As new coronavirus cases slow to a trickle across Hawaii, officials are cautiously optimistic that the economy can start to reopen, though business likely will look different and a second wave of cases could send people back into lockdown.
“The curve is beginning to level off, but like I said, we’re not out of the woods yet,” Maui County Mayor Michael Victorino said Thursday. “I don’t want people to get excited and start running around. However, please, please understand — I see a light at the end of the tunnel.”
Both Maui County and the state have started to talk about rebooting the economy this week, following nearly two weeks of six or fewer daily cases reported across the state.
“We know it’s time to begin that conversation,” Gov. David Ige said Thursday during a “Community Connection” Facebook livestream. “We had three conditions that we felt needed to be in place in order for us to consider relaxing some of the mandates. First and foremost is the case count. We wanted to make sure that the case count was trending downwards and is at a rate and level that our health care system can manage.”
Ige added that the second condition is to make sure the health care system is ready. As of Wednesday, 52 percent of hospital beds and 41 percent of Intensive Care Units beds statewide were in use, while just 14 percent of ventilators were in use, according to the state Joint Information Center.
The third condition is making sure Hawaii has the ability to test and trace contacts. With the help of the private sector, Hawaii now has the capacity to run more than 3,000 tests per day, and results are coming back faster, within 24 to 48 hours, Ige said.
Maui County also is looking at the same factors — whether cases are going down, if testing and contact tracing is available, if the health care system is prepared and if people are following the rules.
“We couldn’t have gotten to this point unless we followed the rules,” Managing Director Sandy Baz said during a news conference Thursday. “We appreciate everyone that’s been stuck at home diligently, wearing your masks. . . . Whatever you’re doing to support our efforts, thank you, because you’re doing a good job, and it shows through the numbers we have.”
Maui and other counties are looking to a report from Johns Hopkins Bloomberg School of Public Health to help weigh the risks of reopening. Parks, trails, golf courses and walking paths are considered low risk. Further up the scale are retail businesses and shopping malls, gyms, playgrounds, restaurants, offices and beaches, which would include activities such as sunbathing and congregating. Higher risk venues include theaters, museums, community centers, beauty salons and spas, concert and sports venues, bars, places of worship, schools, contact sports and large social gatherings.
“High risk doesn’t mean that we won’t ever allow it; it just means that more modifications may be needed,” Baz said. “Risk can be adjusted with social distancing and modifications like face covering, physical barriers and contact reduction.”
The county also emphasized that the report mainly offers guidance and that businesses may not necessarily open in the order of risk.
When asked what industries the community would rely on most as the economy reopens, Victorino said that “the hospitality industry, which has so many ancillary services connected to it, will still be our number one industry.” But, he added, it will likely change. The county will have to depend on it less. There may be fewer rental cars on the road and fewer rooms available.
He added that there also are possibilities in manufacturing for companies making face shields, respirators, ventilators and other desperately needed supplies during the pandemic. Agriculture also will likely play a role, whether it’s small farms or large-scale operations like Mahi Pono.
“I think Maui can be the breadbasket of not only the state but of this community at large,” Victorino said.
The mayor added that a task force has been created to explore recovery and diversification of the economy moving forward.
“Any type of diversity will take some time,” Victorino said. “Made in Maui products will be one of the other areas we’ll be pushing very diligently on, whether it’s jams or clothing, or whatever is made here, made locally, can we make that an industry that can be sustainable and thrive?
“We’re going to do everything in our power to help, and we have money set aside in our economic package that will help in that area of recovery.”
Council Chairwoman Alice Lee said via email Thursday that a reopening of the economy should “require a stabilization or reduction in new COVID-19 cases, begin with businesses that do not ordinarily involve close contact with fellow employees and customers, maintain restrictions on travel and corresponding self-quarantine measures, continue to practice social distancing and use of masks and no social gatherings.”
Lee added that she doesn’t expect the visitor industry to pick up where it left off. She supported continued travel restrictions and said people may be reluctant to travel for the next year or so anyway.
“The council already anticipated the need to offset our previously over-reliance on tourism,” Lee said. “Our budget will reflect strong support for a diversified agricultural industry, including growing hemp, and all of its interrelated support businesses. Other areas to consider are health care, high tech, virtual travel, climate change and a host of other industries.”
Lee pointed out that the upcoming fiscal year 2021 budget, which the council is in the process of finalizing, includes a $2.5 million microgrant for farming, and that the council has also allocated “substantial funds for the Farm Bureau and Farm Union and other farm endeavors, like the farmers mentoring program.” The budget also provides “grants and loans to incentivize farmers and ranchers to support food security for our county” and strengthen the agricultural industry overall.
Remaking tourism
Officials within the tourism industry also expect changes as the economy reopens. Many hotels have been closed since late March, when travel quarantine and stay-at-home orders first went into effect. Rod Antone, executive director of the Maui Hotel and Lodging Association, said Thursday that hotels that have contracts with flight crews or condos and timeshares are among the few accommodations still operating.
“The industry is decimated,” Antone said. “There’s no revenue at all, of course, because there’s no guests, there’s no occupancy, and even when we open up again, what’s that process going to look like? Even if Hawaii is clear and we do some COVID-19 openings, what about the other places where people travel from? Are they going to be clear?”
In March, visitor arrivals by air to Maui were down 55 percent to 125,943, while total visitor spending fell 50 percent to $222 million. On Thursday, 640 people arrived in Hawaii, including 580 to Oahu, 58 to Kona, two to Lihue and none to Maui.
In a survey of 623 businesses across the state, the University of Hawaii Economic Research Organization found that Oahu had lost the highest number of jobs but that job losses as a percentage of their January level were highest on Maui at 58 percent, followed by Kauai at 52 percent, Hawaii island at 48 percent and Oahu at 38 percent. UHERO said this was “consistent with the larger share of tourism-reliant companies on the Neighbor Islands.”
Antone said that some hotel general managers are expecting occupancy to be as low as 20 to 30 percent once travel resumes, which also affects the number of workers they’ll be able to bring back in the near term. All of these factors — low occupancy, higher property tax assessments from before the pandemic, having to invest more into making sure properties are safe — “do not bode well for the industry,” and it could take some time to get back to what it once was, Antone said.
“Hotels have to invest in new training for staff, new equipment,” Antone said. “PPE (personal protective equipment) is going to be in everybody’s inventory, maybe even new types of cleaners. Just like after 9/11, things have changed, and they will probably stay changed. It’s a change the industry wants to make and needs to make.”
Antone said that both the visitor industry and local organizations have long talked about the improvements that could be made to tourism, such as shuttling people to hotels to rent a car there instead of having them drive from the airport and clog up the roads. The “silver lining” of the pandemic may be that “we have this chance, now that it’s been torn down, to build it back up again in a way that is better for the community.”
“Now’s the time to change tourism,” he said. “Now that we’re back down to zero we can manage it and bring it back again the way we want. You can come back, but when you drive to Hana, don’t stop at the waterfall to block traffic and take a picture.”
While some have advocated for capping the number of visitors, “the problem is much more complex,” UHERO research fellow and emeritus professor of economics James Mak and Marketing Management President Frank Haas said in a UHERO blog post Wednesday.
Mak and Haas pointed out that “technology has allowed people to find — and overrun — many sites,” but that technology can also be used to harness tourism. For example, places like Amsterdam use data stored on the chip of the Amsterdam City Card to analyze tourist behavior and devise ways to reduce congestion, as well as an app to notify tourists when an attraction is overcrowded and suggest alternative sites.
“Today’s visitors and residents are likely to feel very comfortable using their smartphone and an app – or another technology – to schedule and pay for their visit,” Mak and Haas said. “Technology can also accommodate variable pricing to smooth out demand. As tourism increased around the world (before COVID-19) more museums, attractions and sites have turned to technology to manage admission and fees.”
However, technology isn’t the only solution and has to go hand-in-hand with good policy, which may include increasing visitor admission fees for state parks. With fewer visitors expected in the wake of the pandemic, “it is critically important to focus on attracting higher spending, lower impact visitors in the mix,” Mak and Haas said.
“Technology will also be critical in the post-COVID world to conduct health screening for incoming passengers,” they added. “Hawaii needs to assure travelers that it is safe to visit — and we need to assure residents that the arriving visitors are not a health threat. Because nearly all Hawaii arrivals are by air, effective screening technology can provide the state with a competitive advantage in tourism recovery.”
Pamela Tumpap, president of the Maui Chamber of Commerce, said Friday that “most understand and acknowledge that the visitor industry of 2019 will not be our reality in the future.”
“A new industry will emerge and is being reenvisioned now,” she said. “Some of this visioning was already underway as we sought more balance within the industry, less impact on the environment and higher levels of resident satisfaction. With COVID-19 causing devastation across the globe, all visitor destinations worldwide will be rebuilding their industries, refreshing their brands, repositioning their offerings and competing against Maui for visitors.”
Life after lockdown
Tumpap, who also sits on the House Select Committee on COVID-19 Economic and Financial Preparedness, added that Maui will likely continue to rely heavily on critical services as it recovers, including grocery stores, gas stations, health care services and utility companies. She said reopening has to happen in careful phases, so that if cases go up, Hawaii can pull back.
“We are currently expecting a phased approach to reopening our tourism industry, beginning with interisland travel once the quarantine is lifted, followed by Mainland visitors and beyond, with monitoring and response at every phase, so that if the threat level goes up, we can pull back and put appropriate restrictions in place,” she said. “All want to ensure that we don’t reopen too quickly, cause harm and further delay our economic recovery.”
Tumpap said that diversifying the economy has been a longtime discussion, and that the pandemic “absolutely gives us the opportunity to be better and do more.” As people work from home, many businesses may continue to use telecommuting and new software tools that are more efficient and reduce labor hours.
“This will likely continue as it did after the 2008 recession when revenue was down and businesses (learned) how to be more efficient and reduce overhead,” Tumpap said. “So to the question of where could we go, many industries have been talked about for decades that are still quite relevant, such as telemedicine and medical tourism. The widely talked about 5G network is here and can be leveraged to create many new industries or expand opportunities for existing industries.”
Baz, the managing director, said that business will look different as the county reopens. Employees and customers will need to wear face coverings. Social distancing must be followed and high-touch points should be sanitized regularly. The number of people entering businesses should be limited to two members per household with the exception of minors, the elderly, people with disabilities and others who need to be accompanied or can’t be left at home.
“The new normal is as follows,” Victorino said. “Social distancing rules, changing in workplace layouts, adjusting work shifts, working from home, adjusting and looking at new school schedules and closures, temperature checks and many more.
“Good hygiene is important. Wearing a mask or face cover will be paramount,” he added. “I highly encourage all of you, both residents and businesses, to take stock and look very carefully at how you do business and how you believe you should do business in the future.”
* Colleen Uechi can be reached at cuechi@mauinews.com.