Report: Impacts of COVID-19 on Native Hawaiian Businesses

Maui Native Hawaiian Chamber of Commerce Business Fest. File photo courtesy County of Maui.

While Native Hawaiian businesses are experiencing “sudden, severe, and lasting impacts” from COVID-19, they may play a crucial role in Hawaiʻi’s economic recovery because they are less dependent on the tourism industry, according to a new report released today.

“As expected, the report tells the story of a fairly grim past few months for Native Hawaiian businesses,” said OHA CEO Sylvia Hussey of the COVID-19 Impacts on Native Hawaiian BusinessesIssue Brief. “But the data also provides signs of hope – that Hawaiʻi’s indigenous entrepreneurs can not only survive with additional philanthropic and governmental support but can also be a valuable component in revitalizing our local economy.”

Joseph Lapilio, president of the Native Hawaiian Chamber of Commerce, agreed.

“Our people have demonstrated incredible resiliency throughout our history,” Lapilio said. “That same sense of resiliency is also found in our businesses today. Our entrepreneurs have developedinnovative business models that have succeeded outside of the tourism industry and despite the longstanding lack of access to capital. If Native Hawaiian business could receive equitable access to resources, we can help drive and build long-term resiliency of the overall state economy.”

The COVID-19 Impacts on Native Hawaiian Businesses Issue Brief was the result of an online survey administered in April by OHA and the Native Hawaiian Chamber of Commerce, the Hawaiʻi Island Native Hawaiian Chamber of Commerce, the Kauaʻi Native Hawaiian Chamber of Commerce, and the Maui Native Hawaiian Chamber of Commerce.

A total of 1,044 business owners responded to the survey, about 84 percent of whom were fully owned or owned in part by Native Hawaiians.

Key findings of the report:

• Native Hawaiian-owned businesses appear to be less dependent upon tourism, suggesting they may be able to better stabilize prior to the lifting of travel quarantine and thus, serve as important drivers in flattening the state’s unemployment curve as we enter into the “kamaʻāina economy” stage of recovery.
  • The tourism industry is one of sectors most dramatically impacted by COVID-19 in Hawai‘i. However, only 25.0 percent of Native Hawaiian businesses surveyed report their business revenue to be over 50 percent dependent on the tourist industry. In comparison, 46.7 percent of non-Hawaiian businesses report their business revenue to be over 50 percent dependent on the tourist industry.
• Native Hawaiian-owned businesses will need greater access to capital; support to keep employees working; and technical assistance to manage their business and complete various applications.
  • The most needed resource by Native Hawaiian-owned businesses is working capital grants (57.9%). Other financial needs include delaying GET or other taxes (41.5%) and accessing short-term working capital loans (40.6%).
• Native Hawaiian businesses most frequently report impacts related to revenue and cash flow.
  • The majority of Native Hawaiian businesses surveyed report a decline in customer/client demand as an impact of COVID-19 (53.0%).
  • Other highly reported impacts on Native Hawaiian businesses include depletion of cash reserves (48.9%), temporary closure (48.2%), event cancellation (34.1%) and reduction/change in hours of operation (32.4%).
  • 64.0 percent of responding Native Hawaiian businesses indicate a loss in revenue from January 31, 2020 to March 31, 2020 in comparison to the same period last year. The median loss reported by Native Hawaiian businesses was $10,000.
• Educational material on health and safety for employees, targeting Native Hawaiian business owners, should be developed and disseminated.
  • Fewer Native Hawaiian businesses report health and safety precaution impacts than non-Hawaiian businesses.
  • In comparison to non-Hawaiian businesses, smaller percentages of Native Hawaiian businesses report a reduction in staff coverage, implementation of off-site working options and enhancement of sanitation practices (about a 17-percentage point difference for each area of impact).

The report also highlights the distinct ways COVID-19 is impacting businesses in each county.  For example, substantially more Maui county businesses reported needing working capital grants than business in other counties (72.5% for Maui to 55.8% for the all businesses statewide). Native Hawaiian businesses on Kauaʻi and Maui also report a delay of utility payments as one of their top five needs.

“Each of the neighbor island Native Hawaiian chambers of commerce participated in the business survey because we knew that COVID-19 was having diverse impacts on the economy in each of our counties,” said Frank De Rego, President of the Maui Native Hawaiian Chamber of Commerce. “This report demonstrates that one size does not fit all. Interventions to help businesses should be tailored to meet the specific needs of each island because of the different ways our local economies are structured.”

The COVID-19 Impacts on Native Hawaiian Businesses Issue Brief was the first publication of a series of research briefs co-produced by the Native Hawaiian COVID-19 Research Hui, a collaboration between Liliʻuokalani Trust, OHA and Kamehameha Schools. The goal of the collaboration is to gather and provide data that explore the ways Native Hawaiians have been impacted by the pandemic and the systemic conditions that place our communities at greater risk, and inform pathways for moving forward to create a new normal.

“Growing data from around the world show that Indigenous communities are feeling some of the worst impacts from COVID-19,” said Dr. Kathy Tibbetts, Senior Director for Research & Evaluation at the Liliʻuokalani Trust. “LT is proud to be part of this coalition bringing information forward to inform key actions in response to COVID-19, both in the present and to help create a more sustainable and equitable future.”

Lauren Nahme, Kamehameha Schools vice president of strategy and transformation said, “We want to mahalo all who contributed to this collaborative project and publication.  While the findings affirmed a few things that we already expected – that many Hawaiʻi businesses are suffering and need resources – the results of this survey also raised more questions. So we hope to continue our collaborative work to learn more, get to root issues so that we can move to solutions and actions together for our community.”

The hui will release a new survey next week to assess local perceptions of what Hawaiʻi’s economy should look like after the pandemic.

The COVID-19 Impacts on Native Hawaiian Businesses Issue Brief can be viewed in its entirety here.