When Hawaii’s largely shuttered economy reopens, it is likely to do so in phases, only after a robust system is in place to test and track patients and people with whom they’ve had close contact.

And even after restrictions begin to lift and Hawaii’s tourism opens again, recreational, cultural and social activities – from dining out to hiking and attending sporting events — may look markedly different until a vaccine is found.

Ultimately, the tourism industry may be the last to come back, in part due to a need to convince large numbers of visitors that Hawaii is a safe place to visit.

Restarting Hawaii’s economy is likely to roll out in phases, only after certain things are in place. Claire Caulfield/Civil Beat/2020

That’s the view of several Hawaii economists, policymakers and business leaders who are working on plans to reboot the state’s economy.

It’s a view that has been unfolding over the last two weeks. And it has buy-in from people like Rep. Scott Saiki, the speaker of the House of Representatives; Peter Ho, the chief executive of Bank of Hawaii; and Dr. Mark Mugiishi, chief executive of the state’s largest medical insurer, Hawaii Medical Service Association, which has developed a roadmap of its own.

“There is not a date for reopening,” said Carl Bonham, executive director of the University of Hawaii Economic Research Organization, which outlined its roadmap in a paper titled, “How to Control Hawaii’s Coronavirus Epidemic and Bring Back the Economy: The Next Steps.

Instead, Bonham said, there is a set of principles to guide decisions. It’s key that the plan and its implementation be transparent to the public, Bonham said.

“The trust in government is going to be really, really crucial,” Bonham said on Monday during a meeting of the House Select Committee on COVID-19 Economic and Financial Preparedness.

Mugiishi added that the players have to coordinate.

“Whatever we decide, we need it to be agreed on by all stakeholders,” he said.

Contact Tracing Is A Key

One thing all seem to agree on is that it’s important to have a robust system to trace people who have been in contact with people who test positive. As some see it, this could eventually mean people – both residents and visitors coming to Hawaii – being asked to carry a phone app that can allow them to see if they’ve crossed paths with a person who proves to be infected.

But regardless of whether it’s done with an app or with old-fashioned, public health gumshoe work, the ability to conduct such contact tracing is one of UHERO’s prerequisites for reopening the economy. HMSA also states the need for contact tracing in its work plan, which Mugiishi went over at Monday’s House select committee meeting.

“This contact tracing is really where the action is,” Hawaii Department of Health Director Bruce Anderson said during Monday’s hearing, which was conducted by Zoom and broadcast on public access television.

Dept of Health Director Bruce Anderson during Governor Ige’s press conference on April 8, 2020.
Department of Health Director Bruce Anderson says contact tracing “is really where the action is.” Cory Lum/Civil Beat/2020

The challenge is that conducting fast and extensive contact tracing isn’t easy, said Tim Brown, an economist with the East-West Center who co-authored the UHERO paper with University of Hawaii economist Sumner La Croix.

The COVID-19 contact tracing criteria involve tracking down anyone who came into contact – meaning within 2 meters for at least 15 minutes — with an infected person, Brown said. This typically can mean some 30 to 40 people, he said.

“The staffing needs should not be understated,” Brown said.

That’s where apps can come in. He pointed specifically to Safe Paths, an open source technology being developed by MIT. As MIT describes it, the technology allows people to “match the personal diary of location data on their smartphones with anonymized, redacted, and blurred location history of infected patients.”

This lets people “check if they have crossed paths with someone who was later diagnosed positive for the virus,” MIT says.

Ala Moana Shopping Center slider walkway.
When restrictions lift, malls like Ala Moana Center could come back faster than places like nightclubs that depend on large crowds in a small space. Cory Lum/Civil Beat/2020

As UHERO and HMSA see it, there could be significant value in combining such tracing with local, same-day testing. Although not available yet in Hawaii on a large scale, such same-day testing is key, according to UHERO. Contacts who test positive could be subjected to strict isolation, possibly in a hotel or other facility.

The state health department has taken the position that wider testing is not necessary. Close contacts of those that are ill need to isolate and monitor themselves for 14 days no matter what, Anderson said.

“It doesn’t help you determine who’s potentially infected,” Anderson said, explaining that a close contact who tests negative could later test positive because the virus can take days to build up in a person and show up in a test.

But UHERO takes testing even further. Part of its vision involves testing air passengers before they board planes to Hawaii, once such testing technology is available. Anderson said such testing might be a good idea.

Saiki said he sees more testing as a key to making visitors feel Hawaii is safe – and for the public to feel safe enough that government officials will lift a 14-day quarantine on people flying into the state.

“To me, that’s the most important point of testing,” he said. “In my opinion, the testing capacity is critical.”

No Swift Recovery

Regardless of what Hawaii decides about contact tracing and testing, there’s the question of how quickly idled businesses can ramp back up. UHERO’s vision is to open up in phases: businesses geared more toward residents in the first phase and visitor industry enterprises in a second phase.

Both types could face challenges rehiring workers and dealing with bills that might have piled up.

To be sure, staffing up might be relatively easy for some companies. For example, at the House committee’s meeting on April 6, Peter Ingram, the chief executive of Hawaiian Airlines, said at least for now the airline could bring furloughed staff back quickly, as long as there’s demand for travel.

But others worry there will be problems.

Yuki Kawai is a real estate agent who works with several small business owners in Kakaako. He said some workers might find it more lucrative to stay home than to come back to work in the short term.

This is because the federal relief law, known as the CARES Act, provides an additional $600 per week on top of unemployment benefits, he said.

“The CARES Act has unintentionally made it far more beneficial for employees to remain unemployed until the additional $600 benefit expires four months from now,” he wrote in a letter to members of a small business hui he’s advising.

On top of that, there’s the issue of how to deal with landlords who are expecting rent from businesses that now have little or no income.

He hopes tenants can get a break, but he said, “I don’t expect the U.S. government or landlords to cover all the tenants’ expenses because the landlords are also suffering.”

Even when businesses open up again, things aren’t likely to be the same for a while. UHERO’s La Croix says it could be 18 months or more until a vaccine is developed and widely given to people. In the meantime, he said, extensive testing, contact tracing and isolation of infected people could keep new infections down. But he said some level of social distancing will remain.

That means certain activities, liked sold-out Rainbow Wahine volleyball games at UH, might not be feasible at all, he said.

“Until a vaccine’s in place, I don’t think UH would be able to pack people into the Stan Sheriff Center,” he said in an interview.

Other venues that tend to bring people into close contact also pose problems. These, he said, include bars and nightclubs. Shopping at Ala Moana Center might be OK.

But he said restaurants forced to promote social distancing by seating patrons farther apart might face financial challenges. Many eateries already have small profit margins and their capacity will be smaller, he said.

Scores of hiker ascend Diamond Head just before the tunnels near the summit.
When the tourist economy reopens, state officials might have to reconsider how they manage popular attractions like the Diamond Head Monument trail until a vaccine can be delivered. Cory Lum/Civil Beat

“You know there’s going to be some readjustments,” he said.

This could eventually lead to a restaurant industry shakeup. Some landlords might have to give rent breaks to keep tenants, and some businesses may close because they aren’t profitable, which could drive rents lower. But eventually, the commercial real estate market will reach equilibrium, he said.

“I don’t have an easy answer for the restaurants,” he said.

Meanwhile, he predicted, some industries will grow and adapt.

“We might see that grocery delivery services are a much bigger deal,” he said.

Professional meetings and conventions might go remote, spawning more sophisticated teleconferencing systems.

Finally, some things that define a Hawaii vacation might change. Crowded outdoor attractions like the Diamond Head Monument trail could see better management of the large crowds, La Croix said.

“It’s the type of stuff the state has to think about,” he said.

Small Businesses Can’t Pay Rent

As leaders plan how to reopen the economy, an untold number of small business owners are thinking about how they can survive. And unless those at the top of the food chain, like landlords and banks, figure out a way to give relief to tenants and mortgage holders, it seems clear the economy will be greatly diminished when it does reopen.

Emily Hodges is a case in point. The owner of Infinity Movement Studio in Kakaako’s Salt shopping complex, Hodges has seen her business effectively shut down. Before COVID-19, she would have salsa classes with 40 to 45 students, plus occasional yoga and pilates classes.

The shutdown orders killed that. Hodges said she hasn’t thought what dance classes will be like if people want to maintain social distancing once the government lets businesses reopen.

She said she’s just trying to patch enough money together to keep her business alive. The SBA’s Paycheck Protection Program, which offers forgivable loans that businesses can use to keep workers on the payroll, doesn’t work for businesses like hers. That’s because she has a small staff that runs two salsa classes, but relatively high rents. And the amount of the forgivable loan is determined by payroll size.

Instead, Hodges said she’s applied for a disaster relief loan under a separate SBA program. And she’s offering classes online, although she says it’s mostly the diehard dancers who are taking them. She even started a crowdfunding campaign. But she still doesn’t know how she’ll make it without a break from her landlord.

“There’s no way I can pay rent,” she said.

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