Hawaii- Done

[SurfFuerteventura]

China is taking over as the next global power anyways so, pretty soon Hawaii will proudly be Chinese.

Enjoy it while it lasts, we all know how China plays environmentalism.

 

[PJ]

There is a lot of tourism money that goes untracked, but there's probably also a lot of tourism spending that leaves the island (big ticket purchases like car rental, hotel, airline etc like we discussed), so I'd say it probably balances out and tourism is 20-21% of the economy.

Imagine Hawaii if we reduced that by 1%, 2%, 3% or even 5%?? Sure, locals would have less income but maybe no traffic? Roads lasting longer? Emptier beaches? Emptier hikes? Less stress?

Paul Brewbaker, economist who used to work for Bank of Hawaii, wrote a report that tourism spending has been flat since the 80's. Meaning that more and more tourists have been arriving annually but each tourist is spending less and less. So the state has been pounded by record numbers of arrivals every year but the revenue hasn't increased in 30-40 years.

Hotel economics - there's a company called Smith's Travel who publishes income and expense data from hotels in the US. I almost bought an oceanfront motel a few times so I spent a lot of time learning about the industry. Surprisingly a chain hotel can only clear about 25% of gross revenue after all operating expenses (depreciation, maintenance, labor, insurance, property taxes, management, etc.). That 25% has to pay for the land and the building itself and also provide a return to the owner. The highest percentage of profit is by resort area properties managed by an owner operator which can reach 38% but that person would be local. So you could say that possibly 25% of big hotel spend could leave the island but the land purchase or lease and building of the hotel which that 25% supports was local so say 15% covers that so 10% could definitely leave to a remote owner. So somewhere between 25% and 10% can leave. So its not as bad as it might look and we have the same situation in Manhattan or anywhere else with any chain hotel which is corporate owned.

 

[racer1]

Interesting, considering there's so many foreign owned hotels and they keep building more and more you'd think the margins would be better for a remote owner. Not just Hawaii, but every tourist destination.

 

[PJ]

Interesting, considering there's so many foreign owned hotels and they keep building more and more you'd think the margins would be better for a remote owner. Not just Hawaii, but every tourist destination.

You would think. But you're always competing with other hotels and real estate investors with interest rates so low are looking for only a 6% return if that - so the hotel next door will compete on price until they only make 6%, which limits what you can charge. And it's amazing how things balance out. For instance say a non-resort hotel on an interstate has 100 rooms x 365 is 36,500 room/nights per year. If they sell 23,725 room nights a year that's 65% occupancy. That hotel will have about 65% occupancy more or less the same all year. A Jersey shore oceanfront resort will have 100% occupancy for 3 months during the season, 20% to 90% leading into and out of the season and zero for 7 months when it's closed but still have the same 65% occupancy overall which always astounded me.
Look at ticker APLE hospitality REIT on Nasdaq - it only pays 3.5%.

 

[hammies]

There is a lot of tourism money that goes untracked, but there's probably also a lot of tourism spending that leaves the island (big ticket purchases like car rental, hotel, airline etc like we discussed), so I'd say it probably balances out and tourism is 20-21% of the economy.

Imagine Hawaii if we reduced that by 1%, 2%, 3% or even 5%?? Sure, locals would have less income but maybe no traffic? Roads lasting longer? Emptier beaches? Emptier hikes? Less stress?

Paul Brewbaker, economist who used to work for Bank of Hawaii, wrote a report that tourism spending has been flat since the 80's. Meaning that more and more tourists have been arriving annually but each tourist is spending less and less. So the state has been pounded by record numbers of arrivals every year but the revenue hasn't increased in 30-40 years.

$99 airline tickets bring budget travelers.

 

[PJ]

Something else that has changed the hotel game - time shares. With a time share you buy so many room nights a year - say 14. You are paying the cost of the property and structure for those 14 room nights, which represent maybe 15% of a normal hotel stay cost, in a lump sum. I've estimated the two that I looked at as selling as time shares for twice the value as if they were hotels. This allows a time share operator to get double the property and structure value out up front then collect the other 85% of a normal hotel stay from the time share owners on each stay in perpetuity just like a regular hotel. I have two close friends who have stayed in time shares recently in Hawaii - Disney on Oahu's West side and Hilton near Waikiki. Both hotels were new and far from the water but they stayed there because of their capital investment in the time share not because they liked the hotel. I think that many new hotels that would not work as a straight hotel (not so hot location, etc.) will work as a time share hotel.

I have seen the time share industry's internal training manuals and they say that the idea is to sell the time share based on a perceived owner benefit of owning something, locking in a fixed room night cost, and being able to trade for time in other properties all over the world when in fact there is no benefit over just shopping and paying for a hotel room. If you consider that only 15% or so of a hotel stay is capital cost it's really silly to lock up 20 or 50k in a time share to "save" 15% on each stay.

 

[Muscles]

I went down the timeshare rabbit hole a few years back.

You can do well with timeshares by buying them on the secondary market. People will sell them for pennies on the dollar to just rid themselves on the maintenance fee. Or you can just purchase their weeks for much cheaper.

But yah, paying retail for a timeshare is for suckers.

 

[youcantbeserious]

I have a good friend who sells Hilton timeshares, as an employee of Hilton, to prequalified people and he clears north of half a mil a year. Pretty high pressure competitive sales job but he does well. I know another HOT surfer woman who grew up on the North Shore and she does about the same.

 

[SirKooksALot]

Anybody have any leads on a 2+ bed house rental (or screaming off market deal )?

 

[casa_mugrienta]

Brewbaker's report is a damning indictment of the industry over the last four decades.

Yeah, I know.

So sad the middle class gets to travel.

The black's and mexican's too.

 

[gbg]

I'm taking a class July 18-22 in Honolulu. All expenses paid tax payer funded boondoggle. $119 a day to eat. STOCKED! Diamond Head here I come. Last time I was on south shore surfed DH with Piercer and had so much fun.

 

[vanrysss]

Couple kids at V-land gonna have a hard time sitting for the next few days. Whole damn mauka side almost went up in flames.

 

[PPK96754]

Couple kids at V-land gonna have a hard time sitting for the next few days. Whole damn mauka side almost went up in flames.

Auwe! Hope it got squashed before any home got caught up in it.

 

[youcantbeserious]

Casa thinks the world owes people vacations

I wanna go to Monaco!

 

[vanrysss]

Gonna drop a plug for a friend of a friend that does some cool artwork.

http://www.laurentrangmar.com/store

 

[PRCD]

Casa thinks the world owes people vacations

I wanna go to Monaco!

I don’t think he’s saying that. I think he’s saying there’s a market for vacationing proles. Hawaii appears to be the Indian casino of island vacationing. Short of blowing up the big runways and liberal use of the guillotine, it will likely remain so.

 

[youcantbeserious]

I don’t think he’s saying that. I think he’s saying there’s a market for vacationing proles. Hawaii appears to be the Indian casino of island vacationing. Short of blowing up the big runways and liberal use of the guillotine, it will likely remain so.

Only if we want it to be.

And apparently the political class here wants exactly that, residents be damned.

 

[foreal]

Couple kids at V-land gonna have a hard time sitting for the next few days. Whole damn mauka side almost went up in flames.

I saw that last night. What’s the story? Whole mountain side was on fire.

 

[racer1]

When I was a kid in the 80‘s, older people used to say “people save up their whole lives to come to Hawaii” now not so much. Just whore it out, should be chill.

 

[vanrysss]

I saw that last night. What’s the story? Whole mountain side was on fire.

I heard a couple kids were ducking around with fireworks shooting them at the side of the hill. Thankfully no houses burnt down