As Hawaii celebrates the big 5-0 in statehood, the Aloha State struggles through an economic downturn. I'm here this week on vacation, (don't tell my husband I'm blogging), and things have changed since last year.
Tourism has taken a hit. Officials are concerned that the outbreak of swine flu, which has not reached these shores, will nevertheless kill tourism at a time when that industry is just starting to recover. Still, the Honolulu Advertiser reports the number of domestic visitors over the last week is up two percent from a year ago. International arrivals are up eight percent. The Japanese are here in force. However, there are huge discounts at many hotels, some rates as low as $52! Book 'em Danno. Hotel rooms. Two nights.
As for real estate, one guy in Maui has had such a hard time selling land along the Hana coast that he's now letting people buy one square foot for $9.99.
Buyers can't develop the square foot or resell it at a profit, but they get a certificate of ownership, like when you buy a star. The man, Froyam Edel, says he got the idea to sell land in small pieces after seeing one of the Menehune, a mythical race of small Hawaiians who come out only at night. "It was then I saw her, bathed in the full moonlight," Edel says. "She was beautiful, regal." Edel called it, "the sign I had been waiting for. I was being directed not to sell the land as a whole, but to share the property in Menehune size pieces..." That's some Maui Wowie.
On the positive side, the banking situation in Hawaii could not be more different than it is on the mainland. Homegrown banks never did much subprime, and First Hawaiian Bank, now owned by BNP Paribas, reported a 33 percent jump in profit in the first quarter. Minus a one-time tax gain, profit still grew three percent, and non-performing assets represented a nearly invisible 0.2 percent of overall assets. Mahalo!
Here are my personal observations so far:
The American Airlines flight from LA to Honolulu was a 757. Airlines have traditionally flown larger planes on this route, like a 767 or 747. But even with the smaller jet, 20 seats were empty.
Honolulu still has bustling crowds, and the best meal can still be found at Alan Wong's. However, note to America: we need to lose weight. In addition to a housing bubble, commodities bubble, and oil bubble, in recent years we've experienced a food portion bubble. What I saw on the beach in Waikiki wasn't pretty.
For the first time, we've come to Lana'i, the island mostly owned by David Murdock, billionaire owner of Dole and Castle & Cooke.
While most of the Lana'i arrivals headed to the Four Seasons Resort at Manele Bay, we're starting our stay at the Lodge at Koele. Prices here have not come down. As a result, we pretty much have the place to ourselves. We were told the Lodge is only half full, so we thought we'd ask for a complimentary upgrade! We were turned down.
Our shuttle driver here explained that business on the island is off so much that many of the 3,000 residents of Lana'i City expect to be laid off. They used to work on the now-gone pineapple plantations for Dole, then moved on to work for Murdock's resorts and high-end home construction. "The construction has stopped," said our driver, "but when (Murdock) is losing millions and millions of dollars, what is he gonna do?"
The hope is to hang on until better days return. I can think of worse places to hunker down.
Check Out These Great Real Estate Stories on CNBC.com:
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