Discount Wars: Jousting for the Bottom Rung

You’ve seen their billboards, heard their radio spots, read their ads. But who is behind the escalating competition in the Hawaiian package vacation market?

More than a dozen wholesalers are in the business of packaging Hawaiian vacations. But if ever there were an 800-pound gorilla in the Hawaiian tourism market, it would be Pleasant Hawaiian Holidays. Pleasant Hawaiian, a family-owned Westlake Village company, uses a broad network of hotels and contacts cultivated over 38 years in the islands. (Another wing of the company sends vacationers to Mexico.)

Led by founders Ed and Lynn Hogan, the company markets enough high-end, mid-market and low-budget variations on the theme of air fare, lodging and car rental to fill a 64-page catalog. Most customers fly via the scheduled carrier American Trans Air (ATA), which sells about 90% of its seats through Pleasant and puts the Pleasant Hawaiian name on the side of ATA jets. All told, a Pleasant Hawaiian spokesman estimates, the company sent about 300,000 tourists to Hawaii last year--that is, roughly one of every 11 Americans who vacationed in Hawaii in 1996.

The upstart challenging Pleasant Hawaiian is Sunquest Holidays, which begins Hawaii service April 2. Sunquest is headquartered in Simi Valley, just a few miles from its competitor’s offices. But the closer you look, the more Sunquest looks like a second gorilla.

Sunquest is a newly created subsidiary of the British travel conglomerate Airtours, which posted $2.9 billion in sales last year, runs 41 hotels, three cruise ships, two airlines and tour operations in the United Kingdom, Scandinavia and Canada. Airtours describes itself as the largest leisure travel company in the world, and since last year, 30% of the firm has been held by Carnival Corp., the same deep-pockets company that is behind Carnival Cruise Lines.

Sunquest Holidays will use Sun Country Airlines as a charter carrier for its passengers, and it, too, has its 60-some-page catalogs in the offices of travel agents statewide. Courting families, Sunquest offers many packages that give one child free air fare (and space in the parents’ room) if the child travels with both parents.

Both Pleasant Hawaiian and Sunquest have been advertising seven-night Waikiki vacations--round-trip air fare and lodging included--for less than $400 per person, double occupancy. And each offers shorter trips, or air fare-only trips, for even less. And one more bit of common ground between Sunquest and Pleasant Hawaiian: Three of Sunquest’s top officials, a spokeswoman affirms, recently left management positions at Pleasant Hawaiian Holidays.

This new battle for the entry-level traveler is just one more chapter in a recent history of feasting and famine. After the go-go years of the late 1980s, visitation to Hawaii stagnated through the Gulf War, and the American and Japanese recessions of the early 1990s, driving seven-night package prices from California as low as $299 in the leanest days of 1992 and 1993. Since then, the industry has begun nudging prices upward again, keeping pace with gradually rising occupancy.

But the bottom rung, that lowest possible package tour price, has risen remarkably little over the last 15 years. In 1983, recalls Pleasant Hawaiian’s Ken Phillips, the low price for a weeklong package was $329.