VIDEO: Trans-Pacific travel reopening helping struggling visitors’ industry, but financial problems persist

By Ryan Kalei Tsuji and Yunji de Nies, Special to the Star-Advertiser — Nov. 13, 2020

Click HERE to watch the full video interview with Outrigger CEO Jeff Wagoner and Hawaiian Airlines CEO Peter Ingram

Trans-Pacific travel reopened in Hawaii just under a month ago, and while tourists are not pouring into the state, their presence is helping to slowly lift up the struggling visitor industry.

“We’ve seen things pick up nicely. It’s still a long way from what we had in 2019, we’re not back to normal by any means yet,” Hawaii Airlines President and CEO Peter Ingram said this morning on Spotlight Hawaii.

“By December 15th, we will have at least some level of flight activity from every one of the 13 origin points we served on the U.S. mainland prior to the pandemic. So we’re cautiously optimistic but it’s still only about a quarter of the total passenger levels that you would have had a year ago at this time,” Ingram said.

Outrigger President and CEO Jeff Wagoner also joined program, and said that bookings at the dozens of his company’s properties throughout the state reflect the same trend.

“We are seeing some nice increase over the holidays, which will be great to see. But I think we all knew it wasn’t going to be a stampede of travel back in. It’s complicated because of the testing protocols that you have to have prior to coming here, and so we believe it’s going to be a very gradual growth over the next several months,” Wagoner said.

Hawaiian Airlines has been working to help make more coronavirus testing available to passengers prior to departure, including allowing passengers to pay for tests using Hawaiian Airlines miles. The airline has also launched a program they are calling “Travel Pono,” to inform visitors through in-flight videos and other messaging before they arrive in Hawaii about the state’s mask and social distancing requirements.

“We’re trying to get the message about personal responsibility, and frankly I’ve asked all of our employees when they travel to think about setting the right example for people about wearing the face coverings on the airplane, keeping distance on the airport,” Ingram explained.

Ingram and Wagoner said the profile of the people coming to Hawaii has changed, with fewer families and seniors, and an increase in younger, single travelers. Those tourists tend to spend less. Both are hoping for the eventual elimination of the interisland quarantine to help boost more kama’aina travel, which is a critical part of their customer base.

While more people are taking flights and staying in Hawaii hotels, both companies are nowhere near where they need to be financially. Hawaiian Airlines was losing over $3 million a day at one point during the pandemic, the numbers have improved but not enough.

“We’ve projected that out for the forth quarter and we expected to bring that number down to closer to $2.2 million a day, which is still way too much and it’s not sustainable over the long term, but we’re on an improving trend,” Ingram said.

Wagoner said Outrigger is looking at occupancy rates between 10-20%, which is not nearly enough to cover costs.

“Clearly, when you start talking about, we’re losing less money when we get to certain occupancy levels, you know that’s not a good thing, but it is positive territory,” Wagoner said.

“Typically in hotels you’re gonna see that they’re gonna need to be between 50-55% occupancy in order to be profitable after debt. So we clearly have a long way to go,” he explained, adding that projections show that overall most hotels in Hawaii will not be profitable in 2021.

Wagoner and Ingram had plenty of praise for the employees that are keeping their companies running during this difficult time. Despite all the challenges, both said they are optimistic that the industry will recover.