Hawaii County’s economy hasn’t been hit as hard as neighboring islands, data shows, but that’s little solace for businesses on the Big Island fighting through the worst economic landscape in memory.

And while the Oct. 15 reopening of tourism injected financial life into the state, those same businesses are wary of what could be ahead. They know that increased COVID-19 cases on the mainland bring tighter travel restrictions to Hawaii, which means tourism could be strangled to another standstill this winter — typically peak visitor season — just when it looked like it was starting to recover.

“It’s really going to depend on the next few months,” said Matt Caldwell, general manager of Foster’s Kitchen, in downtown Kailua-Kona, on what his business is expecting this winter.

The oceanfront locale noticed an increase in patrons after tourism reopened on Oct. 15 and shortly after the state issued $500 restaurant cards for people collecting unemployment benefits to spend at local eateries.

Whereas they were doing 10% of their numbers from the year before during the worst of the shutdown, Foster’s saw near normal numbers during the fall. But with all the uncertainty surrounding travel and the virus, they’re not expecting to maintain that clip.

Caldwell said they’re planning to do 50-60% of last year’s busy season numbers.

“It’s not good news but it’s not terrible,” he said. “It’s managing. It’s getting by.”

Matt Caldwell, general manager at Foster’s Kitchen, pours a drink behind the bar Dec. 8. Tom Hasslinger/Civil Beat

Data from the Department of Business, Economic Development and Tourism show precisely how sensitive Hawaii’s economy is to the mainland’s COVID-19 situation.

On Nov. 24 – the day tighter testing requirements to fly to Hawaii mandated by Gov. David Ige went into effect – daily passenger arrivals dropped dramatically.

On the Big Island, they fell to around 600 visitors that day. More than 1,600 people had deplaned on Nov. 22. By Nov. 29, fewer than 400 passengers arrived.

The decline mirrored what happened around the state. More than 10,000 visitors came Nov. 22, whereas 6,595 landed on Nov. 24.

State Economist Eugene Tian gives a presentation during Council on Revenues meeting.
State Economist Eugene Tian says December visitor arrivals are expected to stay on pace with Thanksgiving week. Cory Lum/Civil Beat

Eugene Tian, state chief economist, said his office is projecting visitor arrivals in December to remain at that Thanksgiving-week pace. For the Big Island, that would mean around 600 visitors a day.

A huge factor in Hawaii’s economic health is the literal health of California, he added. Some 25% of Hawaii visitors on a given day during normal times hailed from the Golden State.

Residents there are currently under a recommended stay-at-home order, so it’s worth monitoring when gauging which way Hawaii’s rebound will go.

The uncertain winter outlook comes on the heels of what was turning out to be a decent economic uptick. October and November data show that arrivals and spending increased across the state after trans-Pacific flights resumed, and when residents about a week later began receiving their restaurant cards, which pumped $6.5 million into Big Island eateries as of early December.

Flights into the Big Island were at 4% of last year’s totals before the reopening. After the reopening, October saw 27% of the volume while November climbed to 35%.

In terms of visitors to the island per day, it was 49 prior to Oct. 15, then 450 after the reopening. It jumped to 474, on average, visitors per day in November.

Tian said the number of visitors arriving – not the number of flights – is the best economic indicator to assess Hawaii’s economy.

Sam Johnson, manager of the oceanfront restaurant the Fish Hopper in downtown Kailua-Kona, agreed. Like Caldwell at Foster’s, Johnson set his winter projections at 50% to 60% of last year’s numbers, based on all the uncertainty with travel rules ahead.

Visitors stop by the Fish Hopper restaurant in downtown Kailua-Kona on Dec. 2, where social distancing and masks are required. Tom Hasslinger/Civil Beat

So dependent on tourism is the establishment, it didn’t reopen until after transpacific flights resumed. When it did, the Fish Hopper experienced about 80% of normal volume.

“It was pretty solid business, and that’s carried us all the way to last week,” he said of the post-Thanksgiving slowdown, which is a typical occurrence that lasts until a few weeks before Christmas.

But there’s nothing to do now except wait and see.

“We’re becoming pros at it, unfortunately,” he said.

There are some bright spots for Hawaii island. In terms of non-tourism related industry, Hawaii island is a little more diversified than Maui and Kauai. Accordingly, its unemployment numbers aren’t as high as either neighbor island.

At 13.5%, the Big Island’s rate is below both the Valley and Garden islands, as well as the statewide mark of 14.2%.

The housing market hasn’t suffered on Hawaii island, either. Median single family home prices have inched upward, to $406,250 in October. And 2020 proved to be a steady, if not banner, year for building permits. Overall, permits are up 13.8% over the first 10 months.

“That means the construction industry is going to be busier next year,” Tian said.

One of Hawaii’s most well-known non-visitor dependent sectors is aquaculture, which announced big economic plans recently. The Natural Energy Laboratory of Hawaii Authority administers the world’s premier energy and ocean technology park off the coast of Kailua-Kona.

NELHA-based businesses Blue Ocean Mariculture and Kowa Premium Foods Hawaii, also known as Big Island Abalone, said in mid-October there are plans to grow operations significantly, which will create over 150 jobs over the next several years.

Aquaculture businesses have plans for continued expansion on the Big Island. Courtesy: NELHA

Big Island Abalone is in the process of expanding its current 10-acre footprint by an additional 15 acres. Plans include adding aquaculture facilities, a new visitor center, administrative offices, a sales facility and a full-service research and development restaurant to improve the visitor tour experience, among other additions.

Construction will be completed in three phases over the next several years, according to a DBEDT news release.

Abalone’s neighbor, Blue Ocean Mariculture, meanwhile, is in the process of establishing a finfish processing center to process kanpachi from the company’s offshore cages. The processing facility will be built to handle over 2,000 tons of fish annually and will allow the business to broaden its target markets, which until now had been primarily supplying high-end chefs and restaurants with fresh whole fish.

The timing of the news has nothing to do with the pandemic or its economy, Gregory Barbour, NELHA executive director, pointed out. Rather, it’s the product of strategic planning by businesses operating in an industry that continues to grow and thrive on Hawaii island, he said.

Still, he added, the additions will make a positive impact on Hawaii’s economy, which in turn will only benefit the island’s business community by diversifying the market more.

“I think we will attract more businesses because of that,” he said.

Ige said in the release that the expansions will only enhance Hawaii’s brand as a leader in the global aquaculture industry. He also noted the timing of NELHA’s plans.

“The timing for this expansion could not be better,” Ige said in the release. “The creation of over 150 short- and long-term jobs in diversified industry sectors is key to reviving our economy in a post-COVID-19 world.”

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