September 26, 2003

(Kahului, Hawaii, September 26, 2003) –Maui County’s economy is leading the state in visitor arrival growth and benefiting from a construction industry feeding on low interest rates, First Hawaiian Bank economics consultant Leroy Laney said today.

At the annual First Hawaiian Bank Economic Outlook Forum at the Maui Beach Hotel, Laney said the renewed strength of Maui’s economy has rekindled the perennial debate about the merits of growth on Valley Island, especially questions about water availability.

He said Maui’s visitor sector “has led the state this year. In the first half, arrivals were up almost 7 percent, compared to big declines on Oahu and smaller ones on the Big Island and Kauai.  Due to added flights directly to Maui, total air seats were up almost 15 percent in the first half of the year.

“The Valley Isle has continued to benefit from its longstanding upscale image and its lower dependence on weak Japanese tourism. But also important in today’s uncertain world is the fact that it is U.S. soil and perceived as a safe destination,” the economist said. 

As on other Neighbor Islands, Laney said Maui tourism is being affected by two emerging trends – time-share and cruise ships:

  • “Time-share visitors provide stability because they have paid already and come anyway despite shocks to global tourism. Yet some hoteliers point out that they also take air seats away from independent tourists, provide lower tax revenues and generate fewer jobs because of reduced services.”
  • “Norwegian Cruise Lines will be adding two more vessels the size of the Norwegian Star  next year – but it’s a similar mixed bag. Cruise passengers also take air seats coming to Hawaii, and may spend less retail and restaurant dollars. Still, they take advantage of many tourism activities during their short stay ashore, and many Maui activity operators report double-digit sales gains this year.”

Laney, who is also a professor of economics and finance at Hawaii Pacific University, made these points about Maui County’s economy:

Jobs

“This year there has been a broadly based snapback in Maui jobs, with 2.1% growth in the first half. That’s not quite as good as the State’s 2.5% growth, but still quite encouraging,” Laney said. 

Construction

“One of the strongest areas on Maui has been construction, boosted by record low interest rates. 

“New residential projects include 144 units at Maui Lani Phase 7, 184 two-acre lots at Wailuku Country Estates, and Makila Plantation Phase I upslope from Lahaina on the old Pioneer Mill sugar acreage.

“Non-residential projects include Maui’s Kamehameha High School, the Lahaina Recreation Facility expansion, and Kaiser Medical Center at Mauna Lani.  On the tourism side, the Kaanapali Ocean Villas time-share project will see occupancy this month.”

A& B Expansion

Laney noted that Alexander & Baldwin has “long been a big player in Maui’s development, retail, real estate and agricultural sectors” and is presently expanding by:

  • Looking for a potential partner in the planned 140-room Courtyard by Marriott business hotel in Kahului.
  • Seeking rezoning to accommodate Maui Business Park II, a 179-acre light industrial project along the Hana Highway.
  • Awaiting zoning for a 150-lot single family residential subdivision in Haliimaile.
  • Buying the undeveloped Shinwa Wailea assets, including three golf courses.
  • Acquiring Napili Plaza shopping center from Maui Land & Pineapple.
  • Selling its Kahului Shopping Center. The California buyer plans retail expansions and senior living apartments.
  • Anticipating good yields at its HC&S sugar operation, where production will be about 219,000 tons, around the same as 2002.

High-Technology

“Current space at the Maui Research & Technology Center is now full, and it plans another 35,000-square-foot building, scheduled for 2005 completion,” Laney said. “The park has ripple effects, providing higher-income employment for local graduates in technical disciplines who do not want to leave the island or want to return from the Mainland.  The park also helps tourism, accounting for 10,000 room-nights per year and $10 million in visitor spending.”

Growth Debate

“Some of Maui’s growth vs. anti-growth confrontation went away in the 1990s when the economy slumped. But it’s coming back,” Laney said.  “That debate has focused more on the availability of water. In July, Maui County announced a moratorium on new water meter reservations.

“Concern about water during drought is understandable. Yet longer term, new sources can come from new wells (perhaps drilled deeper), surface water formerly used for agriculture, East Maui irrigation ditches, or desalinization.

“Oahu, a smaller island with lower mountains to catch rainfall, supports a much larger population than Maui.  In Hawaii, especially on the Neighbor Islands, the debate over growth probably will never end.”