In June, Flora LaMontagne watched The Kahala Hotel and Resort’s reawakening.
After being dormant for weeks — Hawaii had reopened its local economy after weeks of closure to stop the spread of COVID-19 — the hotel’s airy lobby was bustling with residents seizing discount rates for staycations at the quiet property in Oahu’s poshest neighborhood.
The rebirth, although modest, was cause for the cautious optimism starting to pervade the tourism industry at the time: Hawaii had quashed the coronavirus and the next step was to execute a plan to reopen the state to tourists as one of the world’s safest destinations.
“It was so nice to see: this hotel and the lobby came back to life again,” said LaMontagne, who is director of guest relations for the 378-room property. “It seemed like old times.”
Fast forward to late July, and the Kahala was among dozens of Hawaii companies sharing bad news with state labor officials. The virus was out of control, and Gov. David Ige had made it clear the state wouldn’t open to tourists any time soon. The promised rebirth wasn’t happening.
“At the time we closed the Resort we did not believe our colleagues would be furloughed for more than six months,” Nichole Morales, the Kahala’s director of human resources, wrote to state officials on July 29. “Although we have reopened on a limited basis our occupancy remains low and social distancing requirements limits our F&B operations.”
The letter catalogued continuing furloughs and work reductions for 496 employees, including 23 bell staff and valet parkers, known as front service attendants, 67 housekeepers and 76 wait staff.
The Kahala isn’t the only company that’s shared such grim news. Local institutions like the Waikiki Trolley, Honolulu Cookie Co. and Sea Life Park have echoed the Kahala in recent letters to the state, which are required by federal law when companies execute big layoffs or extended furloughs.
Known as the Worker Adjustment and Retraining Notification Act, or WARN Act, the law is meant to protect workers from the impacts of unexpected job losses. It generally requires employers to notify workers when there’s going to be a layoff lasting longer than six months or a reduction of working hours by 50%.
For local tourism-related companies that shut or scaled down operations in March, August marked the six-month trigger for notifying the state.
Ige previously had planned to modify a 14-day quarantine for tourists by Sept. 1. But on Aug. 18, he put that plan on hold until Oct. 1, at the earliest. This means that for many companies, furloughs or temporary layoffs will extend indefinitely.
The few dozen WARN Act notices filed in July and August alone document thousands of temporary furloughs, layoffs and job cuts. They include big properties, like the Hilton Hawaiian Village, which extended furloughs for about 1,880 employees, and smaller cuts, like the termination of 14 jobs at Miyako Restaurant in Waikiki, which said it’s closing.
It’s hardly news that COVID-19 has battered Hawaii’s economy. Continuing unemployment claims peaked in the middle of May at about 150,000, but were still more than 100,000 in August. Also in August, small business revenues were still down 50%, a sign of just how important visitors are to local firms.
But while such statistics provide an overview, the WARN Act letters fill in details, showing what companies have been hardest hit and the types and numbers of jobs put on hold or cut entirely.
And they’re probably harbingers of worse times ahead, said Sumner La Croix, an economics professor at the University of Hawaii. Most of the letters were sent even before Honolulu Mayor Kirk Caldwell announced a 14-day stay-at-home order for Oahu. La Croix said he doesn’t see the economy bouncing back until the virus is under control.
“The letters are the canary in the coal mine,” he said. “There’s more to come.”
But there’s considerable bad news already. And it’s not just obvious hospitality jobs, for occupations like hotel housekeepers and restaurant servers.
Take Sea Life Park, for example. The marine mammal park in Waimanalo is making moves to downsize its operations, scaling to five days a week from seven and reducing hours, said Valerie King, the park’s general manager.
The park announced 55 permanent job cuts, including ones for specialized positions like wildlife keepers and apprentice aquarists, King said in her letter.
King said in an interview that the park is financially stable thanks to its parent, Madrid-based Grupo Parques Reunidos. But she said it is hard to justify a big staff until tourism bounces back.
“Should things turn around, we’d be happy to hire some of them back,” she said.
Likewise, while retailers fall in an industry category different from the food service and accommodations industries at the heart of tourism, some retailers cater mainly to visitors.
Consider DFS Group, the retailer that sells items from luxury brands like Cartier and Burberry to international visitors who don’t have to pay sales taxes. The company announced 171 furloughs extended through Oct. 31 and another 193 layoffs at its locations at the Honolulu and Kahului airports and its T Galleria By DFS store in Waikiki.
The layoffs, including 85 sales associates in Waikiki, became effective Sept. 1, Cassundra Ware, the company’s human resources director, wrote. Ware declined to comment for this article.
Honolulu Cookie Co., which sells its fancy, chocolate-dipped shortbread cookies at DFS and elsewhere, also announced 71 layoffs by the end of this week. Heather Aki-Marcos, the company’s human resources director, didn’t respond to an emailed request for comment.
Another firm announcing triple-digit job eliminations: E Noa Corp., which owns the Waikiki Trolley. It’s laying off 231 of 271 employees, including 106 trolley drivers and 10 Japanese narrators. Haley Reddell, the company’s human resources manager, declined to comment.
In his letter to the Department of Labor and Industrial Relations, Richard Elliott, general manager of the Hyatt Centric Waikiki Beach, expressed concerns similar to many others. What in March seemed like a temporary reduction in business had shown no sign of changing, not only because of a decline in travel, but also because of various government shutdowns as well as the cancellation of business conferences and special events, he wrote.
“With such a significant reduction in our business in a rapidly evolving situation, we have to make painful choices that would have seemed unthinkable just a short time ago,” he wrote.
While the boutique hotel said it was laying off just two employees, another 61 who previously were getting medical coverage would be placed on furlough without benefits.
The problem is the uncertainty, Elliott said in an interview.
“We don’t know when things are going to return to normal,” he said. “It’s just out of our hands.”
In many cases, companies have managed to avoid complete job eliminations. Employees might be out of work, but technically furloughed, potentially with benefits. The Hilton Hawaiian Village, for instance, has 1,880 employees on extended furloughs.
And even the more modestly sized Halekulani has 784 employees temporarily laid off, chief operating officer Peter Shaindlin wrote. Those included more than two dozen engineers and maintenance workers, 109 restaurant servers and 126 housekeepers, plus florists, massage therapists and phone system operators.
UH’s La Croix, who reviewed the WARN Act notice letters, noted that many of the people suffering layoffs and furloughs were in managerial and professional positions that are traditionally less vulnerable to the ups and downs of tourism. At the Halekulani, which is temporarily closed, these include the IT manager, public relations manager, two sales managers and the director of purchasing.
“Many of these are white-collar jobs,” La Croix said.
The big question is when these jobs might bounce back. During an interview this week, U.S. Rep Tulsi Gabbard pointed out that the state had a plan to reopen tourism in June, when the daily COVID-19 case count was close to nil.
But Ige’s health department director, Bruce Anderson, and state epidemiologist, Sarah Park, didn’t put in place the extensive contact tracing system that was designed to keep the virus in controlled clusters, Gabbard said. That failure, she said, has allowed the virus to spread and has led to another shutdown of Oahu and widening economic problems.
“This is definitely tied to the failure of Gov. Ige and his team to do what they said they would do and what everyone knew had to be done back in May,” she said.
“It doesn’t appear Gov. Ige realizes this, or he’s ignoring the reality,” Gabbard said.
Sherry Menor McNamara, president and chief executive of the Chamber of Commerce-Hawaii, agreed.
“It’s just mind-blowing to see the lack of leadership and ineffectiveness,” she said.
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