Island Fever : Honolulu Seeks Its Place in the Convention Industry Sun

After more than a decade of political wrangling, this “sun and fun” tourist mecca is finally getting serious about wooing business travelers, by building its own convention center.

But the question hanging over the four-story, pitched-roof structure now taking shape at the entrance to Waikiki is whether Hawaii’s belated entry can succeed in the high-stakes meetings business.

Honolulu may be the last major destination in the United States to build a full-fledged convention facility. Over the last decade, while residents here wrestled over whether and where to build a center, other U.S. cities were beating them to the punch. “There has been an explosion of convention centers,” said Steven Hacker, president of the International Assn. for Exposition Management, a trade association based in Dallas. Some centers were built willy-nilly, but in most cases they were the products of solid marketing studies, he said.

Hawaii’s state-owned center, due to open in July 1998, faces fierce competition. Dozens of facilities nationwide are now expanding and renovating, angling for a bigger piece of the estimated $83-billion meetings and trade show industry.

The 94-year-old Hawaii Visitors Bureau, which is marketing the center, recently changed its name to the Hawaii Visitors & Convention Bureau in hopes of changing the state’s image from a playground to a serious meeting venue. But in this era of corporate cost cutting, the notion of going to Hawaii may pose a hurdle.

“Until people begin to feel comfortable in seeing Hawaii as a business destination, as opposed to a leisure destination, there is going to be a soft period of unknown market,” said Lynn Thompson, general manager of the Hawaii Convention Center.

State officials are counting on the $350-million center to diversify Hawaii’s visitor mix and boost the off-peak travel season. Conventioneers tend to meet in the fall and spring, traditionally slow periods for travel to Hawaii. Until now, groups meeting in Honolulu have relied on hotel ballrooms, the largest of which is 26,000 square feet at the Sheraton Waikiki. Big conventions have had to split their meetings and exhibits among several hotels. Others have simply steered clear of Hawaii.

The convention center, mid-size at 1.16 million square feet, is expected to appeal to professional associations and corporations, especially those with interests in Asia and the United States. It will not try to compete, nor could it, for the mega-trade shows that are the staple of the Los Angeles Convention Center and the Anaheim Convention Center, which Thompson managed before taking over as general manager here.

With 200,000 square feet of exhibit space and 100,000 square feet of meeting space, Honolulu’s center is more in league with the facilities in San Diego and Seattle. Both of those centers have plans to double their exhibit space. Other likely direct competitors for Honolulu include established tourism destinations such as San Francisco and Vancouver, Canada.

“Meeting professionals are always looking for exciting new places to take their meetings,” said Edwin Griffin, chief executive of Meeting Professionals International, a 14,000-member association based in Dallas. “Hawaii has unique advantages. The cost of transportation is always a variable, but at this point I don’t see a problem with that.”

Of course, Hawaii’s geography cuts both ways. As one proponent pointed out, the fact that the state is an archipelago in the middle of the Pacific Ocean is what makes it so special. Nonetheless, the time and money required to reach the islands can be daunting.

“I think the bureau has a big job working on the travel question,” said Dick Walsh, general manager of the Los Angeles Convention Center. “Why should I go there if it’s more expensive? It all depends on the package that’s put together with the airlines.”

Several blockbuster groups, including the American Dental Assn. and the Lions Club, each with 30,000 attendees, have already booked at the new Hawaii Convention Center. The ADA, after a fragmented convention in Waikiki in 1989, had vowed not to return until Honolulu had a bona fide facility. Other confirmed guests include the American Federation of State, County and Municipal Employees and the International Foundation of Employee Benefit Plans.

In the short run, however, projections for the center appear to have been too rosy. State planners had set a goal of 30 events, each with an average attendance of 5,400, in the first year of operation. To date, five major groups have committed for the first year, and six others have tentative bookings. Altogether, 17 events, representing more than 160,000 people, have made firm commitments between 1998 and 2010.

Marketing efforts suffered a setback in November when Rick Chapman abruptly resigned as vice president of marketing, conventions and incentives at the visitors bureau, citing personal reasons. The sales effort had begun in January, just 2 1/2 years before the scheduled opening. Many major conventions were already committed to other venues. National associations reserve meeting sites three to seven years in advance, often rotating through different regions of the country. Honolulu was already behind the curve when it joined the game.

“We got a late start,” acknowledged Alton Kuioka, chairman of the Convention Center Authority. “It is going to be difficult to get things going in 1998-99. . . . But in many cases, until you have the facility under construction, convention planners don’t really want to talk to you. Now that we’re under construction and we have people marketing, it is taking off.”

That wait-and-see attitude applied especially in Honolulu, which had several false starts in its tortured path toward a convention center. A previous site selection, the International Marketplace in the heart of Waikiki, caused an uproar among vendors who would have been displaced. Some of them drew their own blood to write “No!” on a protest placard in a successful effort to derail the plan.

The new location fronts the Ala Wai Canal at the edge of Waikiki closest to Honolulu. The facility has nearly 7,000 hotel rooms within a 10-minute walk, including the Hilton Hawaiian Village, and another 20,000 hotel rooms within a mile. It will be equipped with fiber optics throughout and offer simultaneous language translation capability. In addition to its 49 meeting rooms, the center will have a 36,000-square-foot ballroom, two theaters and a teleconferencing center.

Its architecture, the “people’s choice” in a design competition, capitalizes on Hawaii’s blue skies and trade winds. A 70-foot misting waterfall will plunge into the airy, glass-walled lobby. Canopies to be placed on its transparent ceiling are reminiscent of white-capped ocean waves. More than 60% of the center will be landscaped, including a 2.5-acre rooftop garden.

Legislators raised the transient accommodations tax from 5% to 6% and authorized $350 million in general obligation bonds to pay for the center. So far, tax revenue raised has exceeded debt service, but a $12.8-million shortfall is projected in fiscal 1998, when payments on principal begin, according to Stanley Shiraki, administrative services officer for the state Department of Budget and Finance.

Already hard-pressed financially, the state will again have to bite the bullet. Independent observers agree, however, that long-term prospects for the facility are good. Along with the practical features of the building itself, crucial ingredients for convention centers, they say, include plenty of first-class hotel rooms and restaurants, easy airline connections and engaging visitor activities.

“The Hawaii center has all the elements required to succeed,” said Hacker, the exposition association president. “It is going to be very, very competitive. The cities that get themselves into trouble with convention centers are those in which there is not an existing tourism industry. A center by itself is not going to bring in the business traveler if there’s no other reason to be there.”

The state’s marketers are pushing hard to develop business from Asia. Japan has more than 40 “convention cities” of its own, and Hong Kong’s and Singapore’s gleaming facilities provide stiff competition. But the lure of Hawaii as a destination gives it an edge, especially among the Japanese, for whom Hawaii is a favorite vacation spot. And Hawaii’s convention rates are substantially lower than those in Japan.

One of the first groups to use the center is Autobacs, a Japanese auto parts franchise operation that will bring 10,000 people to Hawaii in August 1998, the month after the center opens. Japanese groups have a much shorter booking cycle, usually two to three years, so Hawaii marketers are working to fill gaps in the early years.

“Hawaii is very strategically located, midway between the Pacific Rim and the West Coast of the United States,” Hacker said. “It could easily become the epicenter of East-West trade events.”

Joseph Toy, director of hospitality consulting for Coopers & Lybrand in Honolulu, noted that Hawaii’s convention center is smaller than those in the gateway cities of Asia, such as Tokyo and Hong Kong, and lacks direct flights from points in Southeast Asia.

“I think where we overlap with some of these destinations in Asia is with the Japanese meeting market and perhaps the Korean meetings market,” he said. “We would be less competitive with the regional meetings market in Southeast Asia.”

A study last year by accounting firm Deloitte & Touche for the Convention Liaison Council of Washington, D.C., pegged the convention business in the United States at $83 billion a year, up 9.5% from three years earlier. Total taxes collected rose 17% over that period, it said. The number of national associations in the United States has jumped to more than 23,000 from about 10,000 a decade ago, according to Bill Taylor, president of the American Society of Assn. Executives.

Hawaii’s entry into the convention sweepstakes, observers say, may not be too late after all.

“I think it’s perfect timing for Hawaii,” said Griffin of Meeting Professionals International. “We’re experiencing probably the healthiest economy, the most growth and the largest potential for everyone to succeed than we ever have in the meetings industry. We haven’t seen any white elephants in a while.”

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Hawaii’s convention center is expected to provide competition for several West Coast venues. Because of its mid-size exhibit space, however, the center is not expected to draw meetings away from Los Angeles. Comparing exhib space, in thousands of square feet:

Los Angeles Convention Center: 867

Anaheim Convention Center: 602

Moscone Center (San Francisco): 442

San Diego Convention Center: 254

Phoenix Civic Plaza: 220

Hawaii Convention Center: 200

Sources: Hawaii Convention Center representatives