Loading...
HomeMy WebLinkAboutCOM 0711.157 2008-2010THE • ,h � l fiT G1 ORCHID STATEMENT OF TOM LEEPER CONTROLLER THE FAIRMONT ORCHID HAWAII May 19, 2010 RE: Bill 211 Operating Budget for the County of Hawaii Aloha Chairman Yoshimoto and members of the Hawaii County Council. I am Tom Leeper, Controller of The Fairmont Orchid Hawaii. I appreciate this opportunity to make a statement regarding the Operating Budget for the County of Hawaii and the proposed real property tax rates. I have already offered testimony before this council that we oppose the proposed tax rate increase in the hotel /resort class submitted by the Mayor in his amended budget proposal. During your May 17 hearing you heard a unanimous message from all who testified not to raise taxes. This council has a very important task set before it, one in which very difficult decisions will have to be made. If you embrace the message of the public and reject tax increases you will be left to determine what expenses in the County Operating Budget are true necessities and those that will need to be deferred until better economic times. I want to bring to the attention of the council the areas that are impacting the recovery of the Hospitality / Lodging industry on the Island of Hawaii. While we are showing signs of improvement we lag behind the improvement seen by the industry on Oahu and Maui. We still find ourselves being driven to lower average room rates in order to compete with resorts on Maui and Oahu. In past years the rates charged by the resorts in Maui driven by their occupancy levels drove business to the Big Island. We now compete with the resorts in Maui and Oahu for this business. They continue to drop their rate to drive their occupancy levels while having a significant financial impact to the resorts on the Island of Hawaii. Resorts on the Island of Hawaii can not continue to drop their rate and remain viable businesses. Hospitality Advisors LLC in their first quarter flash report on Hawaii hotels indicates a statewide increase in hotel occupancy of 4.1% to last year, Maui increased 8.4% while resorts on the Kohala Coast reflected a decreased occupancy of 2.9% and the Island of Hawaii as a whole reflected a decrease of .4 %. The average daily rates for Hawaii hotels statewide decreased by $14.21 or 7.5 %, rates in Maui decreased $30.08 or 11.5 %, the Kohala Coast decreased by $1.34 or half of a percent and the Island of Hawaii decreased by $8.71 or 4.5 %. It was also noted that Hawaii as was within the top 5 US Hotel Markets. When they reviewed the top ten competitive Island Destinations for Occupancy Oahu ranked #4 and Maui ranked #7. ONF NORTH KAN1KU DRIVE, KOHALA COAST. HAWAII U S A 2 0743 FLFFHONF. 808 885 2000 FACSIMILE 808 885 5778 Comm. No. 7 l _ • IS Ref. Tot Ref, Dais MAY 19 2010 If you do a comparison of airfare costs for direct flights to Kona compared to Honolulu or Maui from Los Angeles, Phoenix or Seattle you will find the airfare for Kona is traditionally $100 to $150 more than to Maui and $150 to $200 more than to Honolulu. It has recently been announced than Japan Airlines will discontinue their direct flight from Narita Japan to Kona in November. Using statistics from the Hawaii Visitor & Convention Bureau website in 2009 visitors from Japan accounted for 11% of our total visitor count to a Kona destination. I hope the brief overview I have provided will assist you in understanding why the proposed hotel /resort class property tax rate increase is the wrong decision to make at this time. Our industry is striving to succeed and remain viable in these very difficult economic times. We have worked with our Union & Vendors and made substantial cost savings in order to meet the unending increases in operating costs. Mahalo for this opportunity to address you.