Category Archives: Travel

Crack Seed Stories

The Sweet (& Sour) Life 

story by Dennis Hollier
photos by Kyle Rothenborg

 

The kid comes into the Crack Seed Store with an order that he can’t fill in a standard grocery store. “Mixed arare and li hing mui sauce,” he tells the owner, K.P. Young.

“In separate bags, though—I don’t like the cracker getting all soggy.”

Mr. Young has heard this order before. It’s a house specialty at his Kaimuki store, invented years ago by one of his high-school-age customers. He goes to a large jar at the front of the store and measures a quarter- pound of arare into a small plastic bag. Then, out of the wet li hing mui jar at the counter, he gingerly ladles some of the sweet juice into another bag. “No need seal ’em,” the kid says. “I’m going to eat them soon.” As Mr. Young puts twist ties on the bags, the kid turns to me and says, “That’s how you know you’re a regular: When you know you can mix ’em up.”

Those of us raised in Hawai‘i can be forgiven for thinking that a visit to the old crack seed store, with its great glass jars of preserved fruits, candies, crackers and dried cuttlefish, is the quintessential Island experience. It’s certainly part of our heritage. I remember as a child digging greedily in little brown paper bags filled with wet li hing mui—shriveled plums preserved in a sauce of sugar, licorice and salt—then sucking on the bags when I was done to get all the juice. How could these memories be more Hawaiian?

But even the names of my favorites—li hing mui; umebashi (pickled Japanese plums); or tako (dried, smoked octopus)—belie any native roots. Crack seed came to the islands in the pockets of immigrants. And even today, most of what one buys here is imported from China, Hong Kong, Taiwan, Singapore and Thailand. Only one local company, Jade Foods in Waipahu, actually makes crack seed in Hawai‘i.

Anywhere you find crack seed, you’ll get a whiff of nostalgia. Jade Foods is no different: Although its current location is in a modern warehouse, everything about how the company works seems quaint, old-fashioned … and complicated. The ingredients for more than fifty types of crack seed line the shelves at the back of the warehouse: barrels of dried salted plums and apricots from Jade’s orchard in California; from Taiwan, a huge crate filled with licorice twigs, which taste faintly sweet when raw; boxes of star anise; barrels of sugar and aspartame; and jugs of vanilla, orange crème and lemon crème.

SzeMong Siu, the head cook from China, has been making crack seed at Jade Foods for more than fifteen years. When I arrive, he’s in the back with his helpers, Willy and Alfred, preparing juicy racks of wet salted plum for the drying oven. They work in half-ton batches, but the process is all done by hand: Home cooking, as done by giants.

In the corner, two gigantic pots—each more than four feet across and four feet deep—simmer on great burners. In one pot, an enormous tangle of licorice twigs and star anise steeps in sugar water: this will become the dashi, the base out of which most crack seed sauces are made. In two stainless steel troughs, Alfred rinses 1,000 pounds of salted plum, stirring them with a bat-sized ladle to remove as much salt as possible—each batch has to be rinsed three times. Then he soaks the plums twice in a syrup of fresh water laced with 300 pounds of sugar, each time discarding the sugar bath. Later, in the other great pot, the plums will be gently cooked in a special version of the home-brewed dashi. After the plums have soaked for two days and stewed in the dashi, Mr. Siu and Alfred shovel them onto perforated racks and put them in a huge oven to slowly dry. They’ll sit there for a couple days until Mr. Siu is satisfied with their weight and consistency.

Jade Foods is a family-owned business, founded forty-five years ago by Hollis Ho, a local entrepreneur who once owned an abalone cannery in South America … and who also brought Hawai‘i its first Chicago-style pizza. Ho still putters around the factory every day, but his daughter, Deanne, has run the company since 1998. She remembers growing up with crack seed: As a child, she haunted the aisles of the old factory when it was down on Dillingham Boulevard. “I remember I used to grab a bag of seedless wet plum,” she says, “and then run across the street to the Lays plant and steal potato chips.” It runs in the family: Deanne’s daughter likes to use red li hing mui as lipstick.

Stacey Higashi, who’s in charge of the company’s sales and marketing, takes it as a point of pride that Jade Foods has managed to grow a little each year. Today, Jade is a far-flung operation. In addition to the orchard in California, supplies come in from across Asia. Deanne travels regularly to rural areas of China, Taiwan, Hong Kong, Japan and Thailand to make sure she gets the best ingredients. Higashi points out that quality is critical for Jade Foods. Because production costs are so high in Hawai‘i, Jade seed is always more expensive than imported seed.

“We don’t want to just survive,” says Higashi, “we want to thrive. Deanne has children who should inherit all this.” But this is a tough business. In order to compete with the importers who supply most of the crack seed in Hawai‘i, Higashi says Jade simply has to offer a better product. But even packaging seed is a time-consuming, labor-intensive process, especially for the wet
varieties. Jade uses one-of-a-kind machinery to bag seed, but the ladies in the back still have to carefully weigh the fruit into individual plastic tubs, and then dump these tubs one at a time into the bagging machine.

Those of a certain age remember when crack seed only came out of an enormous glass jar. Now, most seed is sold in plastic bags at the grocery store—only a few shops do enough volume to rely on glass jars. That old-time feel is what keeps customers coming back to places like Seed City in Pearl Ridge, the Crack Seed Store in Kaimuki and the Crack Seed Center in Ala Moana.

The Crack Seed Center, which opened in 1959 as one of the original stores in the Ala Moana Center, is probably the largest retailer of crack seed in Hawai‘i. It’s also delightfully old-fashioned. Ted Li, who bought the store fifteen years ago, still carries more than 100 kinds of seed, all in glass jars. Every day, 500 to 600 customers come through the store looking for their ration of salted plums or shredded mango. Li says this volume allows him to sell a fresher product. “We cater to the discriminating type of customer,” says Li. “They have to know it’s fresh.”

Many of those customers have been coming to the Crack Seed Center since it first opened. Li says some who’ve moved to the Mainland will visit with their children and say, “Mom and Dad used to come to this store every week.” It’s not uncommon for elderly customers to bring their grandchildren in.

The nostalgia people feel for crack seed is a real boon for business. At the Crack Seed Store, customers call from around the world to place orders. One afternoon while I was in the store, Mr. Young packed up five care packages to send to customers on the Mainland. On the same day, four different customers came into the store to place embarrassingly large orders. One lady bought a mix costing nearly $100. Worried that we might think she was going to eat it all herself, she told us, “I have a daughter going to school at USC in Los Angeles. She’s homesick.”

Crack seed is thought to have originated in China, as a way to preserve fruit and seafood. Chinese soldiers supposedly carried it with them like hard tack. It lasted indefinitely and was thought to be good for the health. At the Crack Seed Center, Mr. Li refers elliptically to its medicinal value. “Although we cannot claim it,” he says, “Chinese have been using it for years and years.” Indeed, older Chinese customers still choose lemon varieties to treat a cold or candied ginger for motion sickness.

Regardless of the origins of crack seed, Hawai‘i has come to be its capital. Mr. Li and Mr. Young immigrated from Vietnam and Hong Kong respectively. In both places, crack seed is common, but neither remembers as much variety as one can find in Island shops today. Similarly, Deanne Ho has visited crack seed factories across East Asia. “Most of them only make a few types,” she says, noting that Jade produces more than fifty varieties.

On the shelves of Jade’s Waipahu warehouse, crack seed waits in barrels to be packed. Willy, my guide, lets me taste some of them: wet ume; sweet ginger; crisp plum; five varieties of li hing mui; wet lemon; mango slice; and li hing cherry, pineapple and sweet cherry. In the back, Mr. Siu meticulously stirs glistening, scarlet racks of wet mango slices to ensure they’ll dry evenly. Wandering through the warehouse, I think of something Mr. Li told me back at the Crack Seed Center: “Local customers are very conservative; they stick to what they know.” When no one is looking, I pull a paper bag out of my pocket and fill it with wet li hing mui. Later, after I’ve eaten it all, I plan to suck the bag. 

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Hawaii Timeshare Controversy

BY DENNIS HOLLIER

     Photo: Courtesy of the Grand Waikikian at Hilton Hawaiian Village

It seems like a contradiction: The traditional hotel business in Hawaii is shrinking even while the hospitality industry recovers from the recession, more visitors arrive and they pay more per room than last year.

The relative decline of stand-alone hotels is a trend that has persisted for years and will stretch into the future. Over the past decade, hotel rooms have fallen from 70 percent of the state’s lodging inventory to less than 57 percent, according to a report from the state Department of Business, Economic Development and Tourism. Even as Hawaii tourism enjoyed boom times during most of the past 10 years, the overall hotel inventory actually declined by 7,599 rooms.

No stand-alone hotels are being built today while almost every other form of visitor accommodation has grown, including condominium hotels, hostels, vacation rentals and, most importantly, timeshares. As the number of hotel rooms fell over the past decade, timeshare’s share of the overall hospitality inventory doubled.

Hawaii now has 87 timeshare resorts and that number keeps growing in a time when no one is building stand-alone hotels. Almost every major hospitality company in Hawaii is developing new timeshare properties, converting existing hotels into timeshare, or rehabilitating the timeshare they have.

Timeshare also has its detractors. Many owners complain about high maintenance fees, or that the flexibility that seemed so straightforward during the sales pitch doesn’t always work out in reality. Even industry executives acknowledge timeshare’s shady past, when the industry was dominated by high-pressure sales and dubious claims about investment potential, but they say much of that bluster is gone and the industry has grown more sophisticated. This change is partly due to the introduction of more consumer protections and better self-policing, but mainly because the industry today is dominated by big corporations like Hilton, Disney, Hyatt, Starwood, Marriott and Wyndham. These are some of the best-known brands in hospitality and they’ve helped bring timeshare into the mainstream in Hawaii.

Prices in Paradise

Timeshares aren’t cheap, especially in Hawaii. A typical two-bedroom unit in Waikiki can sell for upwards of $80,000 for a prime week (though the same unit might sell for half that in the resale market). This suggests that a well-appointed, two-bedroom apartment in Waikiki is worth about $4 million, clearly an inflated price. And the cost doesn’t end with the purchase price. Timeshare owners must pay maintenance fees, which cover everything from property and excise taxes to routine maintenance and the condominium’s reserve fund.

The maintenance fee for that two-bedroom timeshare in Waikiki will likely set you back upwards of $1,000 annually for each week of ownership. Not surprisingly, these maintenance fees are one of the main objections of potential buyers. Imagine paying condo fees of $52,000 a year.

     Joe Toy, president of the consulting firm Hospitality Advisors, says 
     timeshares represent 13 percent of Hawaii’s total lodging inventory.
     Photo: Rae Huo

Nevertheless, the role of timeshare within the hospitality sector is growing. Joe Toy, president of the consulting firm Hospitality Advisors, reports that there are nearly 10,000 timeshare units in Hawaii, or 13 percent of the total lodging inventory. The allure of timeshare is such that nearly 6,000 Hawaii residents own timeshares in Hawaii.

Timeshare’s influence is even more obvious when you start to look at occupancy rates. “In Hawaii, timeshare properties average about 90 percent occupancy,” Toy says. “And that’s down from prior years.” To put that in perspective, Hawaii hotel occupancy in the bitter year of 2009 was about 66 percent. The reason for the difference, of course, is that timeshare owners have prepaid for their lodging and they want to use it. That means their vacation plans are less likely to be thwarted by economic or political upheavals.

“Even after 9/11,” Toy says, “timeshare occupancy was in the 70 percent range, when the rest of the state was around 30 percent.”

This is one reason so many hotel companies have added timeshare to their quiver: When your hotel guests stop coming, you can still count on the timeshare crowd to help fill your restaurants and shop in your stores.

Other numbers reinforce this picture. Toy’s report shows that the average stay for timeshare visitors is nearly a week. They typically travel in larger groups, and they tend to spend more money in the community, nearly $1,600 per party. In other words, these are some of Hawaii’s most reliable and free-spending visitors. They’re also locked in; the state doesn’t have to spend its marketing dollars to find and persuade them to come.

There are other benefits to the overall state economy from timeshare. One is a marketing strategy that liberally uses incentives and gifts to attract people to timeshare sales presentations. “That’s sort of a fundamental part of our marketing,” says Bryan Klum, executive VP of Hilton Grand Vacations. “In exchange for the customer giving up some of their valuable vacation time, we usually provide some sort of gift.” These gifts might be discounts on accommodations, or credits that can be spent at the resort’s restaurants and shops. More frequently, though, the gifts are virtually cash. “We often just give customers Ala Moana gift cards,” Klum says.

     King’s Land by Hilton
     Photo: Courtesy of King’s Land by Hilton

Hilton is far from unique. “As an incentive, we offer $125 dining coupons that can be used at several different restaurants in Lahaina,” says Robert Welch, general manager of Marriott’s Maui Ocean Club. “It’s a huge part of our marketing.” All these marketing dollars ultimately end up in the pockets of local vendors rather than in those of out-of-state media and advertising outlets. Large properties in Waikiki, which may give sales presentations to 10,000 to 20,000 customers a year, each contribute millions of dollars annually to the incomes of the shops, restaurants and activities in their neighborhoods.

Then, of course, there are jobs. “There’s a lot of economic benefit from our industry,” says Hilton’s Klum. “There’s the tax revenue that’s raised; there’s the passed-along spending of our customers; there’s the marketing money that we spend, both in state and out of state. But where the rubber really meets the road is the number of people we’re able to employ directly.” Hilton alone, he says, employs more than 700 people in its timeshare operations.

Disney estimates the construction of its Aulani project on Oahu created 1,200 new construction and permanent jobs. According to Hospitality Advisors, the timeshare industry directly contributes more than 4,400 jobs to the Hawaii economy, with a total payroll exceeding $226 million a year. It’s worth noting: That’s an average annual income of nearly $51,000.

Developers’ Incentive

The timeshare industry has been one of the few private sources of economic growth in the state over the past two years. For example, Disney’s Aulani project was built in the teeth of Hawaii’s most severe economic turndown in a generation. When you add in other developments, timeshare generated more than $200 million in capital expenditures in the state during 2009 and 2010, according to the Hospitality Advisors report. This year, Toy says, the industry projects an additional $80 million, which means there are currently more than 3,000 new timeshare units in the pipeline. Hotels are another matter entirely.

“Looking back over the last few years,” says Marriott’s Welch, “the only lodging construction in the state has been timeshare. And over the next 10 years, we have a plan to spend about $1 billion on more timeshare development.” That plan includes projects that are currently partially built, like Koolina and Kauai Lagoons, as well as others on the drawing board. Similarly, Hilton is in the entitlement process on two new towers at Hilton Hawaiian Village, and is selling units at the Grand Waikikian.

Dan Dinell, vice president at Hilton Grand Vacations and chair of the Hawaii chapter of ARDA, the industry trade association, puts that in perspective. “I know of no pure hotel project planned anywhere in the state,” he says, “but there are several timeshare projects planned.” He emphasizes that by adding: “There’s nobody who would develop a stand-alone hotel now in Hawaii; it just doesn’t pencil out.” In other words, the future of Hawaii’s hospitality industry is timeshare and mixed-use.

That’s because timeshare is simply a better capital machine, says Mitchell Imanaka, principal of Imanaka Kudo & Fujimoto, and the former chair of the Hawaii chapter of ARDA, the trade association for the timeshare industry. “The business model,” he says, “has to be contrasted with the hotel model, where someone comes in and builds a project, and hopes that by branding it, they’ll have a certain level of revenue and visitors.” In other words, the developer’s capital is buried in the project, and it may take years of uncertain profits to extract it again. “But the timeshare model permits a developer to go to market, sell his interest, and generate capital to either replenish his coffers, or to make a profit on the sale.” No less important, the ability to extract capital early helps mitigate the risk in the project. “It’s a very compelling model,” Imanaka says. “Because the return is likely to be higher for the developer.”

Timeshare Taxes

Despite timeshare’s growing importance in Hawaii’s hospitality industry, it’s still misunderstood. In January, Gov. Neil Abercrombie proposed legislation that would have more than tripled the transient accommodation tax paid by timeshare owners. According to the governor, this was an attempt to bring timeshare’s TAT in line with that paid by hotel guests. “The objective,” he said, “is to have equitable tax treatment to ensure that the people of Hawaii have adequate funds to support the impacts of visitors to the Islands.” In this sense, he believes the timeshare visitor and the hotel guest should be treated the same.

But industry advocates point out that timeshare owners are already treated differently. Toy says timeshare units already pay more taxes than comparable hotel rooms. For example, as a fee simple owner of real property, a timeshare owner pays property tax. When a timeshare unit is rented out as a hotel room, GET is charged. These visitors are also charged exactly the same TAT as hotel guests. Moreover, timeshare owners do pay a transient accommodations tax, albeit somewhat lower, when they use their own units.

It’s this last tax that industry insiders find most galling. To the governor, it’s simply a matter of equity. “In terms of sharing roads, public parks and hiking trails with our own residents,” Abercrombie says, “it doesn’t matter whether a visitor is staying in a timeshare or a hotel room – the impacts on our Islands are the same.” But the industry turns the equity question on its head. Marriott’s Welch puts it this way: “I believe Hawaii is the only state where a TAT is applied to people sleeping in their own beds,” he says.

Timeshare advocate Imanaka says another problem is what an increased TAT would say to outside developers. “The increase itself would have sent a very negative message to the timeshare industry, to the timeshare owners who visit Hawaii, and to the investment community who invests capital here,” he says. “We’re a capital-poor state, meaning we need to import money in order to keep things running here. The last thing we want to do is send a negative message to the investment community saying, ‘Your dollars aren’t welcome here.’ And that’s my fear: that this will have a chilling effect on investment here in Hawaii.”

Instead of hiking taxes on timeshares, Imanaka says, the state should be nurturing the industry. “If we did, we would not have budget shortfalls as dramatic as we’re experiencing today. We would not have Furlough Fridays; we would not have to look at closing social services, having to tax retirees’ pension benefits, having to tax away Medicaid reimbursements, and the list goes on. Timeshare is the answer; it’s certainly not the problem. And what we have to do is embrace it, make sure the industry continues to thrive. Because we all benefit from that.” 

 

 

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Marketing Hawaii to the World

BY DENNIS HOLLIER

      The Hawaii Tourism Authority’s VP for Brand Management, 
      David Uchiyama, is a numbers man. Under his leadership, 
      the state’s international marketing strategy has been 
      increasingly driven by good data.
      Photo: Irwin Wong

Tokyo, Japan —

High on the stage of the Hawaii booth, overlooking the hubbub of Japan’s biggest travel fair, the musical group Manoa DNA launches into “Aloha You, Aloha Me.” It’s a catchy tune, sung mostly in Japanese, that has become the band’s signature song here in Japan, and the smiling, enthusiastic crowd gathered at the foot of the stage seems to know all the words.

The group’s performance brings business at the neighboring booths to a standstill. At the Canada booth, instead of watching videos of Nova Scotia on giant plasma screens, visitors swivel 180 degrees to watch the band and clap to the music. The Japanese women hosting the Las Vegas booth set down their brochures to dance and sing along. They cheer and flash shaka signs when the song ends. This might be Japan, but there’s a great deal of Hawaii at the Japan Association of Travel Agents Congress and World Travel Fair.

That makes Japan an excellent place to start talking about how Hawaii sells itself to the world. Japan, after all, is our most lucrative foreign market, and three of the most important players in that marketing effort are at the event. On the edge of the crowd is Takashi Ichikura, dapper in an aloha shirt and blazer. Ichikura-san, as he’s known to almost everyone here, is the director and principal owner of Hawaii Tourism Japan, HTJ, the state’s marketing partner in Japan, and the person most responsible for organizing Hawaii’s presence at the JATA fair. At the back of the crowd are the two key players from Hawaii: Hawaii Tourism Authority president and CEO Mike McCartney and his right-hand man, VP for brand management David Uchiyama. 

They’re an odd couple: McCartney, the sensitive, soft-talking former politician; and Uchiyama, the taciturn numbers man and marketing guru. The industry consensus is that their good cop/bad cop routine, the mix of political sensitivity and strategic planning, has been one of the keys to reviving Hawaii’s battered tourism economy. Here’s how they’re doing it.
 

      More than 111,000 people attended the JATA World Travel 
      Fair in Tokyo in September. HTA president and CEO Mike. 
      Photo: Irwin Wong

Old-School Marketing

Even in the digital era, marketing is sometimes just about getting in front of as many people as possible, and the JATA World Travel Fair is one of the largest tourism expositions in the world. This year, 71,740 consumers attended and, more important, so did 39,492 travel agents, tour operators, media and others in the travel industry. That makes the fair an extraordinary marketing opportunity, which is why HTJ invests so much time and money on its booth every year. It still works.

For example, HTJ used a contest at the fair to persuade nearly 5,000 consumers to complete surveys about how they choose a destination. Employing QR codes, the survey provided consumers with a link to HTJ’s new mobile website, resulting in 74,199 hits and 23,712 unique visitors, a 33 percent increase over the previous month. Exposure at the fair also boosted hits to HTJ’s regular website by 69 percent to 1,387,079 during the month. And, of course, tens of thousands of brochures were handed out at the booth, each offering a specific call to action. 

Beyond the raw numbers, the fair also generated the kind of good will that marketers love, even if they can’t measure it. All those people singing along to Raiatea Helm and Manoa DNA are priceless.

Like almost all HTJ programs, the fair also offered marketing opportunities for the state’s travel partners – hotels, wholesalers and attractions that depend on tourism. In fact, six Hawaii-based travel partners paid a nominal fee – helping offset the cost of the event – to have a table at the Hawaii booth. These included the Kaanapali Beach Hotel, Hilton Hawaiian Village and Kualoa Ranch. Travel professionals and consumers file past their tables collecting brochures and listening to the company pitch. HTJ also provides free brochure hosting for companies that can’t come to the fair.

Marketing partners like HTJ provide other essential services, like training and educating travel agents and wholesalers. HTJ, for instance, offers extensive destination training, both online and through seminars it conducts around Japan. Last October, HTJ collaborated with numerous Hawaii hotels and attractions to bring more than 200 Japanese travel agents to the Islands on a familiarization trip – or megafam. It’s much easier to sell a place when you’ve been there yourself. Similarly, in November, the Hawaii Visitor and Convention Bureau, HTJ’s North American equivalent, hosted a small group of travel writers on a trip to Oahu.

 

      Photo: Irwin Wong

The JATA travel fair in Japan is also a good opportunity to see the competition. This year, more than 1,000 delegates from 90 countries gathered at nearly 900 exhibition booths. A stroll through the exhibition hall reveals that Hawaii doesn’t have a monopoly on good marketing ideas.

The Croatian booth, for example, is a collaborative affair, with Croatia’s equivalent to HTA lauding the country as a tourism destination, and its version of DBEDT wooing Japanese investors. (The fair’s organizers awarded the Croatian representatives “best destination marketer” for 2010.) In the Yemen booth, visitors can change into Bedouin garb and pose for photos in an ersatz harem. Mexico, one of Hawaii’s most important tourism competitors, has a spectacular booth with multiple flat-screen displays showing videos of Chiapas, Oaxaca and the Yucatan. Not to be outdone by Hawaii’s performers, Mexico employed a full mariachi band, replete with balladeers and brass.

 Big exhibitions like JATA highlight one of the great challenges facing Hawaii: As a small, island state, we don’t have the financial resources to compete with entire countries such as Mexico or Australia, or large states like Florida or California. Even some cities, such as Las Vegas or Macau, have larger marketing budgets than Hawaii. Industry observers estimate Mexico’s tourism marketing budget at $200 million to $250 million a year. Florida’s destination marketing – split among many agencies – probably totals more than $150 million.

In contrast, the total marketing budget for the state of Hawaii in 2010 was $65 million, which had to filter through HTA, to the marketing partners such as HTJ and the Hawaii Visitors and Convention Bureau, down to the individual island chapters. Most insiders say this simply isn’t enough money. “We ought to be spending about $150 million a year instead of $60 million,” says Outrigger president and CEO David Carey.

Big events like the JATA fair aren’t cheap. It cost HTJ $48,326 just to rent the floor space in the exhibition hall for three days. Building and manning the booth, including the stage and the sound system, cost $111,657. Transportation, accommodations and nominal per diem for the performers ran another $41,350, even though HTJ was fortunate that much of the talent was already in Japan. Roll in HTJ’s staff time to plan for the event and to support the HTA visit, and the tab for JATA approaches a quarter of a million dollars. That doesn’t include the money spent by the travel industry partners or the cost of flying in the HTA board members and staff. There’s no way around it: Big-time marketing is expensive.
 

 

      McCartney spoke at a JATA symposium on how to increase 
      global travel among Japanese people who live outside the 
      Tokyo area.
      Photo: Irwin Wong

 

 

Although Japan is an important market for Hawaii tourism, it’s dwarfed by North America, particularly the U.S. West, which contributed about 2.8 million arrivals to Hawaii last year, more than twice as many as Japan. So, in 2009, when plummeting visitor counts threatened a crisis in Hawaii’s largest industry, it’s not surprising that the marketers looked to the West Coast. In the wake of the loss of Aloha Airlines and ATA, the question for the Hawaii Visitor and Convention Bureau seemed to be: How do we preserve and grow airlift? And from the marketer’s perspective, how do we do that and still maintain the integrity of the Hawaii brand? As HVCB president and CEO John Monahan points out, “We didn’t want to dilute its value, built over decades, by putting ‘Hawaii on Sale.’ ”

 

The Blitz

The answer was “The Blitz.” Jay Talwar, senior vice president for marketing at HVCB, ascribes its origins to a conversation HVCB had with Hawaiian Airlines and its ad agency. “They said to us, ‘What if we focus on one market and just saturate it with a cooperative marketing program?’ And we said, ‘That’s great, but what if we invited everyone – all the hoteliers, the attractions, the travel sellers, all of them – to come and really try to get the tide to rise?’ And Hawaiian was good enough to say, ‘That’s fine. We know we’ll get our share. If the pie grows, our slice grows with it.’ That’s the birth of The Blitz.”

Talwar sketches out the thinking that went into the first trial run: “Let’s say we go to San Francisco for a whole month, and each week, we focus on a separate island.” The key, he says, was, for a month, to make Hawaii “unavoidable in that marketplace.” Doing that meant using every marketing tool available. It meant editorial visits to get the Hawaii story in local media – newspapers, magazines, radio and TV. It meant advertising: They cover-wrapped the San Francisco Chronicle and ran banner pages on its online version, SFGate. They put up billboards along the commuter routes of a demographic their analysis described as the habitual traveler. At night, they had “billboards” projected onto the sides of prominent buildings. They used social media and online contests to publicize special events. All of that drove traffic to the website of HVCB or an island chapter or a travel partner. “Basically, we did everything that you would do in Marketing 101,” Talwar says. “We just did it all at once.”

      Several HTA staff and board members also attended JATA, 
      including the new chairman, Atlantis CEO Ron Williams 
     (center.) The Hawaii booth at JATA is always an elaborate 
     affair, although HTJ has reduced its size in recent years due 
      to declining attendance at the travel fair.
      Photo: Irwin Wong

 

For later blitzes in Seattle, Los Angeles and again in San Francisco, HVCB fine-tuned its approach. In coffee-mad Seattle, marketers handed out free coffee to early morning commuters on the ferries, each week featuring coffee from a different Hawaiian island. The pitch: “You can actually go visit the farm where this coffee was raised. You can’t do that anywhere else in the United States.” Similarly, the second blitz in San Francisco took advantage of the city’s reputation as a culinary capital. “This time, we had a few guys with us named Roy and Alan and DK,” Talwar says. “It’s now connected with chefs and the farm-to-table movement. Now, we’re talking to San Franciscans in a language they understand. That got us a lot of great coverage in the local media.”

It worked. “We began measuring results 30 days out,” says Monahan. The steep spikes in visits to the HVCB website after the blitzes are unmistakable signs of marketing success. Perhaps a more meaningful measure is the level of participation among the travel industry partners. Monahan points out, “At one point, we had brand X; then X and Y; then X, Y and Z. Now, they all want to know as far in advance as possible what our blitz schedule is going to be so they can work that into their plans.”

The travel partners are more direct. “We use two metrics to measure marketing success,” says Jack Richards, CEO of Pleasant Holidays, the largest travel wholesaler to Hawaii. “One is brand awareness; the other is sales or passenger volume. And from our perspective, the blitzes have been tremendously effective on both fronts.” He also remarks on one of the keys to that success: Much of the money to pay for the blitzes comes from private industry. “You’ve got to understand that suppliers like me, we spent millions of dollars in matching funds to help drive visitors to the Islands,” Richards says. Exactly how much is difficult to ascertain, but, HVCB’s Monahan says, “We know the funding spent by these partners is a multiple of what we spent.” And HVCB has been spending between $1 million and $2 million per blitz. 

Beyond Marketing

Much of what makes marketing work isn’t the flashy media campaigns or public relations bonanzas; it’s what happens quietly in the background, and one of the keys to the recent successes of HTA and HVCB is their growing use of data. While the whirlwind nature of the blitzes makes it seem like those decisions were made by the seat of the pants, in reality they were grounded on hard numbers. The target cities were chosen because the data showed they accounted for more than half of Hawaii arrivals. Just as important, as HVCB’s Talwar points out, most U.S. East Coast visitors also pass through these cities, so it’s critical that marketers preserve as much airlift from them as possible. “Protecting the West Coast hubs allows us to protect our East Coast markets as well,” Talwar says.

Similarly, good strategic data was behind almost all the tactics used in the blitzes. Extensive consumer surveys allowed HVCB and its ad agency to craft advertising and public relations material based on the lifestyles and interests of the target audience. Demographic data and customer profiling helped identify appropriate media outlets and event locations. Social media allowed the marketing professionals to track the effectiveness of blitz activities in near real time. New-age marketing is all about data.

Hawaii’s marketers increasingly rely on sophisticated private-sector specialists to develop and make sense of all these numbers. In addition to DBEDT analysts (who recently moved under the HTA roof), these include companies like Hospitality Advisors, a Hawaii-based company with a global reputation as a strategic tourism consultant; Smith Travel Research, a respected industry consultant providing competitive set surveys that allow HTA and its marketing partners to see how Hawaii tourism is doing compared to its major competitors; and Sabre Airline Solutions, the giant travel conglomerate, which provides critical airlift analysis.

Airlift data is particularly critical for an island destination like Hawaii. Our economy depends on having enough air seats and, as the loss of Aloha Airlines and ATA demonstrated, maintaining that airlift is complicated. As David Uchiyama, HTA’s No. 2 man, points out, prior to contracting with Sabre, the state’s marketers had no idea if an airline’s route was having problems. As a consequence, it had no way of knowing if the airline needed help. “With the use of Sabre Aviation,” Uchiyama says, “we can now look months in advance to see booking pace, what the load factors are, and what’s the average fare they’re charging. Now, we can go to them and say, ‘We see that the route’s not doing so well. How can we support it with some kind of marketing boost?’ ” Those sorts of conversations are now commonplace.

Another quiet factor in the recent success of HTA has been the teamwork of Uchiyama and McCartney. HTA is not without critics, and one of the main complaints has always been that the organization’s structure makes it easy prey to politics. Most industry partners say they would prefer a much tighter focus on marketing, and less emphasis on cultural and environmental programs, and other priorities. (The money to fund HTA, after all, doesn’t come from the general fund; it’s paid by hotel guests through the transient accommodations tax.) So, when McCartney was selected to run HTA, many worried about his lack of a marketing background. Starwood Resorts senior vice president for operations Keith Vieira readily admits he preferred Paul Casey, the other major candidate for the job. “Mike had legislative experience and community experience,” Vieira says. “Paul had industry experience.”

Yet Vieira, like other industry critics, have been pleasantly surprised by HTA’s performance under McCartney. “Looking back,” he says, “I would say Mike McCartney was a very good choice.” Partly, that’s because McCartney has been careful to delegate most of the marketing decisions to Uchiyama, whose marketing background at Starwood puts him in good stead with the industry. David Carey, the CEO of Outrigger and another long-time critic of the politics and organization of HTA, points out, “Under Mike, they have a pretty good team in place. And now David’s so much more involved on a higher level.” Both Vieira and Carey acknowledge that McCartney’s political gifts have been useful, too, and not simply in dealing with the Legislature. In fact, his sensitivity and political skills have probably been most on display internationally, where he’s helped transform HTA’s relationship with key travel partners. The best example may be how the McCartney/Uchiyama team dealt with the loss of Japan Airlines’ Narita-Kona flight.

McCartney tells the story this way: Last spring, after losing money on its Narita-Kona route for years, JAL announced it was shutting the route down. For Kona, the result would be devastating, not only because Kona would lose a steady stream of lucrative Japanese visitors, but because, besides Honolulu, Kona is the only international point of entry for the state. Without JAL’s international arrivals, TSA would likely close its temporary facilities there, probably for good. With that in mind, the next time he was in Tokyo, Uchiyama paid a visit to Sunichi Saito, then JAL’s executive officer for passenger sales and marketing. He asked Saito a simple question: “How can we help?”

Those four words changed everything. The next day, Uchiyama was summoned to JAL headquarters to meet with Kiyoto Morioka, JAL’s VP for international passenger sales. “We’ve been flying to Hawaii for 55 years,” Morioka said in astonishment. “This is the first time anyone’s asked us that.” What ensued was a frenzied effort by JAL and tour operators in Japan, and HTA, the Big Island Visitor Bureau, and travel industry partners here to work together to develop marketing and promotional campaigns to create enough demand to sustain the route. This unprecedented cooperation succeeded in raising JAL’s load factor by more than 20 percent – not enough, ultimately, to preserve the route (as part of its bankruptcy restructuring, JAL shuttered 40 percent of its international routes) – but enough to set a new tone in the relationship and create a model for how to market in the future.

That same sensitivity to the needs of travel partners was on display during a string of courtesy calls made by the HTA entourage after the JATA travel fair. Over the course of a day, Ichikura-san chaperoned McCartney, Uchiyama and the HTA board members through a string of corporate offices around Tokyo. Along the way, they visited with executives at airline partners, such as JAL and Delta; at major travel wholesalers, such as JTB and JALPAK; and with trade organizations like JATA and the Japan-Hawaii Tourism Council. These meetings, as you would expect in Japan, were frequently formal and stylized. They were also surprisingly candid, with each side volunteering inside information about corporate strategy or political challenges, swapping industry rumors, and asking for opinions and advice.

In the end, it always came down to those four words: How can we help?

During one of the symposia at the JATA conference this September, McCartney sat on a panel that discussed how to get more Japanese from beyond Tokyo to travel abroad. But, seeing JAL VP Kiyoto Morioka in the audience (a courtesy in itself, since the audience was mostly midlevel managers), McCartney took a question about how low-cost carriers were going to affect the market, and he turned it inside out.

“We appreciate all airlines,” McCartney said, nodding to Morioka, “but we want to say a special aloha to Japan Airlines. Your Kona flight did very well for many years. But, because of the downturn in the world economy, you came to us to apologize that you could no longer fly to Kona. You showed us pictures of your trips to Hawaii when you were a child and told us how important Hawaii was for you. We will never forget that. We’ll never forget the commitment that JAL has for Hawaii. And I wanted to say, ‘We’re the ones who should be apologizing for not coming to you sooner to help.’ Thank you so much for all you’ve done for Hawaii.”

When McCartney finished, Morioka and his small entourage of JAL executives stood and bowed deeply.

Which media produce results in Japan

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Effect of mainland “blitzes”

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Marketing “blitzes” in key Mainland cities generated lots of traffic to the GoHawaii website. For example, the June blitz in Los Angeles drove that city’s share of all traffic to the website from about 6 percent to 20 percent. Perhaps more important, Los Angeles’ interest in Hawaii after the blitz seems to have what marketers call a “long tail.” 

 

Where HTA spends its marketing Dollars

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Ohana Style

 

‘Ohana Style 

story by Dennis Hollier
photo by Brad Goda

 

“No more fried chicken,” 78-year-old Nadine Tokuzato tells the fourth customer in a row at Waikane Store. “Got sushi, though.”

She gestures through mosquito netting into what appears to be the family kitchen. There, her sister, Makiko Gishi, sits at the kitchen table laconically rolling out makizushi. She smiles back into the store, where several customers obligingly await the next batch.

The sign out front says, “Since 1898.” But there’s hardly anything for sale at Waikane Store: soft drinks, crack seed and a few sundries like toilet paper and soap. Unlike some of the other country stores on O‘ahu, Waikane Store doesn’t sell booze or cater to the tourist trade. It’s not hard, though, to see how this family operation stays in business. Hulking in the corner is an enormous stainless steel freezer full of chicken parts and shrimp.

All day long, customers shuffle into Waikane Store for the home cooking. They come for the little tubs of fried chicken or shrimp fritters, for the sushi (including the popular hot-dog maki with Coleman mustard) and for the homemade cookies and boiled peanuts. Makiko and Nadine cook it all in small batches—sometimes while customers wait—so it’s always fresh.

It’s an old-fashioned store that’s been in the same family since the 1940s. “Mama-san,” Haruko Tsutsui, took over the operation in 1959. Her daughter, Nadine, has run it for the last thirty-four years. Three generations of the family still live in the rooms behind the store.

Most of their customers are regulars: A young man with “Kahalu‘u Boy” tattooed on his chest wanders in and asks Nadine, “How da shrimp?”

“Here, I give you a taste,” she says, handing him a small tub to sample.

He takes a bite. “Oh wow,” he says, “da bugga’s ‘ono. I’ll take two.”

Like most customers, he ends up buying a little of everything, walking out with some sushi and a bag of boiled peanuts to go with his shrimp. Nadine bags up his purchase with a little twinkle in her eye. At Waikane Store you sample at your own risk.

Waikane Store
(808) 239-8522

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