Is the president helping Hawaii?

Commentary about business and finance.
Aug. 1 2009 7:19 AM

Aloha, Obama

Is the president helping Hawaii?

Presidents' hometowns and states often get a fleeting financial boost after an election. In Little Rock, Ark., hotels received a fillip when independent prosecutor Kenneth Starr and his team checked in to investigate President Clinton. The diners and souvenir shops of Crawford, Texas, briefly boomed serving the protesters and fans who flocked to President George W. Bush's ranch.

In July, I set out to investigate whether the economy of Hawaii, where Barack Obama was born (no matter what they say on CNN and Fox News) and raised, is receiving any native-son stimulus. This unreimbursed, hazard-filled assignment—sunburn, expensive macadamia nuts—yielded some surprising findings. Like the stimulus package, the Obama Effect, while holding the promise of gains down the road, hasn't been able to overcome a sour economic climate.

Hawaii's tourism industry accounts for up to half of the 50th state's economic activity. In the first half of 2009, the number of visitors fell nearly 10 percent from the year before, and the amount they spent on leis and loud shirts fell 15.1 percent. Occupancy rates in Hawaii hotels were an anemic 62 percent in May, even though rooms were a bargain. The 1927-vintage Royal Hawaiian on Waikiki Beach is where Hawaiian tourism, along with the Mai Tai, was invented—or so the Royal Hawaiian claims. The pink hotel, which just completed a $60 million makeover, was only about 70 percent full in early July. Why? Honolulu's top markets are the left and right coasts of the United States, which are both struggling. The third-largest source is Japan, from whence young people flock to Honolulu for honeymoons and high-end shopping—Waikiki's main drag, Kalakaua Avenue, is home to Chanel, Kate Spade, etc. Thanks to the recession and to swine flu, visits from Japan fell nearly one-third in June 2009 from the year before. Hawaii has an 8.1 percent jobless rate.

Some businesses that attempted to cash in on Hawaii's Obama association have found limited success. Tour operator Mitch Berger started an ObamaTour, For $40 a piece, Obamaniacs are taken to view holy sites like the Punahou School, the prep school Obama attended, and the building on Beretania Street where his beloved grandmother lived. But Berger says there aren't many takers, since most tour companies have integrated these spots into their existing tours, "like what they did with the places familiar from the filming of [the ABC series] Lost."

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Others have clearly benefitted from direct official patronage. For its annual congressional picnic on June 25, the White House threw a luau. It imported a troupe of dancers from Kauai to D.C. and hired Alan Wong, whose eponymous Honolulu restaurant is a favorite of the First Eater, as a guest chef. Wong and 14 colleagues helped the White House crew prepare a meal for 2,200 that included traditional luau fare like kalua pig plus menu items like coconut- and macadamia-nut-crusted lamb chops and tilapia, which, Wong says, is Mrs. Obama's favorite fish.

But the evidence that Obama is bringing more business to Hawaii is circumstantial. Oahu, the island most associated with the president, has suffered the smallest fall in hotel occupancy rates among the islands. On a week night in early July, Alan Wong's was packed. (In another bit of hardship duty, your intrepid columnist slogged through a five-course tasting meal.)

Wong and other Hawaii businesspeople believe that they will benefit from the free publicity that Obama brings when he visits. When the president-elect rented a house on Kailua Beach last December, the national media followed him. Jay Talwar, senior vice president of marketing at the Hawaii Visitors and Convention Bureau, says the White House luau story generated more than 700 million media impressions. Buying such exposure would deplete the HVCB's annual budget.

But the Obama Effect works in the other direction, too. Early in 2009, Obama railed against bailed-out financial firms holding high-end golf retreats and spa weekends. "You can't take a trip to Las Vegas or down to the Super Bowl on the taxpayers' dime," he said in February. That may have had a chilling impact. At the Grand Hyatt Kauai, whose network of salt and freshwater pools rivals the canals of Venice, 30 percent of the business is corporate meetings. And that has dropped off this year. In May, the number of visitors who came to Hawaii for corporate meetings and travel was down 38.4 percent from the year before.

Fortunately for Hawaii's hoteliers, one industry still feels sufficiently healthy to keep on partying: health care. The week I visited, the American Society of Pharmocognosy (natural drugs) had set up shop at the 1,600-room Sheraton Waikiki, and the Grand Hyatt Kauai was hosting the 18th National Kaiser Permanente Internal & Family Medicine Symposium. Aside from golf, it's a safe bet the agenda included plenty of discussion on how to deal with President Obama's health care reforms.

A version of this article appears in Newsweek.

Daniel Gross is a longtime Slate contributor. His most recent book is Better, Stronger, Faster. Follow him on Twitter.