First Hawaiian Bank Reaches $10 Billion in Loans

First Hawaiian Bank has announced that they have reached $10 billion in loans for the first time in their company's history, and attribute this to a growing level of consumer confidence and a resurgence in the construction industry. Bob Harrison, the chairman, president and CEO of First Hawaiian, stated, "We're seeing good growth in the lending portfolio, which leads to growth in net interest income. We also saw good expense control, as we have had throughout the year, and we had gains from securities sales (in the bank's investment portfolio)."

Deposits have also grown over the last 12 months to $14.7 billion from $13.6 billion.  Harrison commented, "Deposits are really a reflection of the bank's relationship strategy as we continue to grow and the economy continues to improve here. That's how deposits grow. It's been unusually high, even we're a little surprised at how high the deposit growth has been going. We're seeing that on the consumer side in terms of borrowing and deposit growth. It also has been strong in the construction portfolio. Clearly, we're seeing growth in our construction loans and, secondly, with those people in the construction industry that are working, you're seeing growth and confidence in their own personal lives. Those are generally well-paying jobs."

Source: Honolulu Star Advertiser, 1-23-2015, www.staradvertiser.com
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Credit and Debit Card Spending Increases by 7.4 Percent During Fourth Quarter of 2014

According to a report issued by First Hawaiian Bank, credit and debit card sales increased by 7.4 percent during the fourth quarter of 2014. This amounts to $763.8 million as compared to the $711 million in the same quarter a year prior.  Bob Harrison, the chairman, president and CEO of First Hawaiian Bank, stated, "The economy continues to grow. Lower energy costs will continue to help the customer because they'll be spending less on electricity. That will give them more disposable income, which will be good for the rest of the economy. This report is a really good reflection of consumer confidence. Construction employment has gone up, and a lot of projects are going up in Honolulu. We see further strength in 2015. For the Japanese visitor, the yen has weakened considerably over the last 12 months, but they're still coming to Hawaii. We're still optimistic for another strong year. I think the strong economy will certainly help the mainland visitors to Hawaii as well." First Hawaiian is the largest bank in Hawaii with $18.1 billion in assets.

Source: Honolulu Star Advertiser, 1-18-2015, www.staradvertiser.com
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Film and Television Industry Spent $223 Million in Hawaii in 2014

According to Donne Dawson, the Hawaii Film Commissioner, the film and television industry spent a total of $223 million in productions in 2014.  This is a slight decrease from the $228 million that was spent in 2013 or the $245.6 million that was spent in 2012.  Dawson commented, "I don't think there's a way to explain (the drop), really.  We did have a project that was slated for 2014 that pushed to 2015. If it hadn't, the figure would have been significantly higher. These things happen for a variety of reasons. It's the nature of the industry."  Dawson added that she does not anticipate much growth in spending in 2015.

Source: Honolulu Star Advertiser, 1-18-2015, www.staradvertiser.com
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Marketing Effort Made to Attract High-Spending Chinese Golfers to Hawaii

The Hawaii Tourism Authority and Pacific Links Hawaii have announced that they are working together to attempt to attract more high-spending Chinese golfers to the Hawaiian Islands. Micah Kane, the chief operating officer of Pacific Links Hawaii commented, "Year-to-date, we've hosted about 2,500 rounds of golf for Chinese members. Ideally, we'd like to see the partnership grow so that we can host 200 to 300 Chinese players monthly." Chinese golfers that come to Hawaii spend more than $550 per day in hotel stays, activities, and travel expenses.

David Uchiyama, the vice president of brand management for HTA, added, "We've partnered with Hyundai to develop the Korean golf market and with Sony to develop Japan, but this is the first time that we've participated in a public-private partnership to bring more Chinese golfers to Hawaii. In general we are doing very, very well in China, and we'll continue to improve our numbers. Golf is becoming a mainstream sport in China. If we can create enough demand, we'll get more carrier frequency, and that will help build the market even more."

Liwei Kimura, the director of business development for Starwood's Hawaii Region, Greater China & South East Asia Markets, commented, "We commend HTA and Pacific Links' leadership in this niche market development as golf is a fast-emerging activity in China, not only because it is viewed as a healthy and enjoyable sport, but also because people are attracted to it as a luxury lifestyle and a statement of social status. Hawaii can benefit by targeting these higher-spending, luxury leisure travelers who can bring us more economic benefit with less impact on our natural resources. Promotion of golf travel is one of the best ways to maximize Hawaii's competitive advantages while highlighting its world-class courses to target the Chinese."

Source: Honolulu Star Advertiser, 1-12-2015, www.staradvertiser.com
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State Council on Revenues' Economic Predictions

According to state Council on Revenue's economic predictions, that Hawaiian Islands should see a 4.5 percent growth during the current fiscal year.  This is a significant increase from the 3.5 percent growth that was predicted in September 2014, and is due to increased consumer spending, lower gas prices, and additional tourists from the U.S. mainland.  Kurt Kawafuchi, the chairman of the Council on Revenues, commented, "The U.S. economy is very strong, and a lot of our tourists are from the mainland U.S. With the lower price of gas, people are going to have more money to spend because they're paying less for gas and electricity. We hope that contributes to more spending, more tourists and more spending in Hawaii."

Carl Bonhan, a professor of economics at the University of Hawaii at Manoa and another council member, added, "I'm still bullish on construction. There's several (projects) in Kaka­ako that are going up right now, and we're starting to see the neighbor islands start to contribute. Maui and Big Island are both seeing some growth that we didn't see at all a year ago or two years ago."

Kawafuchi cautioned that global concerns could still have an impact on Hawaii.  Kawafuchi added, "The strong U.S. economy has a downside. As the dollar gets stronger, it makes it more expensive, for example, for Japanese tourists or Chinese tourists to come to Hawaii. I think there's optimism, but people are being very cautious and careful."  The council have left the projected growth for the fiscal years of 2016 through 2021 unchanged at 5.5 percent per year.

Source: Honolulu Star Advertiser, 1-7-2015, www.staradvertiser.com
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Hawaii Tourism Industry Poised to Set Record Year

According to a report issued by the Hawaii Tourism Authority, it appears that the state will set new records for visitor arrivals and spending in 2014.  While the final numbers for December are still not available, during the first 11 months of the year arrivals had increased by 0.9 percent and spending grew by 2.3 percent, leaving experts predicting that December will not be any different.

David Carey, the president and CEO of Outrigger Enterprises Group, was pleased with this development, but commented that hotel operating costs have also grown. Carey stated, "We always forget that inflation is a factor. Costs have certainly increased rapidly over the past three years: labor costs, medical costs and up until very recently, energy costs. At the end of the day it's been three years in a row of positive increase in business and that's good. The industry is getting better at getting pricing that's more in line with the quality of products here in Hawaii."

Ronald Williams, the CEO for the Hawaii Tourism Authority, commented, "Arrivals and spending from our developing international markets also continue to grow as we work toward diversifying our tourism profile and increasing first-time arrivals to the Hawaiian islands. This has helped to balance our core markets like Japan, where economic uncertainty has led to slight declines in visitor arrivals and decreases in length of stay, which are affecting total expenditures and may hinder us from reaching year-end targets for this market."

Source: Honolulu Star Advertiser, 12-30-2014, www.staradvertiser.com
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Illegal Vacation Rentals Have Many Residents Frustrated

There has been a recent expansion of illegal vacation rentals throughout the island of Oahu and visitors hope to gain new experiences other than being in traditional hotels and tourist destinations. While small businesses have welcomed these visitors to their local economies, many residents argue that the volume of visitors have hurt the quality of life in their sleepy neighborhoods. According to research conducted by the Honolulu Star-Advertiser, the North Shore of Oahu and Kailua are the most popular areas for illegal vacation rentals and as many as 80 percent of these vacation rental owners are operating outside of city restrictions. Donna Wong, a member of the Kailua Neighborhood Board, commented, "It's creating a lot of conflict and hostility. Kailua used to be a quaint, small town where everyone knew everyone. Now, it's a resort. The North Shore has a similar situation. Visitor traffic used to be contained to surf season. Now, they've got it 24/7, 365 days a year."

In 1986, a law was passed that prohibited vacation rentals rented for less than 30 days in neighborhoods outside of designated resort areas.  In 1989, another law was passed prohibiting any new bed-and-breakfast homes in all zoning districts. However, the Hawaii Tourism Authority has noted that the city has failed to enforce these laws and rental property owners are blatantly violating regulations in recent years. It is estimated that between 78 percent to 87 percent of the North Shore and Kailua rentals are operating illegally.

Some tourism industry leaders believe that the city should relax restrictions and make these types of rentals legal, provided that homeowners pay the transient accommodation tax (TAT) and general excise tax (GET). Critics argue that illegal rentals should be stopped, as it increases traffic and crime in residential neighborhoods, drains community resources and reduces the supply of residential housing.

Source: Honolulu Star Advertiser, 12-28-2014, www.staradvertiser.com
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Minimum Wage to Increase to $7.75 Per Hour on January 1

The state's minimum wage will be increasing by 50 cents to $7.75 per hour beginning on January 1, 2015.  This is the first increase the state has seen since 2007. It will increase to $8.50 per hour by January 2016, to $9.25 per hour by January 2017, and will finally reach its new peak of $10.10 per hour by January 2018.  Dwight Takamine the director of the state Labor Department, commented, "This increase will boost consumer demand and jobs because minimum and low-wage workers spend most if not all of their increased wages.

Source: Honolulu Star Advertiser, 12-26-2014, www.staradvertiser.com
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Bankruptcy Filings Decrease in November 2014

According to a report issued by the U.S. Bankruptcy Court, there were only 128 filings during the month of November 2014.  This represented a decrease of 13.5 percent as compared to the same month a year prior Jack Suyderhoud, professor of business economic at the University of Hawaii at Manoa Shidler College of Business and an adviser to First Hawaiian Bank, commented, "Bankruptcies tend to track the economy, so it's not surprising that it's down when the economy is improving, which in terms of the labor market certainly has been the case. When you look at the GDP (gross domestic product) for the U.S. as a whole, 2014 is going to end up pretty good despite the weak start at the beginning of the year. To me it's not a surprise that bankruptcies are going down in this part of the business cycle. The data we're getting on the overall economy is pretty strong. The big question is how this will carry over into 2015 given weakness in Europe and Asia and the strength of the U.S. dollar."

Source: Honolulu Star Advertiser, 12-17-2014, www.staradvertiser.com
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Hawaii Rejoices at Lower Gas Prices, Still Highest in the United States

Hawaii residents are rejoicing the fact that the average gas prices around the state are now $3.75 gallon, but still pay significantly more than anywhere else in the United States. In fact, Alaska and New York are the only other states where the average price tops $3 per gallon.  There are even some areas in the country that are already paying less than $2 per gallon.  The national average is $2.60 per gallon.  Still, Hawaii economists believe that the relative lower price of gas will help holiday spending, as residents will have a little extra cash in their pocket.

Source: Honolulu Star Advertiser, 12-15-2014, www.staradvertiser.com
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Time-Share Industry Generates $45.8 Million in Tax Revenue

According to a report released by the Hawaii Tourism Authority, the time-share industry generated more than $45.8 million in state and county tax revenue and added 1,445 jobs to Hawaii's tourism industry during the past fiscal year which ended in June 2014.  The report noted that time-share occupancy was 88.9 percent statewide, which was almost 12 percentage points higher than the hotel occupancy during that same period.  Joe Toy, the president and CEO of Hospitality Advisors, commented, "The time-share industry is very healthy in Hawaii. I expect it will continue to expand.  There's lots of motivation for people to buy here. Part of it is the ability to have a prepaid stay in Hawaii, but there's also a very strong redemption value if you want to exchange elsewhere. That's why there are even a lot of Hawaii residents that buy into time share."

Henry Perez, the chairman of the American Resort Development Association of Hawaii added that within the next two years, the island of Oahu and Maui are expected to add an additional 500 time-share units each, and that there are another 800 units planned for the Big Island of Hawaii.  Perez noted, "This period of expansion is pretty close to the 2005-to-2008 time period. The time-share market gets hot when the visitor industry gets hot."

Source: Honolulu Star Advertiser, 12-9-2014, www.staradvertiser.com
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Tourism Arrivals Increase by 3 Percent in October 2014

According to a report released by the Hawaii Tourism Authority, visitor arrivals increased by 3 percent in October 2014 to a total of 659,821 people.  Visitor spending also increased by a total of 3.3 percent to $1.1 billion.  However, the average length of stay for visitors decreased slightly.  Ron Williams, the interim CEO of the HTA, stated, "The HTA continues to monitor slight declines in average length of stay and its potential impact on future expenditure growth. As the U.S. dollar continues to strengthen against international currencies, amidst increasing competition from closer and more affordable destinations, we also anticipate changes in the booking pace through the second quarter of 2015." 

Williams added, "During the first 10 months of the year, visitor spending continues to increase for most of our major market areas, which is demonstrative of the continued demand for travel to the Hawaiian Islands. However, we continue to monitor the impact of the weakening yen and recent consumption tax hike in Japan, which has resulted in decreases in expenditures and a shorter length of stay from the region, in comparison to the same period last year.  While we are still on track to surpass last year's record-breaking numbers, the growth trend in visitor expenditures and arrivals over the past two years is at a much slower pace than in previous years."

Source: Honolulu Star Advertiser, 11-27-2014, www.staradvertiser.com
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Hawaii Hotels Set Second Highest Average Daily Rate in Country

According to a report issued by Hospitality Advisors LLC, Hawaii hotels had the second high daily rate and revenue per available room in the entire country during the first nine months of 2014.  Coming in just behind New York City, Hawaii's average daily rates were $241.28 while the revenue per available room was $187.72.  These numbers represented a 4.9 percent and 4.8 percent respectively from the previous year.

Oahu had the highest occupancy rate of 85.2 percent, while Maui came in second at a 72.5 percent occupancy rate.  Kauai had a 71.3 percent occupancy rate and Hawaii island (Big Island of Hawaii) had a 62 percent occupancy rate.  Tourism experts are trying to come up with new ways to increase the neighbor island occupancy throughout the year while increasing the cost of Oahu's rooms. Barry Wallace, the executive vice president of hospitality services for Outrigger Enterprises Group, commented, "Oahu, especially Wai­kiki, is pretty much at capacity. When you get to occupancy in the high 80s, the industry really can't sustain much more since there are always some rooms that are out of order. Practically speaking, that's about as high as it can get, so for the next few years, growth on Oahu will have to come from higher spending."

Source: Honolulu Star Advertiser, 11-21-2014, www.staradvertiser.com
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Housing Summit Examines Hawaii's Affordable Housing Crisis

Faith Action for Community Equity (FACE) organized a housing summit for developers, politicians, ministers, retirees, young people and people of all economic backgrounds to discuss what could be done about Hawaii's affordable housing crisis.  The basic assertion by FACE is that the median price for condominiums and single family homes have gotten too high for an average family to afford.  Even rental prices have soared in recent years, making things increasingly challenging for the middle class and lower class.

Mayor Kirk Caldwell, stated that developers need to help build housing for people earning up to 80 percent of the Area Median Income, which in Honolulu is $53,700 for a single person, rather than work force housing (120 to 140 percent of the median income) and luxury properties. Caldwell stated, "we've become a place where people who have a lot of money can come and live here, and the people that we love, our children, our neighbors, our families, our friends are moving away. That breaks my heart. We're losing our soul when that happens."

Caldwell added, "I don't blame the developer. They are building to a market where they can make money. We need to figure out how we can work with those developers. Just passing a law doesn't work. Maui had very aggressive standards and regulations, and the developers just didn't build."  Caldwell called for creating additional incentives for developers in the form of subsidies and tax credits.

Source: Honolulu Star Advertiser, 11-16-2014, www.staradvertiser.com
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Hawaii's Economy Expected to Continue Its Steady Growth in 2015

According to a report released by the state Department of Business, Economic Development & Tourism (DBEDT), Hawaii's inflation-adjusted gross domestic product should increase by 2.8 percent in 2015.  Richard Lim, the director of DBEDT, stated, "The (state's economic) fundamentals are strong with steady growth and we expect this to continue into 2015. Our labor market remains robust, with unemployment being the seventh lowest in the nation and employment levels reaching an historic high during the first nine months of the year. Visitor arrivals are on track to set another record year in 2014. The value of building permits increased 15.9 percent as of September, indicating a good year for construction next year."

DBEDT predicts that the construction industry will play a major part of Hawaii's economy in 2015, and noted that several major government projects including the Honolulu Rail Project and maintenance of the Honolulu Water Supply sewage treatment facilities, will help to stimulate the economy.  The full report can be found at 

DBEDT said its full report, which contains more than 100 tables, is available online at dbedt.hawaii.gov/economic/qser

Source: Honolulu Star Advertiser, 11-14-2014, www.staradvertiser.com
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Tourism Officials Excited About Chinese Tourist and Business Visa Announcement

President Barack Obama and Chinese government officials have announced that they will continue to encourage international cooperation and tourism by making it easier for citizens to obtain visas to the other country.  This was seen as a major milestone for the Hawaii Tourism Authority, which has been working for more than a decade to have more Chinese visitors, students and businessmen come to the islands.  Mike McCartney, president and CEO for HTA, stated, "China has become a market with tremendous growth potential. We look forward to working with our marketing contractor, Hawaii Tourism China, and industry partners to enhance travel opportunities and attract Chinese visitors to ensure the long-term sustainability of our tourism economy."  According to McCartney, there have been 128,792 visitors from China to Hawaii during the first nine months of this year.

Mark Dunkerley, the president and CEO of Hawaiian Airlines, commented, "Tourism is a vital contributor to the U.S. economy and to Hawaii in particular, and should not be underestimated. With an enormous population and a burgeoning middle class, the new visa policy will positively impact tourism and create new jobs over the long term by making our islands more easily accessible for Chinese travelers. Hawaiian Airlines offers three-times weekly service between Hono­lulu and Beijing, and we are well positioned to introduce this growing and steady new stream of visitors to our home."

Source: Honolulu Star Advertiser, 11-11-2014, www.staradvertiser.com
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Economic Forecast for 2015 by Jack Suyderhoud

Jack Suyderhoud is the economic adviser to First Hawaiian Bank and a professor of business economics at the University of Hawaii Shidler College of Business.  At a presentation held for local business leaders, Suyderhoud was cautiously optimistic about what 2015 will look like for the state of Hawaii, thanks to several construction projects that will provide a much needed boost. Suyerhoud stated, "Despite erratic tourism patterns and slow, but promising, construction spending, the Hawaii state economy has built some internal momentum so that output, jobs and incomes are expected to expand overall next year with continued strength in most sectors. I am cautiously optimistic about the economic outlook for the rest of 2014 and 2015. Tourism will contribute to growth, but construction will finally fulfill its anticipated role as the leading growth engine in 2015."

According to his presentation, Suyderhoud estimates that the construction industry will increase their revenue by about 12 percent next year and as a result will also be increasing their hiring.  Suyderhoud commented, "There has also been a change in the composition of the construction with more emphasis on high-density housing that uses a lot of concrete and specialized labor, away from single-family housing that uses more lumber and carpenters. More projects face regulatory and community hurdles that are delaying construction."

In terms of visitor arrivals, it is predicted that they would increase by about 2 percent in 2015 and the state should see an increase in visitor spending by about 2.9 percent. Unemployment should drop to around 3.9 percent by the end of 2015.

Source: Honolulu Star Advertiser, 10-30-2014, www.staradvertiser.com
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Visitor Spending and Arrivals Increase in September 2014

The Hawaii Tourism Authority has announced that visitor spending increased by 1.4 percent to $1.1 billion in September 2014 as compared to the same month a year prior. Visitor arrivals also increased by 4.1 percent to 622,163 visitors.  Mike McCartney, the President and CEO for the HTA commented that these numbers show that the Hawaii visitor industry continues to maintain the positive momentum that they had experienced over the past two years.  McCartney stated, "While we are just shy of our targets, we are optimistic that 2014 will be another record-breaking year for Hawaii's tourism economy."

Barry Wallace, the executive vice president of hospitality services for Outrigger Enterprises Group, commented, "We beat last year by a pretty good margin. We didn't see double-digit increases, but the gains were pretty significant given that tourism set records last year. I think almost everyone is sold out for Christmas and New Year's, and there are a few conferences and the Hono­lulu Marathon to give us some nice spikes. With any luck at all, we'll continue that momentum into 2015."

Source: Honolulu Star Advertiser, 10-29-2014, www.staradvertiser.com
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Average Gas Prices in Honolulu Drops to Below $4 Per Gallon

For the first time in nearly four years, the average gas prices in Honolulu drops to below $4 per gallon.  Furthermore, due to a recent plunge in the global price of oil, Hawaii customers should see additional relief, with analysts predicting that the average price of gas could fall to $3.60 by the middle of January.  This would also reduce shipping costs, electrical bills and airline tickets.  As a point of comparison, the average price of gas on the mainland United States is currently $3.16 per gallon.

Source: Honolulu Star Advertiser, 10-17-2014, www.staradvertiser.com
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Credit and Debit Card Transactions Increase Significantly During Third Quarter of 2014

According to a report released by First Hawaiian Bank, credit and debit card transactions increased by 8.3 percent during the third quarter of 2014, as compared to the same quarter a year ago.  Bob Harrison, the chairman, president and chief executive officer of First Hawaiian Bank, stated, "The consumer in Hawaii and across the nation has done a great job of paying down debt and getting their financial house in order. But the consumer is also the primary driver of our economy. If they don't spend, then the economy can't grow. Hopefully with some of the numbers in the broad consumer categories increasing, people are feeling more comfortable spending."

Jack Suyderhoud, a professor of business economics at the University of Hawaii Shidler College of Business, commented, "What we're seeing this year is kind of an acceleration of spending. The first quarter was pretty slow. The second quarter picked up some speed, and in the third quarter we're seeing even more growth. That suggests to me that things have been picking up after a slow start for the year. I find encouraging in the numbers that for the last couple of quarters, the expenditure categories have been more kind of a local type of spending -- utilities, home furnishings and supermarkets. They've been among the leading sectors, which means we're seeing an internal momentum to the economy."

Source: Honolulu Star Advertiser, 10-10-2014, www.staradvertiser.com
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