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Hawaii, hurt by tourist sag, out to woo new enterprises

By David R. FrancisBusiness and financial editor of The Christian Science Monitor / May 29, 1981



Honolulu

Fewer tourists flew to Hawaii last year to share in what the island promoters call the "aloha" spirit. It has shaken the islands economically, rousing fresh interest in proposals for attracting new businesses here.

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"We need other activities to ensure a broader economic base," Gov. George R. Ariyoshi said in an interview.

What hit tourism was higher air fares. From July 1979 to January 1981, the typical weekday round-trip coach fare from San Francisco to Honolulu increased from $282 to $530 as the cost of jet fuel rose.

Westbound visitors, primarily from the United States mainland and Canada, decreased 3.1 percent during the year. Eastbound visitors from the Orient and Pacific showed an 8.3 percent increase. But this was not sufficient to offset the decline in the much larger westbound traffic, and thus tourist visitors as a whole dropped 0.8 percent. the adverse trend was felt most severely in the "neighbor islands" rather than on Oahu, where this capital city is situated.

Moreover, many tourist industry representatives believe that the visitors to these islands were conservative in their spending, hit by inflation and tight budgets.

The tourist industry had been counting on continued rapid growth in tourism, such as had occurred in much of the 1970s. Growth in the visitors' arrival rate slowed in the 1973-75 recession. But it rebounded to 13.5 percent in 1976 and remained in the 6.6-to-7.9-percent range in the years 1977-79. The number of new hotel rooms increased about 4,400 from June 1979 to June 1980. The result was a decline in the statewide occupany rate from 73.5 percent in 1979 to 67.4 percent last year.

Faced with this situation, the state Legislature approved a budget last month providing for an increase in tourism promotion from about $3 million in the fiscal year ending June 30 to $5 million in the year starting July 1.

This, the Honolulu Star-Bulletin noted in an editorial, was "a notable change from [the Legislature's] past practice of hassling the industry and the Hawaii Visitors Bureau."

Governor Ariyoshi hopes also to see further diversification and processing of Hawaiian agricultural products.

The islands' sugar industry was exceptionally profitable last year as the average price of raw sugar increased to $604 per ton, up 99 percent from the 1979 average. Sales of sugar and molasses reached an estimted $630 million in 1980, up 82 percent from the year before. Sugar prices have since fallen.

Pineaaple also had a good year, with sales of about $215 million, up roughly 13 percent from 1979.

"We feel agriculture is very complimentary to the visitors industry," the governor said.

Another goal of the state is to attract an electronics industry. The state Department of Planning and Economic Development recently surveyed electrical engineering graduates of the University of Hawaii working on the mainland and found that many of them would be eager to return to the islands to work if jobs were here.

Many electronics fims, because of their rapid growth, nowadays hhave a hard time finding expert help.

Looking at the survey report with its list of available engineers. Andrew Gerakas, head of the economic development division, commented: "If I showed this to an electronics company, they would go bananas." An electronics firm locating on Hawaii, he maintains, would find it easy to attact the needed talent "We have a beautiful place to

Mr. Gerakas and other state officials find the electronics industry especially attractive because it is relatively nonpolluting, high income, and produces lightweight products that could be easily shipped from the islands to the mainland.

One problem would be the high cost of obtaining suitable land. But Governor Ariyoshi maintains that electronic firms could either locate in present industrial parks or on land not suitable for agriculture, though currently designated under state planning provisions as agriculture land.

"We are not talking about hundreds of acres of land," he noted.

In any case, the state has drafted a "high-technology strategic plan" for attration electronic or other high-technology firms to the islands.

Another goal of the governor is to make Hawaii a regional center for the Pacific business of multinational fims. The islands already have about 35 regional headquarters. The new budget approved funding for turning the Aloha Tower area on the Honolulu water-front into an international trade center.

"Hawaii," Mr. Ariyoshi told the annual meeting of the Asian Development Bank last month, "is the ideal meeting place between the East and the West. We can serve as the linguistic and cultural interpreters for this part of the world, and we can serve, too, as the economic brokers.

"I feel much of the destiny of these islands resides in our abilities to translate this into reality."

Hawaii's population grew about 2.5 percent a year in the 1970s, and reached 965,000 last year. That population growth slowed last year, Governor Ariyoshi believes, but he is nonetheless much concerned to find new areas of job growth.