VIDEO: Maui’s 2011 Economic Forecast is a “Mixed Bag”

By Wendy Osher

[flashvideo file=http://www.youtube.com/watch?v=yYyjO7goCLE /] Maui’s economy this year “is a mixed bag,” according to Dr. Leroy Laney who presented the 37th Annual First Hawaiian Bank Economic Outlook Forum for Maui on Friday.

Dr. Laney, who is a professor of economics and finance at Hawaii Pacific University, also serves as the bank’s economic advisor.  He provided the update during a morning presentation at the Maui Beach Hotel, Elleair Ballroom in Kahului.

“Maui’s visitor industry is doing extremely well, thanks to its resilient upscale image,” said Lane, however, tourism alone he said, “cannot be relied upon to bring Maui back to better times.”

Dr. Leroy Laney, First Hawaiian Bank economist. Photo by Wendy Osher.

He noted that while the visitor industry is doing quite well, weakness in other sectors of Maui’s economy “simply overwhelms that strength.”

Laney said, unfortunately, the other sectors of Maui’s economy, especially the construction industry, continue to lag significantly.  He said progress in this area would help in providing a more balanced and stable economy.

Laney discussed several local economic indicators and elaborated on the impact that has been felt on Maui.  This includes: jobs, tourism, construction, real estate, higher education, and the island’s sugar industry.

Tourism has proven to be Maui’s shining star in an otherwise dim economic environment.  Total airline seats for Maui experienced a surge of over 11% this year, far stronger than anywhere else in the state.

A power point presentation highlighted key economic indicators that contibuted to Maui's Economic Forecast. Courtesy image, FHB.

“A big reason is the fact that Maui has been picking up direct flights by Hawaiian and Alaska Airlines from secondary cities in the US and Canada,” said Laney.  “That, combined with aggressive marketing in those cities has paid off,” he said.

In addition to the airlift, the wide range of activities available to visitors on Maui is “hard to top,” said Laney.

While tourism is a positive, jobs are one of the weaknesses identified on Maui.

Even though the end to the recession occurred some time ago, Laney said Maui is the only county in the state that continues to lose jobs.

Lane said one of the major reasons that Maui lags in job creation is the weakness of its construction sector.  But help, he said, is on the way with several projects on the horizon including:

• Hyatt’s plans for a time-share tower in West Maui;
• Alexander & Baldwin’s Maui Business Park Phase II that includes 179 acres of light industrial development in Kahului; and
• The recent groundbreaking for the 138-room Courtyard by Marriott hotel near the Kahului Airport.

One of the other economic indicators, real estate, showed a leveling-off on Maui for sales of both single-family homes and condos in 2011.

The Economic Forecast for Maui was delivered during a morning presentation at the Maui Beach Hotel, Elleair Ballroom in Kahului. Photo by Wendy Osher.

“Until the downward pressure on prices abates, there cannot be sustained recovery in the real estate market,” said Laney.  “And that has to do with the inventory of short sales and foreclosures that constitute an overhang on the market,” he said.

As for education, Laney identified some positive strides at the University of Hawai’i Maui College–including a recent name change reflecting the addition of four-year degrees, and a rapid enrollment growth of around 33% in two years to nearly 4,400 students.

The final area of interest that Laney touched upon was the sugar industry and Hawaii’s sole remaining sugar plantation, HC&S.

He attributed recovery in 2011 to better rainfall and better age on the crop, with estimated production expected to be around 185,000 tons.

The importance of HC&S on Maui, Laney said, is its role as a large employer, its ability to keep the central valley green, and its contribution to Maui’s power grid.