.
Additionally, 91% of companies indicated that health insurance for about 4,000 furloughed employees would be at risk if the status quo continued another 30 to 90 days.
While Kauai’s overall unemployment rate was 13.5 % in November, the average unemployment rate for survey respondents was 90%, with activity companies reporting that on average they had furloughed 92% of their workers and retailers reporting that they had furloughed 73%.
Survey respondents indicated that during the state’s mandatory 14-day visitor quarantine, which ran from March 26 to Oct. 15, their workforce dropped to 29%. The Oct. 15 launch of Safe Travels Hawaii returned their workforce to 53%, but it fell to just 10% after Kauai opted out of Safe Travels.
Mayor Kawakami told the Honolulu Star-Advertiser on Thursday that “most definitely, some of our policy calls have impacted the visitor industry and our economy negatively. There’s no way around that. In this type of scenario, every single decision that we make comes at a consequence.”
But Kawakami said Kauai’s policies also “made an impact as far as keeping this island healthy and safe and avoiding large outbreaks that overwhelmed our hospitals. They’ve certainly played a part in maintaining very low positivity rates.”
While there have been 322 deaths in Hawaii caused by COVID, Kauai has had only one. Out of the 24,353 total cases in the state, only 173 have been on Kauai.
Kawakami said he finds “glimmers of hope” for the island’s economy in the possibility of increased federal support, the COVID-19 vaccine rollout, reports of increased occupancy at Kauai’s existing resort bubbles and calls to expand the program.
Sue Kanoho, Kauai Visitors Bureau executive director, said Kauai added two more resort bubbles Thursday, bringing the count to eight.
Resort bubbles are starting to gain some traction with longer-staying, more affluent travelers, especially those who are committed to Kauai through timeshares or homeownership, Kanoho said.
Still, most of Kauai’s hospitality industry hasn’t embraced resort bubbles.
Katy Britzmann, director of sales and marketing for the Grand Hyatt Kauai Resort &Spa, said the property closed early in the pandemic but reopened in November to participate in the state’s Safe Travels program.
“We were able to bring back a couple hundred of our more than 900 employees,” Britzmann said. “But once the county opted out, we had to immediately close. All of our reservations were canceling.”
Britzmann said the Grand Hyatt researched resort bubbles but found little demand for them among guests.
“About 85% of our potential guests said they weren’t interested in a resort bubble concept, given that they have other options,” she said. “We’re hearing from our partners that it’s just too confusing.”
Britzmann said fewer than 75 workers are now on the payroll at the county’s largest resort, which recently extended its closure through February.
Sheraton Kauai Resort General Manager Chip Bahouth said he’d like to see the state adopt uniform travel requirements across all islands.
While resort bubbles have allowed some Kauai resorts to build their base of business, Bahouth said they haven’t improved Kauai’s tourism-dependent economy much.
HTA reported that only 20 visitors came to Kauai on Thursday for pleasure or vacation. That’s less than 1% of the 5,288 that entered the state Thursday for pleasure or vacation.
Kauai’s poor travel performance stands out even in an industry that is experiencing a weak first quarter. From the start of the year to Jan 14, the Hawaii Tourism Authority reported, the volume of domestic arrivals on Kauai was down 96.7%.
The drop was in the low- to mid-60% range for all other islands, where visitor industry members expect momentum will start to pick up with more meaningful recovery starting to take place by the third or fourth quarter.
The shutdown is costing the Sheraton Kauai about $500,000 monthly, but Bahouth said the hotel would weather the storm.
“We’re a major business. We’re in it for the long haul. It’s not about us; it’s about my people that work for us and the small businesses on this island,” he said. “We need the trickle-down effect from tourism — it’s huge. It touches agriculture. It touches everybody. We are in for a world of hurt. The half a million on my end isn’t the problem; the problem is, What do all these other people do?”