Stussy Honolulu is working with Canadian designer Willo Perron, who made Rihanna’s stage float during the Super Bowl LVII halftime show, to design a new flagship location in the Royal Hawaiian Center.
Brockton Kodama, vice president for Stussy Honolulu, said the streetwear retailer has been at the center for about five years and is moving into a much larger space later this year. The build-out, which is about three times the current store’s investment, is expected to double Stussy’s space as well as the number of employees.
“When we reopened in 2020 (after a seven-month shutdown) it was dismal at best. It was empty and that lasted at least a year after that,” he said. “We started to pick up really only last year around February or March. It’s been very good since then; Stussy has become very, very popular. They’ve had some really solid collaborations. We finally made up the deficit from before.”
Stussy Honolulu is just one of the many signs of new life in Waikiki, which has come a long way from what resembled a ghost town three years ago today, when the state put into effect a 14-day COVID-19 travel quarantine requirement that shattered Hawaii’s tourism economy.
At the worst point of the pandemic it was possible to walk down Kalakaua Avenue — the 50-yard line of the state’s tourism economy — without encountering cars or people. It was so quiet that wild chickens wandered freely through the neighborhood.
Kathryn Henski, a Waikiki Neighborhood Board member, said that when the traffic noises were gone, she could hear the animals from the neighboring Honolulu Zoo.
Stephany Sofos, who has lived in Waikiki since 1968, said there are no historical comparisons for what Waikiki experienced.
“I’ve witnessed the Vietnam War, Hurricane Iniki in 1982, the 1987 stock market crash, the 1990 savings and loan crash, Hurricane Iwa in 1992, 9/11, the 2007 and 2008 financial crisis. COVID-19 hit Waikiki bad,” Sofos said.
COVID-19 has created lingering challenges as well as permanent business losses and closures. It also created opportunities for those waiting to break into Waikiki’s normally tight commercial real estate market. The pandemic plunge gave rise to a wave of new restaurant and retail openings and expansions as well as significant investment in the resort sector.
“The bottom line is that you can never ever believe that Waikiki will be down for long. Because of the magic of that name, there will always be entrepreneurs that want to come and do business here — just like people that save all their life to come here,” Sofos said. “It looks busy again. But even though it’s more crowded, I wouldn’t give it up for anything. During the pandemic, I came to appreciate even more the stunning beauty of my home.”
Returning Waikiki to normalcy has been a wild and conflicted ride. Prior to government crackdowns to stop the spread of COVID-19, Waikiki tourism was the heartbeat of the state’s economy, contributing more than 6% to the state’s gross domestic product. Locals complained of over-tourism and others warned any more development would turn it into a concrete jungle.
But that was before strict social-distancing practices designed to flatten the new coronavirus curve slowed tourism to a trickle. The mass exodus of visitors, along with a desire to support containment efforts, prompted more than 100 hotels statewide, many of them in Waikiki, to temporarily suspend operations. The district’s stores, usually teeming with visitors and residents, were closed just about everywhere.
WAIKIKI’S TOURISM contributions to statewide GDP fell to just 1.9% in 2020, according to data from the state Department of Business, Economic Development and Tourism. It rose again to 4.7% in 2021 and is expected to continue growing its share, though a 2022 estimate is not yet available.
Visitor arrivals to Oahu, which are heavily dependent on Waikiki, returned to 4.86 million in 2022, or about 79% of the pre-pandemic 2019 total, according to DBEDT data. In January, Oahu had 435,833 visitors, about 89% of its January 2019 pre-pandemic level.
While Oahu’s tourism performance is improving, it has lagged recovery of statewide tourism arrivals, which recovered to 89% of the pre-pandemic level in 2022 and in January was at 97%.
Keith Vieira, principal of KV & Associates, Hospitality Consulting, said Waikiki was hard hit due to its dependence on international arrivals, which prior to the pandemic represented about 50% of Waikiki’s total arrivals.
“My guess is that Waikiki is still only doing about 80% to 85% of what it did pre-pandemic,” Vieira said.
Lynette Eastman, general manager of the Surfjack Hotel & Swim Club, said Waikiki had a great spring and some properties are doing better than they were in 2019, but not all.
“It looks busy now in Waikiki but we are expecting Waikiki to be much slower in May,” Eastman said. “I’m not saying it will be bad, but some will struggle.”
Jerry Gibson, president of the Hawaii Hotel Alliance, said the U.S. leisure market has kept Waikiki going. However, he said more international travelers are needed to offset potential slowing from the mainland.
“The Feds are pushing back on interest rates and Americans are feeling like there could be a recession looming — that’s always in the back of our mind. Hopefully, the U.S. leisure business keeps on going and the U.S. economy keeps on getting better,” Gibson said. “There is more pressure on businesses now with supply-chain issues, energy creep, health care and wages increasing substantially and property taxes jumping.”
RYAN TANAKA, chair of the Hawai‘i Restaurant Association, said Waikiki was “hit really bad during COVID-19. Sales just plummeted.”
Tanaka said that while there were various state and federal relief efforts, only a fraction of restaurants qualified for them. Rising costs, supply-chain issues and labor shortages also are taking a toll.
“That means that many restaurants are still suffering though the lingering effects of COVID-19,” he said. “If there is a silver lining, it’s that each individual restaurant owner is a source of perseverance and resilience and is literally inspirational. They were able to make it through the greatest challenge that has faced our industry in 100 years.”
He said Waikiki restaurants are seeing growth as tourism recovers, and the return of Japanese visitors could add some tailwinds. However, Tanaka said Waikiki’s new restaurants are adding to what was already a fiercely competitive market.
Rick Egged, president of the Waikiki Improvement Association, said though challenges remain in Waikiki, the district is attracting new investment and new investors.
“There are obviously short-term ebbs and flows in traffic, but I think that it’s pretty obvious that major companies are still putting a lot of money into Waikiki,” Egged said.
Vieira estimates about $1.5 billion to $2 billion has gone into resort investment in Hawaii over the last three years, and some of it has been in Waikiki. He noted that new hotel investment ranges from the planned Ala Moana Boulevard Tower, which would add 515 rooms to the Hilton Hawaiian Village, to the recent $80 million renovation of the Outrigger Reef and renovations at the Halekulani.
Planning for a $50 million overhaul of the Ohana Waikiki East by Outrigger also is underway, and tourism sources have said renovations are planned for the Hyatt Regency Waikiki Beach and the Sheraton Princess Kaiulani.
Egged said Stix Asia Food Hall opened in February, replacing Waikiki Yokocho, which had occupied the lower level of the Waikiki Shopping Plaza before a pandemic-related closure.
Another big Waikiki investment is the reopening of the T-Galleria by DFS, which caters to duty-free shoppers. It was acquired for $270 million in August 2021 by BlackSand Capital, which recently partnered with the Kobayashi Group to buy the Kyo-ya Restaurant site, a 25,000-square-foot space that has been vacant since the restaurant closed in 2007.
The landlord representative told the Honolulu Star-Advertiser that BlackSand Capital and DFS “remain excited to reopen the T Galleria by DFS, Hawaii store in Waikiki Galleria Tower and are targeting a summer reopening, pending the recovery of international travelers to Hawaii.”
JOE JITSUKAWA said the pandemic freed up space for Junbi, a drink store that specializes in matcha products sourced from a century-old farm in Japan, to open its first Hawaii location in the Royal Hawaiian Center in November.
“I knew eventually that the pandemic had to end. I also had the foresight to know that there is a lot of opportunity here and I wanted to get in for the moment when it does open up,” Jitsukawa said.
Pent-up demand, especially from the local market, buoyed the new Junbi store from the start, he said, and performance is improving as more tourists return to Waikiki.
“It doesn’t feel as empty as before. I really don’t know how to gauge what it should be. Everyone keeps telling us it’s better than this,” he said. “If I already feel that this is successful, that just tells me that it’s going to be even better — that’s great news.”
The first Hawaii location of Daeho Kalbijjim & Beef Soup is expected to open in the fall of 2024 on the third floor of the Royal Hawaiian Center.
Johnny Lim, chief growth officer for Daeho Dining Group, said COVID-19 was very difficult in the beginning; however, Daeho’s founder found a way to quickly pivot and the chain chose to expand during the pandemic.
“If a restaurant can make it through the pandemic, then growth strategy becomes a little more clear. Our confidence grew from there and from the overwhelming support that we get from our current customers,” Lim said.
He added that Daeho chose to expand into the Royal Hawaiian Center as “it is the mall in Honolulu.”
“We saw the opportunity with the tourist attraction and how we can really further validate Korean food,” he said. “What better place to do it in Hawaii, where there are just tons of people traveling from throughout the world.”
The Royal Hawaiian Center also is betting on itself and on Waikiki returning to previous volumes with the opening this month of Ka Lewa Lanai, a newly expanded rooftop lawn offering 5,091 square feet of space for meetings and private events.
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Pandemic travel for Hawaii
• March 26, 2020
The state implements a mandatory 14-day quarantine for visitors to Hawaii, which collapses tourism to a trickle.
• June 16, 2020
Hawaii removes the travel quarantine for interisland travel.
• Oct. 15, 2020
The state reopened tourism on Oct. 15, 2020, with the Safe Travels program, which allowed trans-Pacific travelers to skip quarantine if they test negative for COVID-19.
• Dec. 17, 2020
Hawaii reduces its mandatory travel quarantine to 10 days.
• July 8, 2021
Hawaii further eases travel restrictions by allowing those who were fully vaccinated in the U.S. or U.S. territories to exempt out of the Safe Travels COVID-19 testing requirement. It also ends all interisland travel restrictions.
• Nov. 8, 2021
The U.S. lifts restrictions on travel for a long list of countries. International travelers had to show proof of vaccination as well as a negative COVID-19 test before flying.
• Jan. 3, 2022
Hawaii shortens the mandatory travel quarantine to 5 days.
• March 25, 2022
Hawaii’s Safe Travels program for domestic travelers comes to a close. Hawaii becomes the last state in the nation to drop its indoor mask mandate; however, some school masking requirements remain.
• June 12, 2022
The Biden administration lifts its requirement that international travelers show a negative viral COVID-19 test result before flying to the United States.
Source: Star-Advertiser research, Associated Press.
