So what comes next?
How do we turn our economy back on?
How do we bring in tourists, while protecting the citizens of Hawaii?
With all the work done to protect Hawaii, how do we move forward without becoming the poster-child for opening too soon, or the feared “second wave”?
The facts are difficult to get away from. No state has a higher percent of its economy dependent on tourism than Hawaii. Various studies put that estimate at around 20 to 30% but nobody truly knows. The ripple effects of the money spent here by tourists go so far at so many levels that it is impossible to know how much it really impacts us.
We do know this: Without tourist dollars coming into Hawaii, the state operates on a negative import-export balance. That means that there are more dollars going out of Hawaii then coming into Hawaii without tourism. In order for there to be balanced we need to bring in dollars from outside of Hawaii to make up for the imbalance. The only way to do that is tourism at this time. We no longer have the option of Agriculture on any scale whatsoever and we don’t have anything else to export that has any sustainable value for Hawaii. The TAT or “Hotel Tax” alone was over $600M last year. Add in the general excise tax for every dollar spent by tourist here as well as other various airport and car rental taxes, hotel property taxes, investment property taxes, and it’s pretty easy to see that tourists contribute significantly more than $1B a year in taxes to the operations of Hawaii’s government. With tourism gone, this burden will fall on the residents of Hawaii.
We have seen various special interest groups over the last few years with xenophobic messaging pushing the idea of getting tourist out of Hawaii. With Covid-19 those groups now have a vision of what it looks like, and it is not pretty.
In only seven short weeks we have seen Hawaii’s unemployment rate spike to a staggering 34%, leading the nation. Perhaps more worrisome is that there is no end in sight. A few jobs here and there have been saved by CARES Act and the creation of the Paycheck Protection Program (PPP). One of the stipulations of receiving money under the PPP is that employees must stay on payroll for 8 weeks. It is very possible that we see a second wave of unemployment claims come after the eighth week period ends for companies.
The final fact that is difficult to get away from is that tourism is discretionary spending. These are the dollars that are spent after everything is paid and everyone feels comfortable spending extra to treat themselves. We don’t get our money from producing computers or agriculture or manufacturing. We get our money as the last thing that consumers spend money on. We’re going through such a drastic economic crisis like we are seeing now it’s hard to say how many people are going to feel comfortable spending those discretionary dollars. It’s also difficult to say when they will want to spend those dollars.
The grim summary is that things are bad, they’re going to get worse, and we don’t know when or if people are going to be able to come to Hawaii. We can sit and worry about all the challenges or we can come up with solutions so that when the opportunities arise we can capitalize on them.
We’ve seen what Hawaii looks like without tourism. It’s not ideal. How do we safely open Hawaii? Lieutenant governor Josh Green introduced an idea; he calls it the “Travel with Aloha Program”, and I think it’s a good start. The general idea is that anyone coming to Hawaii would have to have a certified test within 72 hours of their departure for Hawaii showing that they are free of Covid-19. I think the program to go one step further and also employ new but expensive rapid testing upon arrival to Hawaii. If a visitor fails the first tests they’re not allowed to board the plane. If they fail the test in Hawaii they are put on a return flight, or given the option of a 14 day quarantine. This redundant system could have all cost transferred to the visitor while going above and beyond safety protocols to ensure that Hawaii stays Covid-19 free.
We do have a particularly unique opportunity to position Hawaii as a place where someone can travel and not have to worry about Covid-19. With a clean Hawaii and rigorous testing at the airport, as well as enhanced monitoring programs for people on quarantine, Hawaii would quickly become a top destination for the people who can still travel.
So how do we solve this? The answer is we need to demand leadership from the highest levels of our local government. By the end of this month why he needs to have a formal plan as to how we reopen our economy for tourism. We must position ourselves as the safest place to visit, once enhanced testing and quarantine protocols are implemented. These all need to happen from the leaders of our state and our counties.
I’m curious as to what you think? Do our leaders have the skill to pull this off? Can Hawaii come out of the other side of this in position to be one of the safest places to visit?