2020.04.23 – A Day in the Life: Hawaii Vacation Rental Industry COVID-19 Road to Recovery
Published on April 23, 2020, by Munro Murdock
Founder, Broker, Property Manager
Love Hawaii Villas
Hawaii is Reeling from the COVID-19 Pandemic
Our thoughts and prayers go out to the world right now, as all people are grappling with determining the best way forward out of this global health crisis.
The peaceful and beautiful scenery in Hawaii is even more tranquil than normal, due to virtually no visitor travel coming to the Islands at this time. Though any peace and quiet that may exist in Hawaii does not tell the whole story: Hawaii’s industries and residents are stunned and reeling from the far-reaching impacts of the COVID-19 global pandemic.
Hawaii’s unemployment rates are some of the highest in the nation, at almost 40%. The entire tourism visitor industry, which is responsible for a massive chunk of Hawaii’s economy (and tax revenue) is virtually non-existent at present. Businesses large and small, are either not operating at all, or at dramatically scaled back levels.
Antiquated unemployment claims systems and processes struggle to handle the deluge of unemployment claims pouring in. The relief cannot come fast enough. Business owners struggle to find a way forward due to the far-reaching economic impacts and the uncertainty related to WHEN Hawaii will be able to get back to business. And all the kids….they are hanging out at home because they have nowhere else they can go, and Hawaii’s public schools are closed for the rest of the school year.
There is not yet any clearly articulated plan for Hawaii that outlines how the powers that be intend to get Hawaii working again and how to restore Hawaii’s once bustling and world-renowned travel industry sectors.
In many respects, Hawaii’s challenges and struggles are no different than other locations around the world, BUT, in other ways Hawaii faces obstacles completely unique from any mainland U.S. geographic area. As one of these most isolated population centers on the planet, heavily reliant upon visitor travel and the industries that support travel, Hawaii faces seemingly insurmountable mountains to summit during these unprecedented and tumultuous times.
Are the leaders of Hawaii up for the challenge? Are they qualified and prepared to lead us on a clear path forward; one that will ensure the future success and recovery for the peoples and industries of the Islands?
We hope so, but only time will tell.
Taking Responsibility for the Future
As a small family-owned and locally operated business in Hawaii, we recognize that in order for our Company to navigate these uncharted waters successfully, we must have a mindset that is committed to doing what is necessary to continue providing our valuable services in the future.
Like ALL companies facing these perplexing times, we must determine how best to reduce expenses, stabilize or enhance revenues, establish updated systems, processes and policies for the post-COVID travel industry and ensure that we have adequate financial resources to weather this storm of unknown duration. THAT is not an easy task, for ANY business!
The sad reality of the times we find ourselves in today, is that there will be numerous businesses, both large and small, that will not make it. It is simply too great of a financial impact and if the mindset and resources are not aligned, such businesses will cease operations. It’s too early to tell how far-reaching such impacts will be seen, but it is an inevitability.
This Brookings article is telling in terms of the business sectors most at risk in the immediate-term, near-term and long-term. In one recent survey of 200+ small business owners, about 35% indicated that they could only survive for less than three months under the current conditions. Multiply that across 30+ million small businesses in the United States, and the economic fallout could become truly mind-boggling. This Washington Post article published on Mar. 31, 2020, about three weeks ago at the time of this writing, shares a dismal outlook on America’s businesses with the headline: “Covid-19 is going to do to business what is has done to people”.
We have no interest in becoming such a statistic and have done and are doing all within our power to make sure we have a strong business continuity plan that involves getting our Team back to work as quickly as possible, serving our Guests and Owners, and keeping ALL of us safe, healthy and happy. We are confident (and truly humbled and grateful) that we are well-positioned to do just that!
Countdown to the end of the Hawaii Stay-at-Home Order
On April 21, 2020, Honolulu Mayor Kirk Caldwell extended the stay-at-home order for Oahu through May 31, 2020. About 300 City parks will reopen Sat. Apr. 24th at 5am for limited use for exercise only (walking, running, biking). Hawaii residents are still awaiting formal updates from the Governors office related to statewide stay-at-home orders, quarantine measures and other initiatives related to re-opening Hawaii for business and, eventually, visitor travel. The current statewide stay at home order and quarantine requirements are in effect through Apr. 30th.
Hawaii residents are literally counting down the weeks, days, hours and seconds to when life in Hawaii can start to return to some sense of normalcy. Here is our countdown to June 1, 2020…when the hope is that our stay-at-home order and quarantine mandates will be lifted for good!
SBA and PPP and EIDL, Oh My!
Keeping up with the acronyms can be a job in and of itself these days! Our Company was highly proactive in applying for available funding options through the Small Business Administration (SBA), including the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) Emergency Advance program.
Fortunately, going into this pandemic, we had money in the bank, little to no debt, accessible business lines of credit, clear contracts, terms and conditions, with Owners and our Guests, and a solid book of business for the future. We were well positioned, but still vulnerable.
No one was fully prepared for the far-reaching implications (financial, mental, emotional, social) of this global pandemic. However, taking quick and decisive action was something that was crucially important for all businesses. As difficult as it was, we quickly realized we needed to layoff or furlough at least 90% of our Team, due to Hawaii travel coming to a screeching halt. We also decided that we would stop paying ourselves, as owners, at the same time. This was a good month ago or so now. It’s hard to keep track of time these days! Days feel like weeks and weeks like months. I guess months will feel like years?
Our Team was and is amazing. They were all understanding and wanting what was best for the future and longevity of the Company. They seemed to understand what was unfolding, on the global scale, and how this was going to be impacting literally every person’s life….and livelihood! Our Team members are to be commended for taking it like a true Champ and trusting the process; knowing that when we can, we will bring them back. We love our people and that was the hardest thing.
It was important to me to personally reach out to each Team member to explain what was going down. I didn’t need to do that, but at the same time, I did need to do that; for my own self-respect and out of respect for each of them. Without our Team members, we have nothing. Without our Owners we have no properties to provide to our Guests. Without our Guests, none of us would have any money! We are all interconnected in this regard; each group of People being very important, in their own unique ways.
Even though the majority of our Team is not working right now, we are working hard to do all we can to position ourselves to bounce back, at the earliest available opportunity, and to bring them back, so that we can all get back to doing what we do best: serving our Owners and our Guests.
SBA’s PPP Initiative
We applied for the SBA’s Paycheck Protection Program (PPP) and thanks to our amazing partnership with Central Pacific Bank, and our private business banker, Mrs. Sharp, we were able to get preliminary approval on the first-round of PPP funding. We recognize we are fortunate and that many businesses were not able to get approved in the first round. While we have yet to see any funds from that, we are working diligently to prepare for the day when those funds hit our account. When they do, we will be bringing our Team back, with a vengeance. Okay, well, not with a vengeance, but you know what I mean.
LHV’s PPP Initiative
In keeping with the love for acronyms of our day, I decided that once we are in receipt of funds from the Small Business Administration’s PPProgram, we would roll out the Love Hawaii Villas “Property Preparation Program”. It seemed fitting to re-allocate these payroll-related funds in such a way to directly benefit our property Owners, and also our future Guests. This program is essentially about preparing all of our vacation rental properties for the post-COVID travel that is sure to arrive. Deep cleanings in every property, disinfecting, touch-up painting, standardization of properties and any other property improvement enhancements that our Team can address during the 8-weeks of PPP funding.
Our properties were already well-cared for prior to COVID, but the bar must be raised and the standard of expectation amongst both Guests and Owners, will certainly be higher. We are up to the challenge and had already implemented hotel-quality pressed linens in all of our Beach Villas vacation rentals starting in 2019, something that is not being done by any other rental provider at the Beach Villas at Ko Olina at present, to our knowledge. We are committed to being the best and the impacts from COVID-19 have not swayed us from that commitment to excellence.
SBA’s EIDL Program
In addition to the PPP funding, we have also applied for and have been preliminarily approved for the SBA’s Economic Injury Disaster Loan program. This is more of a “peace of mind” fund for us, in the event we need to access it for the continuation of our business while Visitor Travel to Hawaii is making it’s comeback. With the uncertainty of the future, and if visitor travel is delayed into what would normally be a peak Summer season, then having access to these funds will be important.
All of these efforts have been taken with one primary goal in mind: maintain our business operations so that we may continue to serve our Owners and Guests at an even higher level of excellence than we have in the past.
And that is exactly what we intend to do!
Charting The Course for the Future
How do you plan for an unknown and uncertain future? The best that we can all do is garner as much information and insight as we can, and then determine what future we are going to help to CREATE. The future is in all of our hands. Truth be told, it ALWAYS was, but now, more than ever.
We must collectively determine what future we are going to create. For all small space in the world of Hawaii vacation rentals, we have a clear plan in mind for the future we are going to create, built on a strong foundation of our successes and experiences from the past.
Though the future be unknown, it does not mean it cannot be bright. There may not technically be a “post-COVID” future as we are likely to always have COVID-19 among us. The question becomes: how to we survive, thrive and feel more alive in the future “post-lockdown” world? There are numerous ways that we can do that.
It is expected that, without question, once people feel safe to travel and have the financial means to do so, they will. Hawaii has been and always will be a destination of choice. Getting to Hawaii right now (late April 2020) is not such a good idea, but in the coming months, will soon become a reality again for many people. We are working hard to make sure that we are ready to welcome Guests to Hawaii, to help them to feel as welcomed as they were before and to be even safer and more comfortable than they were before.
The Hawaii of the future will be better and more welcoming than the Hawaii of the past. Why? Because we feel now more than ever before, how crucial YOU are to the lifeblood of what Hawaii is! Hawaii is so heavily dependent on YOU bringing YOUR love for the Islands here, so that the Islands and the People of the Islands, can reflect their love back to you in the form of the Aloha Spirit. This is an important circle of life, trust, welcome and Ohana. While there are always those that might wish all tourism to Hawaii would cease, the vast majority recognize the great importance that respectful visitor travel to the Islands plays in our overall industry, culture and life experience. The essence of modern Hawaii requires the infusion of millions of other people from around the world, briefly gracing us with your presence and your energy. YOU help to infuse Hawaii with more life-giving force.
Will these things happen overnight? Definitely not! The first year or two of travel recovery to Hawaii may very well “feel like” it is less welcoming and more restrictive, but as the new processes get ironed out, not only for Hawaii, but ALL of the world’s most sought-after travel destinations, everyone WILL feel welcomed and they will LOVE to get themselves here to our beautiful sandy beaches, sun-drenched ocean waves and misty rainbow-arched mountaintops.
When you are ready to return to Hawaii, the Islands will be ready to welcome you to your home away from home, with love and aloha.
Published on April 23, 2020, by Munro Murdock
Founder, Broker, Property Manager
Love Hawaii Villas