County of Maui

Summary Analysis of Economic and Social Impacts on Maui County from Timeshare Conversions June 1, 2006 Final Report

HOSPITALITY ADVISORS LLC 1 2

HOSPITALITY ADVISORS LLC HOTEL TOURISM & REAL ESTATE CONSULTING

June 1, 2006

Mr. Kalbert K. Young Director of Finance Department of Finance County of Maui 200 South High Street Wailuku, HI 96793

Dear Mr. Young:

Hospitality Advisors LLC (“Hospitality Advisors”) and the University of Hawaii School of Travel Industry Management (“UH TIM”) are pleased to provide the County of Maui (“COM”) this draft report entitled “Timeshare Industry Study for the Department of Finance, County of Maui.” This report provides relevant overview market data, analyses and commentary as appropriate with respect to the impact of timeshare developments and conversions in Maui County.

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Very truly yours,

Joseph M. Toy Russell Uyeno President & CEO Director of Applied Research and Consultancy Hospitality Advisors LLC University of Hawaii – School of Travel Industry Management 4 Table of Contents

1. Executive Summary p. 5 2. Background p. 6 3. Methodology p. 7 4. Finding 1: Apparent Magnitude of Impact p. 9 5. Finding 2: Conversion Impact on Operating FTE p. 16 6. Finding 3: Timeshare Visitor Expenditures p. 19 7. Finding 4: Timeshare Activities p. 22 8. Finding 5: Branding p. 25 9. Finding 6: Real Property Tax p. 26 10. Finding 7: Tax Impact p. 27 11. Finding 8: Relevant Studies p. 29 12. Finding 9: Impact on MCI Market p. 31 13. Finding 10: Maui County Employment p. 32 14. Finding 11: Perceived Business Impact p. 33 15. Finding 12: Visitor Behavior p. 35 16. Finding 13: Traffic p. 36 17. Conclusions p. 37 5 Background

¾ Hospitality Advisors LLC and the University of Hawaii School of Travel Industry Management were engaged by the County of Maui, Department of Finance to conduct an economic and social impact analysis due to timeshare conversions on the County of Maui. ¾ The scope of the project included: „ Analysis of the economic and social impact of timeshare conversions in Maui. „ Timeframe of analysis for 2000-2005; 2006-2010 for anticipated conversions „ Intended to provide data and information base for COM’s use as “tool” to develop tax policy, not recommendations for tax rates or categories „ Due to resource constraints, primary focus on existing data, supplemented by limited interviews ¾ Study Timeline Key Dates „ Early January: Begin project, including preliminary research; meeting with County, DBEDT Economics Analysis Division „ Late January-February: Initiate meetings and stakeholder interviews; design various surveys and questionnaires; interviews with Council Members; status presentation to Mayor Arakawa „ March: Continue interviews, analyze data; coordinate cooperation with timeshare operators and Chamber of Commerce „ Late March/April: Analyze preliminary survey results; continue stakeholder interviews and site inspections; preliminary status report to Mayor Arakawa and County Council; complete research and report writing „ May: Deliver written draft to Department of Finance „ End May: Deliver final report based on review comments ¾ Considerations „ While Maui is Hawaii’s most successful destination, the island is faced with a number of growing challenges due to both resident population and visitor growth „ Our scope was to analyze the extent such issues, concerns and challenges are due specifically to timeshare conversions „ Analyses were challenging due to lack of data and prior analyses specific to timeshare conversions 6 Methodology

¾ Our study approach included: „ Analyzing current and prior research from HTA, DBEDT, HVCB, County of Maui data „ Conducting Maui property and market site visits „ Conducting stakeholder interviews „ Conducting limited industry surveys ¾ In particular, the State of Hawaii provided extensive “tailored” databases to help specifically analyze comparisons between hotel, condo hotel and timeshare visitors to Maui with respect to activities, expenditures and demographics „ Sample size for the Maui hotel visitor satisfaction and income data is 1,385 „ Sample size for the Maui timeshare visitor satisfaction and income data is 196 „ Sample size for the Maui hotel expenditure survey is 3,026 „ Sample size for the Maui timeshare expenditure survey is 5,617 ¾ Representative Issues and Concerns „ Are timeshares paying “fair share” of taxes? „ Are timeshare conversions substantial contributor to traffic congestion? „ Are timeshares disproportionately using public resources (e.g. public parks)? „ Are timeshare conversions causing significant loss of employment and economic decline? „ Are timeshares attracting a less desirable market segment? 7 Executive Summary

¾ In general, our analysis of timeshare conversions did not indicate any major social or economic impact on the County of Maui resulting from conversions of hotel to timeshare product. The overall Maui timeshare industry is small compared to the islands’ more developed hotel and condo-hotel market. An analysis of timeshare conversion activity revealed that timeshare conversions comprised an even smaller part of Maui’s lodging industry, with only three properties converting in whole or in part to timeshare during the period 2000 to 2005. It was noted that there were far more condo conversions that occurred in Maui during the same period.

¾ We do note that the problems that Maui faces are real and include increasing traffic congestion, increases in cost of living and housing. Although timeshare conversions likely contribute in part to these issues, impacts appear to be more likely due to changes in Maui’s repeat visitor profile, increases in Maui’s hotel leisure guest mix and the substantial rise in Maui residents over the past five years. These changes in themselves have led over time to different visitor spending and demand patterns, greater use of public facilities, and rising competition for public space and services with residents and visitors alike.

¾ Nonetheless, data from the State of Hawaii Department of Business, Economic Development & Tourism suggests that the impact specifically from timeshare conversions is likely minimal. Separate data provided by the County, our real property tax model and data from those hotels that underwent conversion also supports this conclusion.

¾ It is important to note that data relating to this specific issue is currently lacking in the industry. Further and/or on-going research, including the insertion of Maui-specific questions into DBEDT’s visitor surveys, could be considered to track this currently small, but active industry.

¾ We also note that Real property tax rates and methods vary among the Counties, with Maui’s timeshare rate the highest Statewide. As each County has a different method for categorizing and valuing timeshare properties, Maui may wish to consider further analysis into these alternative methods for any applicability for Maui. 8

Findings: Economic Impact 9 Finding 1: Apparent Magnitude of Impact

¾ Timeshare conversions on Maui and Statewide have been relatively limited, and the incremental number of new timeshare visitors on Maui have been comparatively small. ¾ A prior study prepared by Hospitality Advisors for the Hawaii Tourism Authority and reviewed by the State of Hawaii DBEDT Economic Analysis Division indicated that the Statewide impact on TAT from timeshare conversions was $1.2 million when comparing 2000 and 2005. ¾ The number of Statewide timeshare conversions were four properties compared to 14 condo conversions. Three of the timeshare conversions occurred on Maui. Future conversions are limited as most activity will focus on new builds. ¾ As Statewide impact from timeshare conversions appear limited, the impact on Maui specifically due to timeshare conversions would also appear to be limited. 10 Finding 1: Apparent Magnitude of Impact

Maui Lodging Inventory by Type 2000 - 2005

Maui County Inventory 10,000 9,000 ¾ Timeshare was the fastest growing lodging product from 2000 to 2004, but only represented 8,000 7,000 eight percent of Maui’s total inventory 6,000

¾ Timeshare conversion accounted for about half 5,000 of the total increase in timeshare units. 4,000 ¾ The planned increases in timeshare inventory 3,000 will primarily be new builds rather than 2,000 conversions over the next five years. 1,000 - Hotel Condo/Hotel Timeshare Other 2000 9,122 7,115 980 1,053 2004 8,541 7,225 1,519 1,200 Maui Timeshare Inventory Change: 2000-2005 Maui Timeshare Inventory Change: 2006-2010

600 1400

520 1189 1200 500 480

1000 400

800

300 600 559

200 400

100 200

0 0 Timeshare Conversion Timeshare New Build Timeshare Conversion Timeshare New Build Source: State of Hawaii DBEDT 11 Finding 1: Apparent Magnitude of Impact

Maui Timeshare Additions 2000-2005 ¾ Most of the timeshare conversion units can be attributed to one property. The conversions that took place at the other properties resulted in minimal decreases in overall lodging inventory. ¾ New timeshare developments opened in Kihei and Kaanapali.

Source of Additions Total DBEDT Total Units on Time-share Conversion New Timeshare Properties Property Type Property 2000 Units in 2000 Expansion Conversions New Build Units in 2005

Kaanapali Embassy (1) Other 411 157 150 307 Vacation Resort

Kahana Beach Resort Other 83 23 59 82

Maui Marriott Resort & Hotel 720 311 311 Ocean Club

Subtotal - Conversions 1,214 180 209 311 700

Westin Kaanapali Ocean Timeshare 280 280 0 0 Resort

Worldmark at Kihei Timeshare 0 0 200 200

Subtotal - New Build 0 0 480 480 Total 1,214 180 209 311 480 1,180

(1) Differs from DBEDT 2004 Visitor Plant Inventory based on industry interview. Source: State of Hawaii DBEDT, industry interviews 12 Finding 1: Apparent Magnitude of Impact

Maui Planned Timeshare Additions 2006-2010 ¾ The two properties with planned conversions are located in West Maui. One includes the completion of an in-process conversion with no loss in inventory count. ¾ All of the planned new builds will be additions to properties with existing hotels or timeshare units

Source of Additions Total DBEDT Additional Property Total Units on # Timeshare Conversion New Timeshare Properties Type Property 2005 Units in 2005 Expansion Conversions New Build Units in 2010 Kapalua Bay Hotel Hotel 196 146 146 Kaanapali Embassy Other 413 189 244 244 Vacation Resort Subtotal - Conversions 244 146 390 Hotel Hyatt Regency Maui 0 0 120 120

Starwood Kaanapali Timeshare 0 0 280 280 Ocean Resort (1) Maui Marriott Ocean Timeshare 311 311 455 455 Club Sequel Westin Kaanapali Ocean Resort Villas Expansion Timeshare 280 280 666 666 (2)

Maui Lu Resort Hotel 388 388 Subtotal - New Build 1,909 1,909 Total 1,329 157 244 146 1,909 2,299

(1) Phase III of the Westin Kaanapali Ocean Resort. (2) Phase IV of the Westin Kaanapali Ocean Resort currently under construction. Source: State of Hawaii DBEDT 13 Finding 1: Apparent Magnitude of Impact

Maui Condo Conversions ¾ There was one completed conversion from hotel to condo-hotel which resulted in the reduction of 74 lodging units. ¾ There are two planned conversions from hotel to condo-hotel which will result in the reduction of 211 lodging units, significantly greater than the planned loss of 41 lodging units to timeshare conversion.

Maui Condo Conversions 2000-2005

Property Type Pre- # Hotel Rooms # Converted Condo Visitor Unit Property Type of Addition Conversion Pre-Conversion Units Reduction

Ohana Maui Islander Hotel New Conversion 354 280 74

Planned Maui Condo Conversions 2006-2010

Royal Lahaina Resort Hotel Conversion 514 455 59

Renaissance Wailea Resort Hotel Conversion 345 193 152

Subtotal – 2006 - 2010 859 648 211

Total Estimated Units 1,213 928 285

Source: State of Hawaii DBEDT, industry interviews 14 Finding 1: Apparent Magnitude of Impact

Maui Planned Condo and Hotel New Builds ¾ There is a significant amount of new inventory that will be opening during the next five years.

Property # rooms Type of Addition Honua Kai Project (Intrawest Corporation) 628 Condo-hotel units New build 72 Townhouses Kapalua Central Resort n/a Condo-hotel New build

Wailea Beach Villas (Destination Hotels & Resorts) 98 villas New build

Kahului Airport Hotel 140 New build

Maui Palms Redevelopment 136 n/a

n/a – not available

Source: State of Hawaii DBEDT 15 Finding 1: Apparent Magnitude of Impact

Percentage Resident Population vs. Percentage Visitor Percentage Resident Population vs. Percentage Visitor Daily Census by Accommodation Choice Daily Census by Accommodation Choice 120.0%

¾ Timeshare visitors account for only 1.8% of the 100.0% daily island census of Maui. 80.0%

¾ Hotel visitors represented the largest increase in 60.0%

visitor average daily census. 40.0%

¾ The total island census (de facto daily 20.0% population) of Maui has increased since 2000. 0.0% 2000 2001 2002 2003 2004 The majority of this increase was driven by Other Visitors 2.0% 2.1% 1.7% 1.5% 0.7% Timeshare Visitors 1.3% 1.3% 1.6% 1.7% 1.8% growth of Maui residents. Condo/hotel Visitors 9.3% 8.5% 8.7% 9.5% 9.5% Hotell Visitors 12.8% 11.8% 12.2% 12.1% 12.8% Maui Residents 74.6% 76.4% 75.7% 75.3% 75.2% Resident Population vs. Visitor Daily Census by Incremental Change in Maui Average Daily Accommodation Choice Census and Population

200,000 4,000 183,864 176,178 180,436 180,000 172,785 172,398 3,000 160,000

140,000 2,000 120,000 1,000 100,000

80,000 - 60,000 (1,000) 40,000

20,000 (2,000) - 2000 2001 2002 2003 2004 (3,000) Total Island Census 172,785 172,398 176,178 180,436 183,864 2000 2001 2002 2003 2004 Other Visitors 3,405 3,606 3,048 2,676 1,260 Hotel (844) (1,827) 1,287 201 1,708 Timeshare Visitors 2,252 2,192 2,784 2,985 3,353 Condo (840) (1,517) 769 1,738 348 Condo/hotel Visitors 16,099 14,581 15,350 17,089 17,436 Timeshare - (60) 592 200 368 Hotell Visitors 22,099 20,272 21,559 21,760 23,468 Other (706) 201 (558) (371) (1,417) Maui Residents 128,931 131,747 133,436 135,926 138,347 Maui County Residents 2,771 2,816 1,689 2,490 2,421 *Tracking of timeshare visitors began in 2000; comparisons to prior years are not available. Source: State of Hawaii DBEDT, Maui Data Book, ARDA 16 Finding 2: Conversion Impact on Operating FTE

¾ The number of displaced Full Time Equivalent (“FTE”) operating employees from timeshare conversions appears to be modest. ¾ Employment levels appear to have been comparatively low for two hotels sold in foreclosure prior to acquisition and conversion. ¾ The introduction of newly built timeshare product during the analysis period would appear to have absorbed displaced operating employment from conversions. ¾ The findings appear to be supported by declining unemployment rates and expanded job counts in both food and beverage and accommodations categories. ¾ Unemployment is low on Maui and Lanai, both of which have economies primarily driven by the visitor industry, and visitor industry and related jobs on Maui increased from 1995 to 2005.

Maui County Unemployment Rates by Island Maui Island Job Count by Industry 30,000 16.0%

14.0% 25,000

12.0% 20,000

10.0% 15,000 8.0%

6.0% 10,000

4.0% 5,000

2.0% - 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 0.0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Full-Service Restaurants 3,700 4,000 4,000 4,200 4,400 4,800 4,950 4,950 4,900 5,050 5,200 Maui Island 6.7% 6.4% 6.5% 5.9% 4.8% 3.3% 3.8% 3.8% 3.8% 2.8% 2.4% Food & Drinking Places 5,600 5,500 5,700 6,100 6,200 6,800 7,100 7,100 7,200 7,550 7,700 Molokai 10.9% 14.8% 13.6% 13.6% 13.1% 13.3% 11.9% 7.4% 7.4% 10.7% 7.8% Accommodation 10,300 10,100 10,000 9,900 10,200 10,600 10,700 10,100 10,350 10,850 11,000 1,800 1,600 1,600 1,700 1,800 1,900 1,900 1,850 1,850 1,950 1,900 Lanai 5.0% 5.3% 5.3% 3.1% 3.9% 3.0% 3.9% 4.2% 4.2% 2.6% 1.5% Arts, Entertainment & Recreation

Source: Maui Data Book, Department of Labor and Industrial Relations 17 Finding 2: Conversion Impact on Operating FTE

¾ The increase in timeshare units occurred during a period while unemployment declined in Maui County and on the island of Maui.

Maui County Unemployment vs. Timeshare Units

Embassy Marriott Conversion Conversion Begins Begins 8.0% 1,600

7.0% Westin New 1,400 Timeshare 6.0% Opens 1,200

5.0% 1,000

4.0% 800

3.0% 600 % Unemployment

2.0% 400 Incremental Timeshare Units

1.0% 200

0.0% - 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Maui County Unemployment 6.7% 6.8% 6.2% 5.1% 3.7% 4.1% 3.9% 3.7% 3.1% 2.6% Maui Island Unemployment 6.4% 6.5% 5.9% 4.8% 3.3% 3.8% 3.8% 3.8% 2.8% 2.4% # Timeshare Units 652 719 885 785 980 1,363 1,435 1,472 1,519 n/a

Source: State of Hawaii DBEDT, Maui County Data Book 18 Finding 2: Conversion Impact on Operating FTE

Timeshare Operating FTE: Conversions and New 1998-2001 Timeshare Operating FTE: Conversions Builds 800 and New Builds ¾ There were only 77 operating FTE positions displaced by 700

timeshare conversions. This does not include the increase 747 600 in management and sales and marketing FTE, which 670 500 increased after conversion. 400 ¾ Maui unemployment claims did not increase during 300 timeshare conversions. 200

¾ The number of FTE displaced by timeshare conversion 100

were potentially absorbed by the new jobs created by new 0 timeshare builds. Pre-Conversion Post-Conversion ¾ Maui unemployment claims did not increase during 2001-2005 Timeshare FTE Displaced vs. timeshare conversions. Employment from New Build

Maui (Wailuku) Weekly Unemployment Claims 500

1000 450 434

900 400

350 800 300 700 250 600 200

500 150

400 100 77

50 300 0 200 Displaced New Employment

100 0 Source: Interviews with converted properties, 2005 2004 2003 2002 2001 Department of Labor and Industrial Relations 19 Finding 3: Timeshare Visitor Expenditures

¾ Timeshare per person per day visitor expenditures are similar to condo hotel visitor expenditure patterns, with total daily and annual non-lodging daily expenditures slightly exceeding condo hotel visitors. ¾ Lodging expenditures and cost of timeshare intervals were given less weight as it primarily reflects profits/revenue returned to mainland/off-shore owners rather than visitor spending within the Maui community

Annual Expenditures Including Lodging Annual Non-Lodging Expenditures

Timeshare Timeshare 4.8% 6.3%

Condo 32.1% Condo 32.3%

Hotel Hotel 61.5% 63.1%

Source: State of Hawaii DBEDT 20 Finding 3: Timeshare Visitor Expenditures

2004 Maui U.S. Visitors Annual Expenditure by Accommodations ¾ Overall, timeshare visitors account for a small portion of total Maui visitor expenditures. Timeshare visitors stay slightly longer than hotel visitors and spend more per person per day on non-lodging than condo visitors. ¾ Timeshare visitors account for only 1.8% of Maui visitors, but account for 4.8% of total Maui visitor expenditures and 6.3% of annual non-lodging expenditures. ¾ Excluding lodging, timeshare visitors have a similar spending pattern to condo visitors and, in fact, spend more per person per day. It is also notable that timeshare visitors spend a portion of their budget on additional lodging nights beyond their timeshare stay.

Maui Visitor Profile Expenditures by Category Friends & Hotel Condo Timeshare Hotel Condo Timeshare Relatives Total Lodging $104.80 $68.97 $30.22 $15.07 Total Maui U.S. visitors spending per person per $240.44 $164.77 $127.31 Total Food & Beverage $49.55 $31.94 $33.51 $23.40 day Total Entertainment $24.26 $14.22 $16.38 $6.27 Total spending per person $135.64 $95.80 $97.09 Total Transportation $21.52 $17.79 $17.68 $10.41 per day without lodging Total Shopping $30.11 $20.77 $20.65 $19.92 Average Length of Stay 6.6 6.34 10.18 All Other $9.51 $10.73 $8.51 $4.02 Cruise per person per day $0.14 $0.03 $0.02 $0.03 Visitor Arrivals 1,351,104 625,163 185,439 Unallocated exp in total $0.54 $0.32 $0.34 $0.27 $2,059.6 $1,048.6 $155.8 Total annual expenditures million million million Total spending per person per day $240.44 $164.77 $127.31 $79.40 Total annual expenditures $1,161.9 $609.7 $118.8 Total spending per person per w/o Lodging million million million $135.64 $95.80 $97.09 $64.32 day without lodging Source: State of Hawaii DBEDT 21 Finding 3: Timeshare Visitor Expenditures

Friends & Hotel Condo Timeshare Relatives 2004 Maui U.S. Visitors Annual Total Food & Beverage $49.55 $31.94 $33.51 $23.40 Expenditures by Accommodations Food at Restaurants $30.12 $16.04 $17.64 $13.34 (continued) Dinner Shows $4.58 $3.91 $4.21 $1.89 Groceries $4.11 $6.66 $5.95 $4.46 ¾ Timeshare visitors have similar Unallocated F&B $10.75 $5.33 $5.70 $3.71 spending patterns to condo Total Entertainment $24.26 $14.22 $16.38 $6.27 visitors, although they spend less Attractions/entertainment $4.78 $2.98 $3.45 $1.19 on restaurants than hotel guests. Recreation $7.31 $5.03 $5.69 $2.62 Other entertainment & tours $6.30 $3.09 $4.03 $1.15 Unallocated entertainment $5.87 $3.13 $3.21 $1.31 Total Transportation $21.52 $17.79 $17.68 $10.41 Ground transportation $0.91 $0.47 $0.57 $0.60 Rental vehicles $16.59 $13.66 $13.63 $7.15 Other transportation $1.70 $1.66 $1.74 $1.41 Unallocated transportation $2.33 $2.00 $1.75 $1.25 Total Shopping $30.11 $20.77 $20.65 $19.92 Fashion and clothing $9.28 $6.84 $6.12 $7.30 Jewelry / watch $6.13 $3.21 $3.92 $2.71 Cosmetics/perfumes $0.31 $0.25 $0.26 $0.35

Leather goods $0.48 $0.29 $0.23 $0.10 Hawaii food products $1.97 $1.75 $1.98 $2.14 Souvenirs $6.22 $4.64 $4.45 $4.10 Unallocated Shopping $5.72 $3.79 $3.70 $3.22 All Other $9.51 $10.73 $8.51 $4.02 Cruise per person per day $0.14 $0.03 $0.02 $0.03 Unallocated exp in total $0.54 $0.32 $0.34 $0.27 Source: State of Hawaii DBEDT 22 Finding 4: Timeshare Activities

¾ Activity participation by timeshare visitors were similar to those staying in condo hotels. ¾ Participation in economic generating activities (e.g. shopping, sightseeing and entertainment) outside of the hotel and in the community appear to be higher with timeshare visitors when compared to hotel guests. ¾ Timeshare visitors compared similarly with recreational activities with hotel guests, but much less in back packing and hikes, presumably in county, state and federal park areas. ¾ Timeshare visitors appear to participate in more cultural events on the Island of Maui when compared to hotel visitors. ¾ As with condo visitors, timeshare visitors are much more frequent users of rental cars. 23 Finding 4: Timeshare Activities

2004 Maui Visitor Participation (Visiting Maui = 100) Hotel Condo Timeshare

¾ Like other Maui visitors, most timeshare All Sightseeing 90.2 91.4 92.1 visitors participate in sightseeing and, in - Helicopter/airplane 8.9 8.4 6.5 particular, a higher proportion of timeshare visitors take boat tours, submarine rides, and - Boat tour/submarine ride/whale watching 34.7 38.6 41.3 whale watching. ¾ Timeshare visitors are less likely to - Tour bus 15.3 5.9 5.9 participate in activities that utilize public - Private limo/van tour 7.2 5.8 4.2 parks. -Self-guided 68.6 81.2 79.4 ¾ A higher proportion of timeshare visitors go to shows and fine dining than other visitors. All Recreation 89.3 95.1 90.3 - Swimming/sunbathing/beach 81.5 88.7 79.7

(Visiting Maui = 100) Hotel Condo Timeshare - Sports event or tournament 1.9 2.7 2.3 - Surfing/body boarding 20.1 34.5 16.4 All Entertainment 83.3 82.8 81.3 - Snorkeling/scuba 46.8 65.5 54.7 - Lunch/sunset/dinner/ 31.2 28.7 30.0 evening cruise - Jet skiing/parasailing/windsurfing 5.8 6.9 7.8

- Lounge act/stage show 29.6 29.6 30.3 -Golf 16.4 20.5 14.1 - Running/jogging 34.4 37.1 35.4 - Nightclub/bar/karaoke 12.6 13.8 6.5 - Gym/health spa 19.2 10.9 20.5

- Fine dining 69.4 64.4 71.2 - Backpacking/hiking 11.7 16.6 4.4

Source: State of Hawaii DBEDT 24 Maui Visitor Participation - Shopping

2004 Maui Visitor Participation (continued) Hotel Condo Timeshare ¾ All Maui visitors have a high patronage of All Shopping 92.12 97.81 96.10 discount/outlet stores, supermarkets, and - Department stores 34.2 45.1 42.1 convenience stores. - Designer boutiques 45.8 51.2 45.8 ¾ Timeshare and condo visitors are more likely to go to luaus than hotel visitors. - Hotel stores 58.1 33.7 41.9

¾ Most timeshare visitors rent cars. - Discount/outlet stores 30.7 46.5 41.8

- Supermarkets 52.6 86.5 81.5

- Convenience stores 50.0 62.0 65.5

All Culture 69.4 75.0 74.3

- Historic sites 41.5 45.9 37.5

- Museum/art gallery 26.0 30.6 32.8

- Luau 39.4 44.1 42.4

- Craft fair 16.3 22.2 18.9

-Festival 2.5 5.2 3.5

All Transportation 90.7 94.8 94.8

- Taxi/limo 17.0 6.2 4.4

-Rental car 78.3 92.8 92.8

Source: State of Hawaii DBEDT 25 Finding 5: Branding

¾ Timeshare income levels and converted product appear to be consistent with Maui branding, with 65.3 percent of Maui timeshare visitor annual household incomes of $100,000 or more, versus 47.0 percent for overall Maui visitor household incomes. ¾ Timeshare visitors had much higher annual household incomes above $100,000 than visitors staying at condos or hotels. Timeshare owners, who are largely from the US, are in Maui’s target market and tend to have higher incomes than other US visitors. ¾ Timeshare visitors are affluent visitors. 65% of timeshare visitors have incomes of over $100,000; only 49% of hotel visitors have incomes over $100,000

Maui Visitor Income Profile: Timeshare Owners vs. Maui Visitor Income Profile by Accommodation Choice Overall U.S. Visitors 35.0% 70.0% Hotel Condo Timeshare 65.3%

30.0% 29.9% 60.0% 56.3%

Maui Timeshare Owners 25.2% 25.0% 23.7%

Overall Maui U.S. Visitors 22.5% 50.6% 49.4% 50.0% 20.0% 18.6% 43.7% 15.7% 40.0%

15.0% 13.8% 34.7% 10.2% 9.1%

10.0% 8.8% 30.0%

5.0% 3.6% 2.7% 2.6% 2.4% 2.3% 2.2% 2.1%

1.6% 20.0% 1.1% 1.0% 0.6% 0.3% 0.0% 0.0% 0.0%

10.0% <$125K <$150K $100K to $125K to up to $15K 0.0% $150K or more $15K to <$25K $25K to <$30K $30K to <$35K $35K to <$40K $40K to <$45K $45K to <$50K $50K to <$70K

$70K to <$100K Under $100K Over $100K

Source: State of Hawaii DBEDT 26 Finding 6: Real Property Tax

¾ The percentage growth in increased assessed values for converted properties were similar for non-converted hotels in Kaanapali. Condo properties had the highest increase in assessed values in Kaanapali, whereas converted timeshare properties generally rose at the same rate as hotel properties. This may indicate a lag in the tax value of properties converted to timeshare given the generally higher economic value of timeshare over hotel use. We note, however, that this is highly depending on the type and class of hotel and timeshare property under comparison. ¾ Tax rates and assessment methods for timeshare properties vary by county. All property types are assessed annually, and values of converted properties are adjusted at the start of a new assessment year. At this time, none of the other counties have plans to change the tax rates or assessment methods for timeshare. „ Implementation of County of Kauai’s assessment methods are reported to be challenging. Timeshare values are based on 51 interval sales per unit. „ City and County of Honolulu, similar to Maui, compares dedicated-use timeshare resorts to comparable hotels, and individual units located in condominium projects are compared to similar condominium units. „ County of Hawaii’s timeshare inventory, at present, only includes individual units located in condominium projects and these units are assessed as condominiums.

Kaanapali Real Property Tax Valuation

1995 2000 2005 % ∆ Kaanapali Area $880,726,610 $1,220,772,800 $1,931,783,300 58.2% Kaanapali Hotel $314,987,810 $497,651,100 $599,941,600 20.6% Kaanapali Condo $425,130,800 $501,670,300 $960,724,600 91.5% Kaanapali Converted Timeshare $140,608,000 $204,311,900 $249,026,600 21.9%

Source: County of Maui, Department of Finance 27 Finding 7: Tax Impact

Maui TAT and TOT and Lodging Inventory ¾ TAT/TOT (Transient Accommodation Tax/Transient 2000, 2005, and Estimated 2010 Occupancy Tax) revenues for Maui lodging properties increased for all unit types from 2000 to 2005. During this time, TOT revenues nearly doubled. TAT, TOT 2000 2005 2010

¾ Based on reported planned additions to supply, 2010 Hotel $ 30,949,111 $ 33,780,478 $ 37,817,165 Maui visitor plant inventory is estimated to be 21,529 units. Condo-Hotel $ 21,763,265 $ 24,603,567 $ 21,624,815 ¾ Estimated TOT is $7.6 million, with total collections estimated to be $68.1 million. Timeshare $ 1,596,685 $ 2,939,013 $ 7,598,280 ¾ We note that timeshare inventory and related taxes is Other $ 662,499 $ 949,223 $ 1,072,827 expected to increase dramatically between 2000 and 2010. The increase is due primarily to new purpose built $ 54,971,560 $ 62,272,281 $ 68,113,087 timeshare added to Maui’s inventory base.

Inventory 2000 2005 2010 Hotel 8,577 8,541 8,460 Condo-Hotel 7,005 7,225 8,366 Timeshare 973 1,519 3,503 Other 918 1,200 1,200 17,473 18,485 21,529

Source: County of Maui, Department of Finance, Hospitality Advisors 28 Finding 7: Tax Impact

¾ Based on surveys of converted timeshare properties, the net tax impact after Statewide allocation is approximately $230,663.

Net Change from Pre-Conversion Post-Conversion Conversions TAT $ 2,902,044 $ 1,244,541 $ (1,657,503) TOT $ 16,467 $ 591,038 $ 574,571 GET $ 2,140,865 $ 2,212,115 $ 71,250

Conveyance Tax $ 172,496 $ 172,496 Total $ 5,059,375 $ 4,047,694 $ (1,011,682)

Maui County's Net Tax Impact After Allocation $ (230,663) (Allocation at 22.8% of Statewide TAT) 29 Finding 8: Relevant Studies

¾ Maui’s effort to distinguish the social impacts specific to timeshare conversions (versus other accommodations segments) places it at the “cutting edge” of tourism policy and planning, as there is a relative lack of case study analysis from other destinations on this subject. ¾ An overview of existing studies (see Appendix for summary) indicates that most of the concern with timeshare development revolves around problems that stem from tourism development in general (traffic, overcrowding, etc.). Thus, opposition to timeshare development is part of a general opposition to tourism development. ¾ Historically, most of the public concern with timeshares has been with protecting buyers/consumers, and this continues to be an important concern. ¾ A few relevant situations indicate that conversion impacts are beginning to receive more attention. „ In Aspen, Colorado (2005), there are competing assessments of how timeshare conversions are changing the destination. Primary concerns of conversion cited include: • Loss of short-term, mid-priced rentals • Displacement of less-profitable businesses by timeshares and their sales offices • Domination of Aspen by wealthy (older) visitors at the expense of younger visitors „ Suggestions to address these concerns include: • Ensuring that non-occupied units are thrown into a hotel pool • Creating a separate zoning designation for timeshares • Creating incentives for hotel room development/expansion. 30 Finding 8: Relevant Studies

„ In Monterey County, California, the conversion of the Highlands Inn was the subject of extensiv public debate (1998). Concerns included: • Intensification of use (relative to the existing hotel) of public facilities • Loss of county tax revenue • Loss of low-cost accommodations inventory „ The county planning commission had requested a negative declaration of environmental impact, but the Board of Supervisors voted to require a full environmental impact review. The EIR generally cited no negative impacts, and the project was eventually approved with conditions set by the California Coastal Commission. These conditions were intended to protect the existing inventory of hotel units by imposing a conversion fee to create funds to develop low-cost accommodations (hostels). 31 Finding 9: Impact on MCI Market

¾ Survey and interview responses are mixed. Most responses indicated that timeshare conversions have not made it more difficult to book rooms for their events. However, a minority of event planners believe that timeshare conversions have hurt their ability to sell activity packages to more meeting groups. ¾ Many respondents pointed out that future loss of hotel rooms would be cause for concern, assuming no new inventory and current demand levels. ¾ National data indicate that the size of MCI events is decreasing, which reflects changes in the overall visitor market. ¾ MCI arrivals to Maui have declined due to the trend in the market for smaller, more regionalized groups.

Maui MCI Arrivals Maui Invitational: 11/21/05 – 11/23/05

250,000 90.0% 220

80.0% 215 200,000 70.0%

60.0% 210

150,000 50.0% 205 40.0%

100,000 30.0% 200 206,668 198,243 193,790 182,763 180,340 20.0% 170,674 170,190 166,738 160,155 158,931 195 141,072 50,000 10.0%

0.0% 190 20-Nov 21-Nov 22-Nov 23-Nov 24-Nov 25-Nov 26-Nov Occupancy 77.7% 80.9% 81.9% 82.3% 75.0% 67.8% 64.7% - ADR 216.57 212.26 216.99 216.85 213.39 202.42 199.76 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005P 32 Finding 10: Maui County Employment

¾ The existing macro-level statistical data does not lead us to conclude that timeshare conversions does not cause disproportionate employment loss, when measured by the following indices: „ Job count „ Unemployment rate „ Unemployment insurance claims ¾ The majority of responses from surveys and interviews support the data findings presented earlier, which indicate that such impacts are unlikely or minimal. However, we do note several anecdotal comments related to employment impacts, including loss of seniority from conversion, that would not be reflected in the macro-level job data. ¾ Nonetheless, the data from multiple sources indicate an expanding employment base, with any displacement of workers resulting from conversions more that offset by the new jobs created from new timeshare developments. Finding 11: TIM School Survey Perceived Business33 Impact

¾ The existing macro-level data indicate that visitor industry business in general has not been negatively affected by timeshare conversions. ¾ Respondents generally confirm the expenditure data from DBEDT, which shows that timeshare and condo visitors spend less than hotel visitors. ¾ Respondents generally either cannot, or do not, distinguish between condominium and timeshare visitors with respect to purchasing behavior. ¾ Respondents stating that timeshares have a negative impact on business generally point to an indirect effect of visitor expenditures. This effect results from timeshare visitors’ tendency to spend at “chain” businesses that purchase their goods directly from mainland distributors. Thus, Maui-based wholesalers see decreased business, from this perspective. ¾ However, a few respondents noted that non-chain businesses are also beginning to bypass local wholesalers. ¾ Several respondents also indicated that hotel visitors’ spending patterns are changing also, with greater expenditures at chain businesses. Finding 11: TimSchool Survey: Perceived Business34 Impact

Survey / Interview Responses ¾ 100% - Hotel visitors spend more than timeshare and condo visitors

¾ 43% - Stability of timeshare visitor spending is good for my business

¾ 86% - Proportion of timeshare units in Reported Indirect Effect on Business accommodation mix is important Timeshare Direct from visitor out of state “Chain” establishments

Hotel Local visitor suppliers

“Mom and Pop” establishments

Source: TIM School survey and interviews 35 Finding 12: Visitor Behavior

¾ The existing macro-level data indicate that the behavior of timeshare visitors cannot be reliably distinguished from that of condominium visitors. „ Overall spending „ Spending patterns „ Activities • Use of public facilities • Use of rental vehicles ¾ Respondents generally report that they are unable to distinguish between the two visitor segments (as opposed to cruise visitors, who are reported to be much easier to distinguish from all other visitors in terms of their spending behavior). ¾ While Maui’s population has been rising, the amount of park acreage has been relatively stable.

2000 2001 2002 2003 2004 National Parks Number of Areas 2 2 2 2 2 Acreage 28,991 28,991 39,747 40,747 40,747 Visits 1,736,160 1,503,068 1,610,996 1,502,640 1,517,274 State Parks & Historic Sites Number of Areas 10 10 10 10 9 Acreage 566 566 566 566 566 Visits 1,921 1,747 1,522 1,553 n/a County Parks Number of Areas 143 143 150 150 n/a Acreage 1,198 1,198 1,307 1,307 n/a Source: Maui County Data Book 36 Finding 13: Traffic

¾ The existing macro-level data does not permit us Maui County Population vs. Drivers Licenses Issued 140,000 105,000

to attribute a disproportionate increase in traffic to 100,916 99,716 100,000 timeshare visitors. 97,045 135,000 „ Car rental use rates are similar between timeshare 93,595 95,000 and condominium visitors: 90,964

130,000 87,550 90,000

• Timeshare visitors – 93% 84,980 85,000 82,217 • Condominium visitors – 93% 125,000 80,988 80,000 „ 138,347 Traffic has historically been perceived as a 135,734

120,000 133,320 75,000 Drivers Licences Issued Licences Drivers 131,684 major problem on Maui, with no apparent Thousands in Population

128,241 70,000 increase due to timeshare conversions. 126,160 115,000 124,648 122,772 ¾ Respondents generally do not perceive traffic to 120,689 65,000 be a specific timeshare issue. 110,000 60,000 1996 1997 1998 1999 2000 2001 2002 2003 2004

Maui County Population Maui Drivers Licences

1999 2001 2002 2005 Maui County Population vs. Vehicle Registration 140,000 160,000 Tourism makes traffic better. 18% 2% 9% 5% 135,000 150,000

130,000 140,000 Tourism makes traffic worse. 59% 85% 69% 91% 125,000 130,000

120,000 120,000 Population in Thousands Tourism has no # Total Vehicle Registrations effect on traffic. 21% 12% 19% 4% 115,000 110,000

110,000 100,000 1996 1997 1998 1999 2000 2001 2002 2003 2004

Maui County Population # Total Vehicle Registrations Source: Department of Business, Economic Development, and Tourism 37 Conclusions Related to Social Impacts

¾ Problems that Maui faces are real and timeshare conversions likely contribute, to some degree, to these issues, but the specific impacts (both positive and negative) is not possible to measure at this time due to: „ Lack of data for such a specific and comparatively small segment. „ Expansion in the overall economy and the addition of newly built timeshare inventory and employment. ¾ However, macro-level data indicate that any impacts specifically from timeshare conversion are likely modest given the limited size of the market segment. ¾ The visitor behavior identified as problematic—lower spending, different spending patterns, greater use of resident facilities, increased incursion into resident “space”—is shared by a much larger population of condominium visitors and, to a significant extent, an even larger population of repeat visitors. ¾ These visitors, and their behavior patterns, are indicative of a continuing shift in Maui’s (and Hawaii’s) visitor market, where visitors are increasingly seeing themselves as “stakeholders” in the destination. ¾ Issues and concerns about timeshare conversions, including impacts on MCI, displaced employment, branding, and visitor expenditures do not appear to be supported by our preliminary research and analysis of DBEDT data. ¾ Respondents are mixed on the effect of the loss of hotel rooms due to conversions on event bookings, with a majority indicating no problems to date. However, most respondents state that it would be prudent to consider the future net effect of additional room loss—for any reason—on the MCI market (assuming existing inventory and demand levels). ¾ The reported negative effects of timeshare conversions on businesses appears to be part of a larger shift away from local producers, suppliers, and distributors that is hurting certain business segments. ¾ We do note that the method used to value timeshare differ among the counties and could possibly have some relevance to Maui County. 1

Appendix A

Definitions 2 Definitions

¾ Hotel „ A hotel property is a multi-unit lodging facility which provides room accommodations on a daily basis. Hotel rooms are relatively small units with configurations similar to a studio, but without any cooking apparatus or cooking facilities. Larger hotel units are available as “suites,” which includes a separate sitting room or living room apart from the bedroom. „ Common hotel classifications include full service hotel and limited service hotel. „ In room amenities in hotel units may include, but not limited to, the following: television, telephone, air conditioning and/or ceiling fan, closet and/or chest of drawers, alarm clock, in-room safe, mini-hygiene products, fresh linen, table and chairs, coffee maker, mini-bar (or refrigeration unit), stationary, and other products depending on the service class of each hotel property. ¾ Limited Service Hotel „ A limited service hotel is defined by the limited basic services a property offers. Limited service hotel offers limited or no food and beverage service. It may offer front desk services available only during designated business hours, or a self- served check-in and check-out procedures. Limited service hotels may or may not have business services such as access to internet and facsimiles, and often does not offer use of fitness equipment. It is unlikely for a limited service hotel to offer spa services, travel desks, or retail outlets. „ In-room service at a limited hotel includes daily housekeeping. ¾ Full Service Hotel „ A full service hotel is defined by the comprehensive services offered at a hotel property. Full service hotels offers a full menu food and beverage service, 24-hour front desk and bell services, valet parking, business services, meeting rooms, access to on-property or nearby fitness equipments, tour and activity desks, and various retail outlets. Other amenities at a full-service hotel may include banquet services, spa and salon services, golf courses, children’s programs, scheduled entertainment programs, laundry and/or dry cleaning services, and on-call medical doctors. „ In-room service at a full service hotel includes, but not limited to, room service, daily housekeeping, and turn-down service. Full service hotel rooms often offer more in-room amenities than limited service hotels, such as in-room safe, umbrella, bath robe, internet access, mini-bar, movies, etc. 3 Definitions

¾ Resort Condominium „ Resort condominiums are condominium properties in a hotel/resort zoned area. Each condominium unit is often individually owned, but can sometimes be collectively owned by a single developer or management company. Resort condominiums can be either owner-occupied or rented as temporary accommodation units by a specialized condominium management company such as ResortQuest, Outrigger Hotels, or Condominiums Hawaii. „ Resort condominium can vary in classifications based on the amenities the condominium unit and the property offers. Luxury resort condominium may offer full size kitchen and hot tubs in-unit, with multiple swimming pools, retail outlets and fitness centers on property. Smaller condo/hotels may have only a kitchenette and a single pool, wtih no food, beverage, or retail outlets on property. ¾ Condo/Hotel „ Condo/hotel units are condominium units equipped with cooking apparatus and/or cooking facilities rented for hotel use. Condo/hotel units are often configured as studios, one-bedroom, or two bedroom units. Condo/hotel properties typically do not offer in-house food and beverage services, but may have independently operated food and beverage outlets nearby or on-property. Amenities at condo/hotels varies, but typically includes daily housekeeping services and check-in service. „ Examples of condo/hotel on Maui include: Napili Kai Beach Resort, Outrigger Eldorado, Aston Kaanapali Shores ¾ Condominium Conversion „ Condominium conversions are conversion from an existing hotel, apartment, or other types of property to condominium use. Condominium conversions requires the filing of a Condominium Public Report by the developer and meet the minimum requirements as defined by the Condominium Property Regime. „ Condominium units may be owner-occupied or rented as hotel units commonly known as condo/hotel or “condotel.” Condo/hotels are either owner-managed or participates in a hotel rental program. GET and TAT are assessed on the full rental income earned for rental periods less than 180 consecutive days. ¾ New Purpose Build Resort Condominium or Condo/Hotel „ New purpose build resort condominiums or condo/hotels are newly developed condominium property located in hotel/resort zoned areas. It can be used for owner occupancy or hotel rentals. New build resort condominium or condo/hotel are new construction projects. New build condominiums can be configured with studios, one-bedroom units, two-bedroom units, or three-bedroom units. „ Example of a new build resort condominium and/or condo/hotel currently under development include the Intrawest Honua Kai Project 4 Definitions

¾ Timeshare „ A timeshare unit is a transient accommodation unit owned by more than six individuals. The ownership shares are divided into time intervals ranging from one week to two months. Properties offering a weekly interval ownership are commonly known as “timeshares,” while properties offering a longer interval ownership, such as one month or longer, are often referred to as “fractional” shares. „ Timeshare units can be hotel units (relatively small units without cooking facilities), condominium units (single or multi- room units with cooking facilities), or villas (stand-alone multi-room units with cooking facilities). Branded timeshare chains, such as Marriott, Hilton, or Starwood, often offer traditional hotel service and amenities such as food and beverage, spa, fitness center, retail outlets, pools, front desk and concierge services. „ Timeshare units are typically larger than traditional hotel rooms. Some timeshare units may have “lock-out” features, which divides a timeshare unit into two rooms with independent entries. „ Examples of timeshares on Maui include the following: Westin Kaanapali Ocean Club, Whaler on Kaanapali Beach, Kaanapali Embassy Vacation Resort, Maui Marriott Ocean Club, Kihei Surfside Resort, Maui Schooner Resort, Maui Hill Resort ¾ Timeshare Conversion „ A timeshare conversion is a conversion of an existing hotel, condo/hotel, or another type of property to a timeshare property. Conversions can be on a partial property basis, such as Kaanapali Embassy Vacation Resort, or on a property- wide basis, such as the Maui Marriott Ocean Club. Unsold timeshare intervals are often rented as hotel units until the project is sold out. „ General excise tax (“GET”) and transient accommodation tax (“TAT”) are assessed on rental income earned on the rented timeshare intervals. „ TAT is assessed on fifty percent (50%) of the daily maintenance fee for owner-occupied timeshare units. TAT is not assessed on the timeshare unit if the owner chooses to leave the unit vacant or exchanges it for timeshare/hotel stay at an out-of-state resort destination. ¾ New Purpose Build Timeshare „ New purpose build timeshares are newly developed property intended for timeshare use. New build timeshares units can be configured in the forms of a hotel room, condominium, or resort villas sold in weekly intervals or longer. 1

Appendix B

Market Overview 2 Table of Contents

¾ State of Hawaii „ Visitor Statistics 3 „ Visitor Plant Inventory 5 „ Hotel Occupancy, Average Daily Rate, & RevPAR 9 „ Statewide Visitor Characteristics 13 ¾ County of Maui „ Visitor Statistics 14 „ Visitor Plant Inventory 29 „ Hotel Occupancy, Average Daily Rate, & RevPAR 37 „ Maui Visitor Characteristics 39

Draft – For Discussion Purposes Only 3 4 Historic Visitor Arrivals Visitor Arrivals by County: 1996-2005

Hawaii’s visitor industry underwent a period of immense sustained growth from 1966 through 1990, followed by On a by island basis, Oahu leads the market for volume of visitor arrivals, but Maui County (“Maui”) several periods of decline and rebound initiated by regional economic shocks. In 2005, Hawaii rebuilt the volume was less affected by the global shocks than other islands. of visitor arrivals back to 1990 levels. However, instead of volume, Hawaii’s tourism strategy has shifted towards 6,000,000 increasing visitor expenditures and sustainability.

8,000,000

7,379,635 5,000,000 International Visitors 6,948,595 6,912,094

Domestic Visitors 6,761,135 6,741,037 6,723,531 7,000,000 6,723,141 6,595,790 6,546,759 6,518,460 6,488,422 6,473,669 6,389,058 6,380,439 Total Visitors 6,364,674 6,303,791 6,101,483

6,070,995 4,000,000

6,000,000 5,770,585 5,569,067 4,843,414 5,000,000 4,827,884 3,000,000 4,356,317 4,227,733 3,966,192 4,000,000 3,928,789 3,928,906 3,676,967 2,000,000 3,413,095 3,213,249 2,818,082 3,000,000 2,804,394 2,622,376

2,233,627 1,000,000 1,817,941

2,000,000 1,745,904 1,526,074 1,313,706 1,124,012 - 1,000,000 834,732 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

0 Oahu Maui County Kauai Hawaii

1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Note: Tourism market performance for the islands of Maui, Molokai, and Lanai are reported as “Maui County.” Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT

5 6 Statewide Accommodations Inventory Accommodations Inventory by Island

In Maui County, the majority of the inventory is located on the island of Maui, the largest of the three islands. Maui County has a greater percentage of condominium hotel inventory than the rest of the State, with Molokai Hotels are the dominant accommodation type in the State of Hawaii, with the number of condominium having the highest percentage. hotel and timeshare units growing in recent years. Maui 2000 2001 2002 2003 2004 Hotel 8,577 49.1% 8,245 46.9% 8,259 47.5% 8,225 45.9% 8,065 45.3% Condo/Hotel 7,005 40.1% 7,027 40.0% 6,601 37.9% 7,084 39.6% 7,085 39.8% 2000 % Share 2001 % Share 2002 % Share 2003 % Share 2004 % Share (1) Apartment/Hotel 641 0.9% 697 1.0% 367 0.5% 340 0.5% 458 0.6% Timeshare 973 5.6% 1,356 7.7% 1,428 8.2% 1,465 8.2% 1,512 8.5% Bed & Breakfast 514 0.7% 492 0.7% 460 0.7% 508 0.7% 643 0.9% Other 918 5.3% 946 5.4% 1,116 6.4% 1,137 6.3% 1,155 6.5% Condominium Hotel 13,602 19.0% 12,488 17.6% 11,933 17.2% 12,671 18.2% 13,898 19.1% Total 17,473 100.0% 17,574 100.0% 17,404 100.0% 17,911 100.0% 17,817 100.0% Hostel 297 0.4% 412 0.6% 339 0.5% 352 0.5% 342 0.5% Hotel 50,218 70.2% 49,663 70.1% 49,025 70.6% 48,117 69.2% 48,223 66.4% Molokai Individual Vacation Unit 1,173 1.6% 1,127 1.6% 1,413 2.0% 1,753 2.5% 1,867 2.6% 2000 2001 2002 2003 2004 Other 785 1.1% 1,125 1.6% 976 1.4% 638 0.9% 1,157 1.6% Hotel 183 42.7% 45 15.4% 45 20.5% 45 15.1% 114 38.1% Timeshare 4,276 6.0% 4,830 6.8% 4,967 7.1% 5,159 7.4% 6,026 8.3% Condo/Hotel 110 25.6% 109 37.3% 94 42.7% 152 50.8% 140 46.8% Total Inventory 71,506 100.0% 70,834 100.0% 69,480 100.0% 69,538 100.0% 72,614 100.0% Timeshare(1) 7 1.6% 7 2.4% 7 3.2% 7 2.3% 7 2.3% Other 129 30.1% 131 44.9% 74 33.6% 95 31.8% 38 12.7% Total 429 100.0% 292 100.0% 220 100.0% 299 100.0% 299 100.0%

Lanai 2000 2001 2002 2003 2004 Hotel 362 98.4% 362 98.4% 362 98.4% 362 98.4% 362 98.1% Condo/Hotel - 0.0% - 0.0% - 0.0% - 0.0% - 0.0% Timeshare(1) - 0.0% - 0.0% - 0.0% - 0.0% - 0.0% Other 6 1.6% 6 1.6% 6 1.6% 6 1.6% 7 1.9% Total 368 100.0% 368 100.0% 368 100.0% 368 100.0% 369 100.0%

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT 7 8 Accommodations Inventory by Island Estimated Statewide Inventory 2005-2010

Nearly half of the visitor accommodations inventory is located on Oahu, with the majority of units located in The Statewide accommodations inventory is expected to increase by over 5,000 units (net) by 2010. The Waikiki. Kauai has the most timeshare units in the State, comprising 25% of its accommodations inventory. majority of this growth will be driven by new builds rather conversions (2000 – 2004). Oahu 2000 2001 2002 2003 2004 Hotel 31,025 85.5% 31,282 85.0% 31,178 85.5% 29,932 83.9% 30,088 83.6% Condo/Hotel 3,185 8.8% 2,899 7.9% 3,088 8.5% 3,425 9.6% 3,407 9.5% Timeshare(1) 938 2.6% 973 2.6% 981 2.7% 985 2.8% 1,135 3.2% Other 1,155 3.2% 1,670 4.5% 1,210 3.3% 1,322 3.7% 1,357 3.8% Sources of Additions Estimated Total 36,303 100.0% 36,824 100.0% 36,457 100.0% 35,664 100.0% 35,987 100.0% # Units Estimated Estimated Estimated Owner Estimated Change # Units in 2004 Reduction Conversion New Build Occupancy to Supply in 2010 Big Island Hotel 48,223 (3,225) - 1,151 - (2,074) 46,149 2000 2001 2002 2003 2004 Hotel 7,052 72.2% 7,073 71.1% 6,486 69.8% 6,483 68.4% 6,513 64.9% Condominium 13,898 - 2,051 2,863 (1,031) 3,883 17,781 Condo/Hotel 1,240 12.7% 1,210 12.2% 1,138 12.2% 1,156 12.2% 1,147 11.4% Timeshare 5,921 - 451 2,965 - 3,416 9,337 Timeshare(1) 819 8.4% 883 8.9% 884 9.5% 1,035 10.9% 1,338 13.3% Other 4,467 - - - - - 4,467 Other 663 6.8% 778 7.8% 789 8.5% 804 8.5% 1,039 10.4% 72,509 (3,225) 2,502 6,979 (1,031) 5,225 77,734 Total 9,774 100.0% 9,944 100.0% 9,297 100.0% 9,478 100.0% 10,037 100.0%

Kauai 2000 2001 2002 2003 2004 Hotel 3,019 42.2% 2,689 37.3% 2,694 38.3% 3,070 42.3% 3,081 38.0% Condo/Hotel 2,062 28.8% 1,807 25.1% 1,583 22.5% 1,552 21.4% 2,119 26.1% Timeshare(1) 1,539 21.5% 1,611 22.4% 1,667 23.7% 1,667 23.0% 2,034 25.1% Other 539 7.5% 1,095 15.2% 1,093 15.5% 968 13.3% 871 10.7% Total 7,159 100.0% 7,202 100.0% 7,037 100.0% 7,257 100.0% 8,105 100.0%

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: Hospitality Advisors LLC, various interviews

9 10 Occupancy by Island ADR by Island

Oahu, with its substantially larger number of visitor units compared to other islands, led the market for Maui has been the clear market leader in terms of Average Daily Rate (“ADR”) from 1990 – 2005, substantially percentage of units occupied from 1990 – 2005. Maui hotels reported strong overall growth in outpacing all other islands since 2003. Maui’s ADR performance is driven by its mix of hotel supply, which includes occupancy during this period with minimal/no growth in hotel supply. a higher proportion of luxury and upscale properties with international brand affiliations in comparison to other counties. $240.00 90.0%

$220.00 85.0%

$200.00 80.0% $180.00 75.0% $160.00 70.0% $140.00 65.0% $120.00 60.0% $100.00 55.0% $80.00 50.0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 $60.00 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Oahu 86.8% 83.1% 82.4% 77.2% 80.9% 80.1% 81.2% 77.5% 72.3% 71.7% 76.2% 68.6% 70.3% 73.1% 79.7% 85.6% Maui 69.7% 59.9% 60.7% 65.5% 70.3% 74.4% 71.9% 72.2% 73.3% 77.2% 80.4% 73.0% 71.0% 74.2% 78.0% 79.6% Oahu $88.92 $89.73 $93.02 $90.19 $89.94 $100.4 $106.9 $111.9 $111.1 $107.9 $117.5 $116.2 $111.4 $116.2 $123.2 $139.6 Kauai 67.5% 56.4% 75.9% 76.0% 77.7% 63.8% 64.7% 67.2% 66.1% 70.4% 74.4% 70.6% 70.0% 76.1% 78.6% 76.7% Maui $134.0 $130.7 $130.1 $128.3 $127.4 $131.2 $142.9 $150.6 $154.1 $161.0 $169.6 $184.1 $181.2 $186.9 $192.2 $214.4 Big Island 71.3% 65.5% 60.1% 60.8% 63.1% 62.5% 66.8% 69.7% 69.4% 65.7% 71.4% 63.6% 62.1% 65.3% 70.2% 72.2% Kauai $100.2 $98.45 $98.17 $90.45 $114.6 $122.6 $123.8 $139.1 $142.5 $144.2 $144.0 $151.3 $156.7 $152.9 $175.0 $148.1 State 81.7% 73.2% 72.1% 72.2% 75.7% 75.0% 74.3% 73.6% 71.4% 72.4% 76.2% 69.0% 70.0% 72.7% 77.8% 81.2% Big Island $115.8 $112.0 $106.2 $108.8 $104.0 $107.1 $109.3 $120.2 $149.3 $162.4 $167.8 $173.7 $172.8 $163.2 $161.6 $173.6 State $96.84 $103.2 $105.9 $101.7 $105.2 $113.6 $118.9 $125.2 $127.9 $130.0 $141.7 $145.2 $142.3 $144.2 $150.9 $166.8 Draft – For Discussion Purposes Only Source: Smith Travel Research, Hospitality Advisors LLC Draft – For Discussion Purposes Only Source: Smith Travel Research, Hospitality Advisors LLC 11 12 RevPAR by Island Statewide Hotel Room Demand Gap

As a result of its strong ADR and occupancy performance, Maui hotels have dominated the market in terms of On a statewide basis, the number of hotel rooms sold (Room Demand) roughly follows the same trend as the Revenue per Available Room (“RevPAR”) for the last decade. volume of visitor arrivals, but began lagging in 2001. These data indicate that visitors increased usage of non- $180.00 hotel accommodations from 2001 – 2005. 19,500,000 7,200,000 $160.00 19,000,000 7,000,000

$140.00 18,500,000 6,800,000

$120.00 18,000,000 6,600,000

$100.00 17,500,000 6,400,000

17,000,000 6,200,000

$80.00 Sold Nights Room Total Visitor Arrivals

16,500,000 6,000,000 $60.00

16,000,000 5,800,000 $40.00 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 15,500,000 5,600,000 Oahu $77.18 $74.57 $76.65 $69.63 $72.76 $80.44 $86.84 $86.79 $80.38 $77.39 $85.02 $79.73 $78.36 $84.98 $98.21 $119.5 3 7 1 5 $93.42 $78.31 $79.00 $84.10 $89.60 $97.61 $102.8 $108.7 $113.0 $124.3 $139.5 $134.4 $128.6 $138.7 $149.9 $170.6 0 0 Maui 991 992 99 995 996 99 999 000 002 003 004 1990 1 1 1 1994 1 1 1 1998 1 2 20 2 2 2 20 Kauai $67.64 $55.53 $74.51 $68.74 $89.11 $78.27 $80.14 $93.50 $94.23 $101.5 $113.6 $106.8 $109.7 $116.3 $137.5 $141.2 Room Demand Statewide Visitor Arrivals Big Island $82.57 $73.42 $63.86 $66.16 $65.63 $66.94 $73.05 $83.79 $103.6 $106.7 $123.2 $110.5 $107.3 $106.5 $113.4 $125.3 State $79.12 $75.52 $76.39 $73.44 $79.60 $85.26 $88.43 $92.19 $91.34 $94.12 $108.0 $100.2 $99.70 $107.2 $117.3 $135.5

Draft – For Discussion Purposes Only Source: Smith Travel Research, Hospitality Advisors LLC Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT, Smith Travel Research

2004 Statewide Visitor Characteristics by Type of 13 14 Maui County Visitor Arrivals and Visitor Days Accommodations A side by side comparison of visitor characteristics by accommodations type shows that visitors tend to be relatively After falling sharply in 2001, visitor days to Maui recovered more rapidly than arrivals to Maui. This similar across lodging choices. Visitors choosing timeshare and condominium hotels are nearly identical, tending to be indicates that there the number of visitors on any given day (average daily census) is growing. experienced visitors who have visited Hawaii more times than average hotel repeat visitors and stay for 10 or more days. While hotel visitors include a significant number of honeymooners and MCI, nearly all guests staying in timeshare and 2,400,000 17,000,000 condominium hotels are leisure visitors. Timeshare % Mix Hotel Only % Mix Condo Only % Mix 2,350,000 16,500,000 Total Visitor Days 5,046,129 30,472,300 9,922,471 Total Visitors 479,661 4,169,795 883,050 2,300,000 16,000,000 One 48,002 10.0% 673,040 16.1% 105,324 11.9% Two 233,377 48.7% 1,703,807 40.9% 338,787 38.4% 2,250,000 15,500,000 Three or more 198,282 41.3% 1,792,949 43.0% 438,939 49.7% Avg Party Size 2.3 2.2 2.3 First-Time 127,711 26.6% 1,812,375 43.5% 211,477 23.9% 2,200,000 15,000,000 Repeat 351,950 73.4% 2,357,420 56.5% 671,574 76.1% Average # of Trips 5.1 3.9 6.1 2,150,000 14,500,000 Statewide Average Length of Stay 10.5 7.3 11.2

Purpose of Trip: Maui Visitor Days Pleasure 462,897 96.5% 3,465,168 83.1% 811,253 91.9% Maui Visitor Arrivals 2,100,000 14,000,000 …Honeymoon/Get Married 23,262 4.8% 582,813 14.0% 45,231 5.1% MC&I 9,618 2.0% 380,098 9.1% 17,101 1.9% 2,050,000 13,500,000 .....Convention/Conf. 6,214 1.3% 222,085 5.3% 11,688 1.3% .....Corp. Meetings 2,259 0.5% 74,155 1.8% 3,568 0.4% 2,000,000 13,000,000 .....Incentive 1,858 0.4% 98,367 2.4% 2,307 0.3% Other Business 7,232 1.5% 177,940 4.3% 23,857 2.7% Visit Friends/Relatives 19,897 4.1% 127,154 3.0% 40,376 4.6% 1,950,000 12,500,000 Government/Military 736 0.2% 68,969 1.7% 2,708 0.3% 1996 1997 1998 1999 2000 2001 2002 2003 2004 Attend School 459 0.1% 6,214 0.1% 2,146 0.2% Sport Events 2,182 0.5% 89,947 2.2% 13,512 1.5% Visitor Arrivals Visitor Days Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT 15 16 Maui Visitor Average Daily Census Maui Arrivals by Purpose

The average daily census for Maui recovered steadily since 2001. The growth in daily census is primarily Most Maui visitors are traveling for leisure, MCI, or to visit friends and family. due to longer length of stay rather than increasing arrivals. 3,000,000 46,000 45,517

2,500,000 45,000 44,510 43,992 43,854 44,000 2,000,000 43,383 42,864 42,751 42,742 43,000 42,724 1,500,000 42,000

1,000,000

41,000 40,651

40,000 500,000

39,000 - 38,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005P 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Pleasure MCI Other Business Visit Friends/Relatives Government/Military Attend School Sport Events

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT

17 18 Statewide MCI Arrivals Maui MCI Arrivals

MCI arrivals to Hawaii have generally dropped since 2000, reflecting an industry-wide trend towards regional MCI arrivals to Maui have also dropped since 2000, reflecting statewide trends and indicating a lack of demand for events. 2005 growth was driven by Oahu. Maui convention and meeting space. 250,000 700,000

600,000 200,000

500,000

150,000 400,000

300,000 100,000 206,668 198,243 608,083 193,790 574,916 182,763 180,340 170,674 170,190 166,738 160,155 158,931 484,751

200,000 473,549 458,754 141,072 451,713 443,570 436,850 429,180 423,642 419,059 50,000

100,000

- - 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005P 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Maui County Arrivals by Accommodation 19 Maui Visitor Accommodation Choice Percentage20 Choice Change Visitors to Maui primarily stay in hotels and condominium hotels. The usage of timeshare accommodations is With the exception of 2001, the percentage change in the number of Maui visitors choosing hotels have been relatively low, but growing. relatively flat. Since 2002, there has been a recovery of visitors staying in hotels and condo/hotels. The large percentage fluctuations of visitors staying in timeshare and other accommodations are due to the small 1,800,000 timeshare and other accommodations inventory base to grow and/or decline from. 60.0% 1,600,000

1,400,000 40.0% 35.7% 27.0% 26.8% 1,200,000 25.2% 20.0% 12.9% 12.3%

1,000,000 10.5% 7.2% 6.1% 5.5% 2.4% 2.3% 2.3% 1.9% 800,000 0.0%

600,000 -0.5% -0.5% -0.5% -0.8% -0.9% -1.0% -1.1%

-20.0% -6.0% 400,000 -7.8% -12.1% -12.5% 200,000 -40.0% -26.1% - 1996 1997 1998 1999 2000 2001 2002 2003 2004

Hotel 1,530,270 1,522,030 1,508,280 1,500,735 1,488,211 1,302,671 1,326,996 1,357,696 1,351,104 -60.0% -42.5% Condo/Hotel 664,560 701,130 658,970 674,953 622,456 546,991 559,733 631,946 625,163

95,574 121,234 153,990 165,063 185,439 -57.7% Timeshare -80.0% 130,200 128,960 136,865 171,314 98,425 133,582 98,708 41,742 46,120 Other 1997 1998 1999 2000 2001 2002 2003 2004 Total 2,325,030 2,352,120 2,304,115 2,347,002 2,304,666 2,104,478 2,139,427 2,196,447 2,207,826 Hotel Condo/Hotel Timeshare Other Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT

Maui Visitor Average Daily Census by 21 Incremental Change in Maui Average Daily 22 Accommodation Census by Accommodation Choice The average daily census for hotels was relatively stable from 2000 – 2005, with increases reported for timeshare and condominium hotels. With the exception of visitors using “other” accommodations, growth in average daily census is seen across all accommodations since 2002, with hotel and condo/hotel showing the highest number of visitor increase on a daily basis. 50,000 2,500 45,517 44,510 43,854

45,000 42,742 2,000 40,651 40,000 1,500

1,000 35,000 500 30,000 - 25,000 (500) 20,000 (1,000)

15,000 (1,500)

10,000 (2,000) 2000 2001 2002 2003 2004 5,000 Hotel (844) (1,827) 1,287 201 1,708 Condo (840) (1,517) 769 1,738 348 - Timeshare 2,252 (60) 592 200 368 2000 2001 2002 2003 2004 Other (706) 201 (558) (371) (1,417) Maui County (138) (3,203) 2,091 1,768 1,007 Hotel Condo Timeshare Other

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT, American Resort Development Association Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Percentage Mix of Maui Visitor Average Daily 23 24 Census by Accommodation Maui County Percentage Visitor Mix While the average daily census for timeshare and condominium hotels have been on the rise since 2001, the The percentage of domestic visitors to Maui have increase by13 percentage points from 1996 – 2005, while majority of the visitors to Maui still choose hotels. the percentage of Japanese visitors have decreased by 9.5 percentage points. 120.0%

100.0% U.S. Total Japan Canada Other Total 1996 69.5% 15.1% 4.4% 11.0% 100.0% 80.0% 1997 68.9% 14.1% 4.6% 12.4% 100.0% 1998 69.8% 13.7% 5.0% 11.4% 100.0% 60.0% 1999 73.6% 10.6% 5.4% 10.4% 100.0% 40.0% 2000 74.5% 11.6% 5.6% 8.3% 100.0% 2001 76.7% 11.2% 5.0% 7.1% 100.0% 20.0% 2002 77.9% 9.3% 4.2% 8.6% 100.0%

0.0% 2000 2001 2002 2003 2004 2003 81.8% 6.3% 4.5% 7.4% 100.0% Other 7.8% 8.9% 7.1% 6.0% 2.8% 2004 82.5% 5.6% 4.3% 7.6% 100.0% Timeshare 5.1% 5.4% 6.5% 6.7% 7.4% Condo 36.7% 35.9% 35.9% 38.4% 38.3% 2005 82.5% 5.6% 4.3% 7.5% 100.0% Hotel 50.4% 49.9% 50.4% 48.9% 51.6%

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT, American Resort Development Association Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT

25 26 Maui Island Visitor Mix Molokai Visitor Mix

The majority of visitors to the island of Maui are from the United States, largely from the U.S. West market area. The majority of visitors to Molokai are from the United States. There was a surprising increase in Japanese The number of Canadian visitors has been stable from 1996 – 2005. visitors in 2001 – 2003. 120,000 3,000,000

100,000 2,500,000 94,106 2,278,933 2,260,454 2,260,921 2,246,254 2,243,912 2,156,242 2,155,561 2,125,421 2,073,051 79,922 2,048,896 77,470 75,245 80,000 75,134 2,000,000 72,119 72,084 70,233 69,657 64,558

60,000 1,500,000

40,000 1,000,000

20,000 500,000

- - 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

U.S. Total Japan Canada Other U.S. Total Japan Canada Other

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT 27 28 Lanai Visitor Mix Kahului Airport Total Air Seat Capacity

The majority of visitors to Lanai are from the United States. Since 1996, the number of Canadian visitors have The overall number of air seats to Kahului International Airport have increased from 2000 – 2005 as domestic declined. airlines added more frequent Mainland direct flights. The overall decrease in international air seats to Kahului relates to the declining number of Japanese visitors to Maui. 120,000 106,036

100,000 97,434 2,000,000 94,546 94,292 1,858,594 91,445

87,661 1,800,000 84,905 1,631,999 80,875 80,000 1,600,000 1,480,866 73,419 73,382

1,400,000 1,326,429 1,254,666 60,000 1,200,000 1,099,940

1,000,000

40,000 800,000 Seats Available

600,000

20,000 400,000

200,000 - 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2000 2001 2002 2003 2004 2005

U.S. Total Japan Canada Other Domestic International

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT, Hawaii Visitor and Conventions Bureau

Total Maui County Visitor Accommodation 29 Maui County Inventory by Type of 30 Inventory Accommodation Total visitor units on Maui fell between 1998 and 2002, primarily as a result of condo and timeshare conversion. Maui’s Maui’s overall accommodation inventory has remained relatively stable over the last decade, but the mix of inventory started growing in 2003 due to new builds. inventory has been changing. Changes in mix have been driven by the conversion of the Maui Marriott from hotel to timeshare and new purpose-built timeshare developments in West Maui.

18,800 10,000

18,650 9,000 18,609 18,578

18,600 18,552 8,000 18,485 7,000

18,400 6,000 18,270

18,234 5,000 18,200 4,000

17,992 3,000 # Units 18,000 2,000 17,824 1,000 17,800 - 1996 1997 1998 1999 2000 2001 2002 2003 2004 17,600 Hotel 8,780 9,375 9,154 9,168 9,122 8,652 8,666 8,632 8,541 Condo/Hotel 8,010 7,698 7,558 7,640 7,115 7,136 6,695 7,236 7,225 17,400 Timeshare 652 719 885 785 980 1,363 1,435 1,472 1,519 1996 1997 1998 1999 2000 2001 2002 2003 2004 Other 382 760 1,053 1,016 1,053 1,083 1,196 1,238 1,200 Total 17,824 18,552 18,650 18,609 18,270 18,234 17,992 18,578 18,485

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT 31 32 Maui County Hotel Inventory by Region Hotel Inventory by Classification

Roughly half of all Maui hotel rooms are located in Kaanapali. The luxury segment dominates Maui’s hotel supply.

3,000,000 4,000,000

3,500,000 2,500,000

3,000,000 2,000,000 2,500,000

1,500,000 2,000,000

Room Supply Room 1,500,000 1,000,000

1,000,000 500,000 500,000

- - 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Kaanapali Other Maui County Maui Luxury Maui Upscale Maui Midprice Maui Economy Maui Budget

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: Smith Travel Research, Hospitality Advisors LLC

Percentage of Maui Hotel Supply vs. Maui Hotel 33 Percentage of Maui Condo/Hotel Supply vs. Maui34 Visitor Average Daily Census Condo/Hotel Visitor Average Daily Census

Maui hotel demand has consistently penetrated above its fair market share on a daily basis regardless of In 2000 and 2001, the supply of condominium hotels in Maui County was substantially greater than the demand for inventory level. Hotel usage penetration has reached as high as 111.6% in 2004. this accommodation type. Since 2002, however, the usage of condominium hotels has increased and is in line with the supply of condominium hotels. 52.0% 113.0% 112.0% 40.0% 100.0% 51.0% 111.0% 99.0% 110.0% 50.0% 109.0% 39.0% 98.0% 108.0% 97.0% 49.0% 107.0% 106.0% 38.0% 96.0% 48.0% 105.0% 95.0% 104.0% 47.0% 103.0% 37.0% 94.0% 102.0% 93.0% 46.0% 101.0% 100.0% 36.0% 92.0% 45.0% 99.0% 91.0% 98.0% 44.0% 97.0% 35.0% 90.0% 96.0% 89.0% 43.0% 95.0% 2000 2001 2002 2003 2004 34.0% 88.0% 2000 2001 2002 2003 2004 Inventory Mix - Hotel % 49.9% 47.4% 48.2% 46.5% 46.2% Inventory Mix - Condo/Hotel % 38.9% 39.1% 37.2% 38.9% 39.1% ADC - Hotel Usage % 50.4% 49.9% 50.4% 48.9% 51.6% ADC - Condo/Hotel Usage % 36.7% 35.9% 35.9% 38.4% 38.3% Penetration 100.9% 105.1% 104.7% 105.2% 111.6% Penetration 94.3% 91.7% 96.5% 98.6% 98.0%

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Percentage of Maui Timeshare Supply to vs. Maui35 Percentage of Other Accommodation Supply vs. 36 Timeshare Visitor Average Daily Census Other Visitor Average Daily Census Maui County timeshare usage and inventory increased from 2000 – 2004. While only representing a three percent change in inventory mix, the total number of timeshare units nearly doubled during this period. Despite the Other Accommodations in Maui County, which include bed & breakfast units and individually owned vacation increasing supply and usage, timeshares has been under penetrating the Maui visitor market, whereas hotel and units, have been growing at a pace that has not been matched by demand for these accommodations. condo/hotel usage has grown significantly in the past five years. 9.5% 160.0% 9.0% 120.0% 9.0% 8.5% 140.0% 8.0% 8.0% 100.0% 7.5% 7.0% 7.0% 120.0% 6.5% 6.0% 80.0% 6.0% 100.0% 5.5% 5.0% 5.0% 80.0% 60.0% 4.5% 4.0% 4.0% 3.5% 60.0% 3.0% 3.0% 40.0% 2.5% 40.0% 2.0% 2.0% 1.5% 20.0% 1.0% 20.0% 1.0% 0.5% 0.0% 0.0% 0.0% 0.0% 2000 2001 2002 2003 2004 2000 2001 2002 2003 2004 Inventory Mix - Other % 5.8% 5.9% 6.6% 6.7% 6.5% Inventory Mix - Timeshare % 5.4% 7.5% 8.0% 7.9% 8.2% ADC - Other Usage % 7.8% 8.9% 7.1% 6.0% 2.8% ADC- Timeshare Usage % 5.1% 5.4% 6.5% 6.7% 7.4% Penetration 134.7% 149.3% 107.3% 90.2% 42.6% Penetration 95.7% 72.1% 81.7% 84.6% 89.6%

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT

37 38 Maui Hotel Room Demand vs. Visitor Arrivals Maui County Hotel Product Gap

Maui hotel room demand remained strong despite large shifts in visitor arrivals. This indicates that variances primarily Luxury and upscale properties make up the majority of hotel products on Maui. Based on ADR and occupancy affected other lodging types. rates, there appears to be further opportunities for properties in the upscale range.

6,000,000 2,400,000 85.0%

84.0% 2,350,000 5,000,000 83.0% 17.0% 2,300,000 15.0% 82.0% 10.7% 4,000,000 2,250,000 81.0%

2,200,000 80.0% 3,000,000 2,150,000 79.0% Visitor Arrivals Room Demand Room 78.0% 2,000,000 2,100,000 77.0% 2,050,000 1,000,000 76.0% 43.8% 2,000,000 75.0%

- 1,950,000 74.0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 $- $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 $400.00

Room Demand Visitor Arrivals Luxury Upscale Midprice Economy

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT, Smith Travel Research Draft – For Discussion Purposes Only Source: Smith Travel Research, Hospitality Advisors LLC 39 Maui First Time vs. Repeat Visitor Arrivals 40 Maui Visitor Profile Percentage Mix The majority of Maui visitors stay in hotels. Two-thirds of Maui visitors are repeat visitors. Condo and Timeshare visitors tend to have longer lengths of stay. Domestic & International U.S. Domestic 70.0% Maui Timeshare All Maui Visitors Maui Hotel Only Maui Condo Only Only 65.0% Total Visitor Days 16,659,327 - - - Total Visitors 2,207,826 898,886 429,181 121,001 One 308,205 - - - 60.0% Two 1,031,357 - - - Three or more 868,264 - - - 55.0% Avg Party Size 2.13 - - - First-Time 798,362 377,281 104,536 - Repeat 1,409,464 521,582 324,645 - 50.0% Average # of Trips 4.59 - - - (1) Average Length of Stay 10.32 8.92 10.88 10.00 45.0% Purpose of Trip: Pleasure 1,940,829 772,390 403,105 117,564 …Honeymoon/Get Married 207,040 114,289 20,638 5,925 40.0% MC&I 158,931 107,430 7,920 1,670 .....Convention/Conf. 88,404 57,441 5,316 956 35.0% .....Corp. Meetings 30,998 21,558 1,795 498 .....Incentive 47,767 34,717 962 284 30.0% Other Business 63,661 31,072 10,126 1,295 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Visit Friends/Relatives 130,132 18,328 15,306 2,460 Government/Military 10,088 3,123 511 71 First Time 42.5% 43.6% 42.0% 40.1% 40.9% 40.9% 38.3% 37.0% 36.4% 36.2% Attend School 3,751 575 232 35 Repeat 57.5% 56.4% 58.0% 59.9% 59.1% 59.1% 61.7% 63.0% 63.6% 63.8% Sport Events 26,132 10,794 4,148 277

(1) Average length of stay surveys total stay in Hawaii, which may include multi-islands. Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT

41 42 Maui Visitor Income Profile Maui Visitor Income Profile

Maui visitors are affluent travelers. Maui visitors are affluent travelers.

Income Level 2001 2002 2003 2004 58.0% Under $15,000 0.2% 0.7% 1.1% 0.6% 56.0% $15,000 - $25,000 1.0% 2.3% 1.5% 2.7% 54.0% $25,000 - $30,000 1.7% 2.1% 1.4% 1.6% 52.0% $30,000 - $35,000 1.3% 2.9% 3.3% 2.3% $35,000 - $40,000 2.4% 3.1% 1.6% 2.1% 50.0% $40,000 - $45,000 2.6% 3.8% 3.0% 2.6% 48.0%

$45,000 - $50,000 4.0% 3.2% 2.9% 3.6% 46.0%

$50,000 - $70,000 17.8% 14.5% 14.2% 13.8% Percentage of Total U.S. Visitors 44.0%

$70,000 - $100,000 25.6% 21.4% 22.0% 23.7% 42.0% $100,000 - $125,000 16.4% 13.1% 16.1% 15.7% 40.0% 2001 2002 2003 2004 $125,000 - $150,000 7.6% 9.5% 8.1% 8.8% Under $100,000 56.6% 54.0% 51.0% 53.0% $150,000 or more 19.4% 23.3% 24.8% 22.5% $100,000 or more 43.4% 45.9% 49.0% 47.0%

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT 43 44 Maui Visitor Income Level by Accommodations Maui Visitor Income Level

Timeshare visitors have the largest percentage of visitors with incomes over $150,000. Timeshare visitors have the largest percentage of visitors with incomes over $70,000.

90.0% Hotel Condo Timeshare 35.0% Hotel Condo Timeshare 83.9% 80.0% 30.0% 71.9% 68.7% 70.0%

25.0% 60.0%

20.0% 50.0%

15.0% 40.0% 31.3% 30.0% 28.1% 10.0%

20.0% 16.1% 5.0% 10.0%

0.0% 0.0% up to $15K to $25K to $30K to $35K to $40K to $45K to $50K to $70K to $100K $125K $150K Under $70K Over $70K $15K $25K $30K $35K $40K $45K $50K $70K $100K to to or more $125K $150K Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT

45 46 Maui Visitor Income Level Maui Visitor Participation - Sightseeing

Timeshare visitors have the largest percentage of visitors with incomes over $100,000. Nearly all Maui visitors participate in sightseeing. Timeshare visitors reported higher participation in boat tours, submarine rides, and whale watching than other visitors. 70.0% Hotel Condo Timeshare 65.3% (Visiting Maui = 100) Hotel Condo Timeshare 60.0% 56.3%

50.6% All Sightseeing 90.2 91.4 92.1 49.4% 50.0% 43.7% - Helicopter/airplane 8.9 8.4 6.5

40.0% 34.7% - Boat tour/submarine ride/whale watching 34.7 38.6 41.3

30.0% - Tour bus 15.3 5.9 5.9 - Private limo/van tour 7.2 5.8 4.2 20.0% - Self-guided 68.6 81.2 79.4 10.0%

0.0% Under $100K Over $100K

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT 47 48 Maui Visitor Participation - Recreation Maui Visitor Participation - Entertainment

Nearly all Maui visitors participate in recreation activities. Timeshare visitors are less likely to go to beach or Entertainment was about equally important to hotel, condo, and timeshare visitors. Timeshare visitors reported go backpacking/hiking. higher participation in fine dining than other visitors, but lower tendency to go to a night club/bar/karaoke.. Hotel Condo Timeshare

All Recreation 89.3 95.1 90.3 Hotel Condo Timeshare

- Swimming/sunbathing/beach 81.5 88.7 79.7 All Entertainment 83.3 82.8 81.3 - Sports event or tournament 1.9 2.7 2.3 - Surfing/body boarding 20.1 34.5 16.4 - Lunch/sunset/dinner/evening cruise 31.2 28.7 30.0 - Snorkeling/scuba 46.8 65.5 54.7 - Lounge act/stage show 29.6 29.6 30.3 - Jet skiing/parasailing/windsurfing 5.8 6.9 7.8 - Golf 16.4 20.5 14.1 - Nightclub/bar/karaoke 12.6 13.8 6.5 - Running/jogging 34.4 37.1 35.4 -Gym/health spa 19.2 10.9 20.5 - Fine dining 69.4 64.4 71.2 - Backpacking/hiking 11.7 16.6 4.4

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT

49 50 Maui Visitor Participation - Shopping Maui Visitor Participation - Culture

All visitors shop. Condo and timeshare visitors have a higher tendency than hotel visitors to shop at Condo and timeshare visitors have a higher tendency than hotel visitors to participate in cultural events. This is discount/outlet stores, supermarkets, and convenience stores, but the percentage of hotel visitors purchasing likely due to their higher average length of stay, which allows condo and timeshare visitors to experience from these sources area also high. Condo and timeshare visitors primarily shop within the greater Maui more of Maui. community, while hotel visitors tend to shop at the hotels. Hotel Condo Timeshare Hotel Condo Timeshare

All Shopping 92.12 97.81 96.10 All Culture 69.4 75.0 74.3 - Department stores 34.2 45.1 42.1 - Historic sites 41.5 45.9 37.5 - Designer boutiques 45.8 51.2 45.8 - Museum/art gallery 26.0 30.6 32.8 - Hotel stores 58.1 33.7 41.9 -Swap meet 12.0 28.9 23.5 -Luau 39.4 44.1 42.4 - Discount/outlet stores 30.7 46.5 41.8 - Craft fair 16.3 22.2 18.9

- Supermarkets 52.6 86.5 81.5 -Festival 2.5 5.2 3.5 - Convenience stores 50.0 62.0 65.5 - Duty free 4.9 4.1 1.4

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT 51 Maui Visitor Participation - Transportation

Condo and timeshare visitors are most likely to rent cars.

Hotel Condo Timeshare

All Transportation 90.7 94.8 94.8

-Trolley 3.8 1.1 2.2

- Public bus 6.6 2.4 4.0

- Taxi/limo 17.0 6.2 4.4

- Rental car 78.3 92.8 92.8

Draft – For Discussion Purposes Only Source: State of Hawaii DBEDT 1

Appendix C

Timeshare Industry Overview 2 Table of Contents

¾ Visitor Plant Inventory 3 ¾ Maui Visitor Characteristics 9 3 Percentage Share of Total Maui Timeshare 4 Maui Timeshare Inventory by Region Inventory by Region Timeshare units in Maui County are concentrated in Lahaina/Kaanapali and Kihei. Since 1996, the number of Timeshare units in Maui County are concentrated in Lahaina and Kihei. A small number of units are located on units in West Maui have increased more rapidly than those in Kihei, as a result of large, purpose-built projects Molokai. developed by international hotel brands. 1,200 80.0%

70.0% 993 1,000 60.0%

50.0% 800 40.0% 680 30.0% 600 519 # Units 20.0%

400 370 10.0% 293 275 0.0%

200 -10.0% 1996 2000 2004 Kihei 42.2% 29.9% 34.2% 777 - Lahaina 56.7% 69.4% 65.4% 1996 2000 2004 Molokai 1.1% 0.7% 0.5%

Kihei Lahaina Molokai Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT

Maui Visitor Accommodations Inventory Growth 5 6 by Accommodation Type Maui Timeshare Additions 2000-2005 Condo hotels accounted for most of the growth in visitor units. Less than half of the growth in timeshare units were from conversions.

800 Source of Addition Total DBEDT Timeshare Property 600 Property Units in Conversion New Timeshare Properties Type 2000 Expansion Conversion New Build Units 2005

400 Embassy Vacation Resort Maui Other 157 11 168 200 Kahana Beach Resort Other 23 59 82 Maui Marriott Resort & - # of Units of # Ocean Club Hotel 311 311

Westin Kaanapali (200) Timeshare 505 505 Ocean Resort

(400) Worldmark at Kihei Timeshare 200 200 Total 180 70 311 705 1,266 (600) 1997 1998 1999 2000 2001 2002 2003 2004 Hotel 595 (221) 14 (46) (470) 14 (34) (91) Condo/Hotel (312) (140) 82 (525) 21 (441) 541 (11) Timeshare 67 166 (100) 195 383 72 37 47 Other 378 293 (37) 37 30 113 42 (38) Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT, industry interviews 7 8 Maui Condo Conversions 2000-2005 Maui Planned Lodging Developments

There was one condo conversion during 2000 – 2005. There are many new visitor units planned for Maui.

Hotels # rooms Type of Addition

Kahului Airport Hotel 140 New build

Maui Palms Redevelopment 136 n/a Property Type # Rooms Type of # Converted Hotel Room Timeshare # rooms Type of Addition Property Pre- Pre- Addition Condo Units Reduction Conversion Conversion Embassy Suites Kaanapali n/a Conversion expansion Hyatt Regency Maui 120 New build Ohana Maui New Hotel 354 280 74 Islander Conversion Kaanapali Ocean Resort (Starwood) 280 New build Maui Marriott Ocean Club Sequel 143 New Build Westin Kaanapali Ocean Resort Villas Expansion 258 New build expansion Maui Lu Resort 388 Redevelopment

Condomium # rooms Type of Addition Honua Kai Project 628 Hotel New build Units 72 Townhouses Source: State of Hawaii DBEDT, industry interviews Source: State of Hawaii DBEDT, industry interviews

9 Maui Visitor Income Profile: Timeshare Owners 10 Maui Timeshare Owner Income Profile vs. Overall U.S. Visitors

The majority of timeshare owners on Maui have an annual income of $100,000 or more. The majority of timeshare owners on Maui have an annual income of $100,000 or more. In comparison to Maui’s domestic visitor income profile, Maui’s timeshare owners tends to have a higher income profile than the Maui U.S. visitors. 35.0% 35.0%

29.9% 29.9% 30.0% 30.0%

25.2% Maui Timeshare Owners 25.2% 25.0% 25.0% 23.7%

Overall Maui U.S. Visitors 22.5%

20.0% 20.0% 18.6% 18.6% 15.7%

15.0% 15.0% 13.8%

10.2% 9.1% 10.2% 9.1%

10.0% 10.0% 8.8%

5.0% 5.0% 3.6%

2.4% 2.7% 2.6%

2.2% 2.4% 2.3% 2.2% 2.1%

1.0% 1.1% 1.6% 1.1% 1.0%

0.3% 0.6%

0.0% 0.0% 0.3% 0.0% 0.0% 0.0% 0.0% <$125K <$150K <$125K <$150K $100K to $125K to $100K to $125K to up to $15K up to $15K $150K or more $150K or $150K or more $150K or $15K to <$25K $25K to <$30K $30K to <$35K $35K to <$40K $40K to <$45K $45K to <$50K $50K to <$70K $15K to <$25K $25K to <$30K $30K to <$35K $35K to <$40K $40K to <$45K $45K to <$50K $50K to <$70K $70K to <$100K $70K to <$100K Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT 1

Appendix D

Economic Impact 2 Table of Contents

¾ Population 3 ¾ Employment 13 ¾ Visitor Expenditures 23 3 4 Population by County Per Capital Income by County

The overall population of Hawaii has been growing steadily from 1990 – 2005. Maui County’s population has The per capita income for all islands has been growing from 1992 – 2003. Maui County’s per capita income been growing at am average rate of 2.8% per year. has been growing at am average rate of 2.4% per year.

35,000

1,400,000 33,000 1,262,840 1,248,755 1,234,514 1,222,011 1,215,233 1,211,640 1,212,109 1,210,300 1,203,755 1,196,854 1,187,536 1,172,838 1,158,613

1,200,000 1,136,754 31,000 1,113,491 1,094,588 1,079,827 1,067,917 1,051,762 1,039,698 1,027,922 1,012,717 993,780

967,710 29,000 978,195 1,000,000 27,000 800,000 25,000

600,000 23,000

21,000 400,000 19,000 200,000 17,000

- 15,000 5 6 7 8 4 5 6 7 3 4 83 84 93 02 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 992 001 1980 1981 1982 19 19 198 198 198 198 1989 1990 1991 1 19 199 199 199 199 1998 1999 2000 2 20 200 200 Honolulu Maui/Kalawao Hawaii Kauai Honolulu Maui/Kalawao Hawaii Kauai

Source: Maui County Data Book Source: Maui County Data Book

Maui County Visitor Census vs. Resident 5 Kauai Visitor Census vs. Resident Population 6 Population Growth Growth The virtual population of Maui rose significantly since 1995, as both the number of residents and average daily census increased 20,000 63,000 46,000 140,000 18,000 62,000 45,000 135,000 16,000 61,000

44,000 14,000 130,000 60,000

43,000 12,000 59,000 125,000 10,000 42,000 58,000 # Visitors

8,000 # Residents # Visitors 120,000 # Residents 41,000 57,000 6,000 115,000 56,000 40,000 4,000

55,000 39,000 110,000 2,000

- 54,000 38,000 105,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Visitor Average Daily Census Maui County Resident Population Visitor Average Daily Census Maui County Resident Population

Source: State of Hawaii DBEDT Source: State of Hawaii Data Book Maui County Building Permits Issued vs. 7 Maui County Population vs. Number of Drivers 8 Estimated Value License Issued

3,500 $500,000

$450,000 140,000 105,000

3,000 100,916 99,716 $400,000 100,000 97,045 135,000 2,500 $350,000 93,595 95,000 90,964 $300,000 2,000 130,000 87,550 90,000 84,980 $250,000 85,000 82,217

1,500 125,000 80,988 # of Permits $200,000 80,000 138,347

1,000 $150,000 135,734 133,320

Estimated Value (in $1,000) (in Value Estimated 120,000 75,000 DriversIssued Licences 131,684 Population in Thousands

$100,000 128,241 70,000 126,160

500 124,648 115,000 $50,000 122,772 120,689 65,000 - $- 110,000 60,000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1996 1997 1998 1999 2000 2001 2002 2003 2004

# Permits Issued Estimated Value Maui County Population Maui Drivers Licences

Source: Maui County Data Book Source: Maui County Data Book

9 10 Maui County Population vs. Vehicle Registration Maui County Population vs. Housing Costs

.3 140,000 59 600.0 140,000 160,000 5

.2 135,000 438 500.0 135,000 150,000 .9 6 37 130,000 400.0 130,000 140,000 .1 9 298 6. 27 125,000 .9 .1 300.0 264.3 125,000 130,000 251 255 250.8 138,347 135,734

120,000 133,320 200.0 131,684 120,000 120,000 Population in Thousands 128,241 Population in Thousands Population # Total Vehicle Registrations 126,160 115,000 124,648 100.0 122,772

115,000 110,000 120,689 Median Cost Single Family in Thousands Housing

110,000 0.0

110,000 100,000 1996 1997 1998 1999 2000 2001 2002 2003 2004 1996 1997 1998 1999 2000 2001 2002 2003 2004 Maui County Population Median Cost Single Family Housing Maui County Population # Total Vehicle Registrations Source: Maui County Data Book, University of Source: Maui County Data Book Hawaii Economic Research Organization 11 12 Maui County Attractions Attendance Level National, State and County Parks

Attendance at Maui attractions is dominated by visitors to Haleakala National Park. Maui Ocean Center is the second most popular attraction for the county. 2000 2001 2002 2003 2004

3,000,000 Maui Ocean National Parks Center Opened Number of Areas 2 2 2 2 2 2,500,000 Acreage 10 10 10 10 10

2,000,000 Visits 28,991 28,991 39,747 40,747 40,747 State Parks & Historic Sites 1,500,000 Number of Areas 10 10 10 10 9 Acreage 566 566 566 566 566 1,000,000 Visits 1,921 1,747 1,522 1,553 n/a

500,000 County Parks Number of Areas 143 143 150 150 n/a 945,566 945,566 863,241 863,241 724,861 724,861 690,572 690,572 2,550,805 1,000,637 2,432,947 988,279 2,494,565 1,039,088 504,213 504,213 485,661 485,661 479,549 - 479,549 Acreage 1,198 1,198 1,307 1,307 n/a 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Total Total w/o Haleakala National Park Source: Maui County Data Book Source: Maui County Data Book

13 Accommodations Establishments and Payroll 14 # Establishments with Employees on Maui Growth The net number of accommodations establishments and net annual payroll attributable to these establishments From 2000 – 2005, both the number of employers and number of people employed in Maui have increased. have increased from 2000 – 2005 by 11.0 percent and 32.6%, respectively. During this period, Maui visitor average daily census rose by 8.9%, indicating that lodging establishments were fuller during this period. 600 25,000 90 $400,000

0 4 $348,428 80 ,2 ,553 ,352 $350,000 8 9 11 500 2 1 14 3 ,870 3 ,1 20,000 1 $ $ ,534 8 7 1 70 79 1 $288 17,345 $300,000 $262,791 $262, 400 9 9 60 ,83 3 $250,000 13,83 1 15,000 50 300 $200,000 40 81 486 77 10,000 # Employees 73 73 442

# Establishments $150,000 200 422 414 66 65 372 372 30

$100,000 5,000 20 100 10 $50,000

- - 0 $- 2000 2001 2002 2003 2004 2005 2000 2001 2002 2003 2004 2005 # Establishments # Employees # Accommodations Establishments Accommodations Annual Payroll Source: Maui County Data Book Source: Maui County Data Book Food and Beverage Establishments and Payroll 15 Maui County Unemployment vs. # Employed 16 Growth Workers Growth by Industry The number of food and beverage establishments and related payroll for these establishments grew from 2005 – 2005, despite fluctuations in the number of accommodations establishments. This growth corresponds to increases in both the resident population of Maui and average daily census. 450 $140,000

400 4.5% 25,000 $120,000 4.0% 350 20,000 3.5% $100,000 300 3.0% 15,000 250 $80,000 2.5% 2.0% 10,000 200 $60,000

% Unemployment 1.5% Number of Employees 150 1.0% 5,000 $40,000 0.5% 100 0.0% - $20,000 2001 2002 2003 2004 2005 50 Unemployment 4.1% 3.9% 3.7% 3.1% 2.6% Accommodation/Food 17,768 17,534 18,128 17,345 19,553 0 $- Construction 2,122 2,580 2,719 2,804 3,183 2000 2001 2002 2003 2004 2005 Retail 7,836 8,751 9,204 9,352 9,469 Health Care 3,719 4,450 4,236 4,782 4,996 # F&B Establishments F&B Annual Payroll Source: Maui County Data Book Source: Maui County Data Book

17 Maui County Unemployment Trend vs. Average 18 Maui County Visitor Arrivals vs. Unemployment Daily Visitor Census As the average daily census for Maui has grown, the unemployment rate has decreased, indicating that the overall health of Maui’s visitor industry is an important influence on the overall level of employment for Maui. 8.0% 46,000

45,517 7.0% 45,000 8.0% 2,400,000 2,352,120 2,347,002 2 44,510 6.0% 4 44,000 7.0% 2,325,030 2,350,000 43,99 2,304,666 2,304,115 43,85 2,300,000 6.0% 5.0% 43,383 43,000

42,864 2,250,000 42,724 42,742

5.0% 2,207,826 4.0% 42,000 2,196,447 2,200,000 6.7% 6.8% 4.0% 2,139,427 3.0% 6.2% 41,000 2,150,000

2,104,478 5.1% 6.8% 3.0% 6.7% 40,651 % Unemployment 6.2% 2,100,000 2.0% 4.1% 40,000 3.7% 3.9% 3.7% 5.1% 2.0% 3.1% # Visitor Arrivals to MauiCounty

4.1% 2,050,000 3.9% 3.7% 3.7% 1.0% 39,000 3.1% 1.0% 2,000,000

0.0% 38,000 0.0% 1,950,000 1996 1997 1998 1999 2000 2001 2002 2003 2004 1996 1997 1998 1999 2000 2001 2002 2003 2004 Maui Unemployment Maui Visitor Census Source: State of Hawaii DBEDT, Maui County Data Book Source: State of Hawaii DBEDT, Maui County Data Book Maui County Unemployment Trend vs. Average 19 Maui County Unemployment vs. Percentage 20 Daily Timeshare Visitor Census Change in Timeshare Arrivals

Increasing numbers of timeshare visitors do not appear to have a negative impact on employment in Maui.

8.0% 4000

8.0% 30.0% 7.0% 3,353 3500

7.0% 2,985 84 25.0% 6.0% 7 3000 2, 6.0%

52 20.0% 5.0% 2 92 2500 2, 1 5.0% 2,

4.0% 2000 4.0% 15.0%

6.7% 6.8% 6.2% 3.0% 3.0% 1500 % Unemployment 10.0% 5.1% 2.0% 2.0% 4.1% 1000 3.7% 3.9% 3.7% 5.0% 3.1% 1.0% % Change in Visitor Arrivals for Timeshare 1.0% 500 0.0% 0.0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 0.0% 0 Unemployment 6.7% 6.8% 6.2% 5.1% 3.7% 4.1% 3.9% 3.7% 3.1% 1996 1997 1998 1999 2000 2001 2002 2003 2004 % Change in Timeshare Visitor N/A N/A N/A N/A N/A 26.8% 27.0% 7.2% 12.3% Maui Unemployment Timeshare Visitor Census Arrivals

Source: State of Hawaii DBEDT, Maui County Data Book, ARDA Source: State of Hawaii DBEDT, Maui County Data Book

Maui County Unemployment vs. Percentage of 21 Maui County Unemployment vs. Incremental 22 Timeshare Inventory Growth Timeshare Inventory Growth

8.0% 1,600 8.0% 50.0%

7.0% 1,400 7.0% 40.0%

6.0% 1,200 6.0% 30.0%

5.0% 5.0% 1,000 20.0% 4.0% 4.0% 800 10.0%

3.0% % Unemployment 3.0% 600 % Unemployment

0.0% 2.0% 2.0% 400 Timeshare % of Inventory Growth Incremental Timeshare Growth in Units -10.0% 1.0% 1.0% 200

0.0% -20.0% 0.0% - 1997 1998 1999 2000 2001 2002 2003 2004 1996 1997 1998 1999 2000 2001 2002 2003 2004 Unemployment 6.8% 6.2% 5.1% 3.7% 4.1% 3.9% 3.7% 3.1% Unemployment 6.7% 6.8% 6.2% 5.1% 3.7% 4.1% 3.9% 3.7% 3.1% % of Timeshare Inventory Growth 10.3% 23.1% -11.3% 24.8% 39.1% 5.3% 2.6% 3.2% # Timeshare Unit Growth 652 719 885 785 980 1,363 1,435 1,472 1,519

Source: State of Hawaii DBEDT, Maui County Data Book Source: State of Hawaii DBEDT, Maui County Data Book 2004 Total Maui Per Person Per Day Visitor 23 2004 Total Maui Per Person Per Day 24 Expenditures Expenditures: First Time Visitors vs. Repeat

Friend & (per person per day) $300.00 Hotel Condo Timeshare Relative Total Lodging $104.80 $68.97 $30.22 $15.07 $250.00 Total Food & Beverage $49.55 $31.94 $33.51 $23.40

Total Entertainment $24.26 $14.22 $16.38 $6.27 $200.00 Total Transportation $21.52 $17.79 $17.68 $10.41 Total Shopping $30.11 $20.77 $20.65 $19.92 $150.00 All Other $9.51 $10.73 $8.51 $4.02 $100.00 Cruise per person per day $0.14 $0.03 $0.02 $0.03

Unallocated exp in total $0.54 $0.32 $0.34 $0.27 $50.00 Total spending per person per day $240.44 $164.77 $127.31 $79.40 $0.00 Total spending per person per day Hotel Condo Timeshare Friend & Relative without lodging $135.64 $95.80 $97.09 $64.32 First Time $241.81 $165.05 $136.70 $73.05 Repeat $238.55 $164.54 $120.68 $82.50 Note: Expenditure data presented from page 23 through page 47 reflect per person per day expenditures. “Total” expenditures represent the expenditures for all components in each category. Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT

25 2004 Maui First Time Visitors Detail F&B 26 2004 Maui First Time Visitor Expenditures Expenditures

(per person per day) Friend & $60.00 (First Time Visitors, PPPD) Hotel Condo Timeshare Relative

Total Lodging $102.01 $64.14 $33.42 $13.51 $50.00 Total Food & Beverage $51.20 $33.97 $32.78 $22.59 $40.00 Total Entertainment $29.15 $23.12 $21.47 $9.04 Total Transportation $20.26 $17.74 $16.73 $9.10 $30.00 Total Shopping $29.53 $21.35 $19.63 $15.05 $20.00 All Other $9.17 $4.09 $12.47 $2.71 Cruise per person per day $0.13 $0.06 $0.06 $1.03 $10.00

Unallocated exp in total $0.37 $0.58 $0.14 $0.02 $- Total Food & Food at Dinner Shows Groceries Unallocated F&B Total spending per person per day $241.81 $165.05 $136.70 $73.05 Beverage Restaurants Total spending per person per day Hotel $51.20 $31.69 $5.58 $3.72 $10.21 without lodging $139.81 $100.91 $103.28 $59.55 Condo $33.97 $16.56 $5.27 $6.45 $5.70 Timeshare $32.78 $17.08 $5.38 $5.89 $4.43 Friend & Relative $22.59 $13.82 $1.57 $4.29 $2.92

Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT 2004 Maui First Time Visitors Detail 27 2004 Maui First Time Visitors Detail 28 Entertainment Expenditures Transportation Expenditures

(per person per day) (per person per day) $25.00 $35.00

$30.00 $20.00

$25.00 $15.00 $20.00

$15.00 $10.00

$10.00 $5.00 $5.00

$- $- Other Total Ground Other Unallocated Attractions/ Unallocated Rental vehicles Total Entertainment Recreation entertainment & Transportation transportation transportation transportation entertainment entertainment tours Hotel $20.26 $0.87 $15.81 $1.74 $1.83 Hotel $29.15 $6.28 $7.41 $8.20 $7.26 Condo $17.74 $0.50 $12.67 $1.97 $2.61 Condo $23.12 $5.08 $6.77 $5.65 $5.62 Timeshare $16.73 $0.59 $12.85 $1.68 $1.60 Timeshare $21.47 $5.61 $5.50 $5.72 $4.64 Friend & Relative $9.10 $0.69 $5.71 $1.28 $1.42 Friend & Relative $9.04 $2.36 $2.94 $1.75 $2.00 Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT

2004 Maui First Time Visitors Detail Shopping 29 30 Expenditures 2004 Maui Repeat Visitor Expenditures

(per person per day)

$35.00 Friend & $30.00 (Repeat Visitors, PPPD) Hotel Condo Timeshare Relative Total Lodging $113.09 $69.62 $25.61 $14.00 $25.00 Total Food & Beverage $47.91 $34.90 $36.56 $27.62 $20.00 Total Entertainment $19.35 $16.16 $16.14 $8.00 $15.00 Total Transportation $18.08 $15.83 $16.33 $9.93 $10.00 Total Shopping $28.52 $20.98 $21.55 $17.78

$5.00 All Other $11.33 $6.65 $4.44 $4.95 Cruise per person per day $0.15 $0.03 $0.00 $0.00 $- Total Fashion Jewelry / Cosmetics/ Leather Hawaii food Unallocated Souvenirs Unallocated exp in total $0.11 $0.36 $0.06 $0.22 Shopping and clothing watch perfumes goods products shopping Total spending per person per day $238.55 $164.54 $120.68 $82.50 Hotel $29.53 $8.71 $5.99 $0.30 $0.47 $1.90 $6.69 $5.47 Condo $21.35 $7.09 $3.09 $0.23 $0.25 $1.84 $5.08 $3.77 Total spending per person per day Timeshare $19.63 $5.81 $2.77 $0.18 $0.12 $1.74 $4.62 $4.38 without lodging $125.46 $94.91 $95.07 $68.50 Friend & Relative $15.05 $4.62 $2.10 $0.22 $0.11 $1.37 $4.61 $2.02

Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT 2004 Maui Repeat Visitors Detail F&B 31 2004 Maui Repeat Visitors Detail Entertainment 32 Expenditures Expenditures

(per person per day) (per person per day) $60.00 $25.00

$50.00 $20.00

$40.00 $15.00 $30.00

$10.00 $20.00

$10.00 $5.00

$- $- Total Food & Food at Attractions/ Other entertainment Unallocated Dinner Shows Groceries Unallocated F&B Total Entertainment Recreation Beverage Restaurants entertainment & tours entertainment Hotel $47.91 $28.87 $3.22 $3.77 $12.05 Hotel $19.35 $3.11 $7.35 $4.42 $4.47 Condo $34.90 $17.94 $3.35 $7.77 $5.85 Condo $16.16 $3.17 $6.91 $2.95 $3.13 Timeshare $36.56 $19.45 $3.72 $6.47 $6.93 Timeshare $16.14 $2.66 $6.96 $3.65 $2.87 Friend & Relative $27.62 $15.19 $2.40 $5.30 $4.72 Friend & Relative $8.00 $1.18 $3.77 $1.40 $1.65

Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT

2004 Maui Repeat Visitors Detail Transportation 33 2004 Maui Repeat Visitors Detail Shopping 34 Expenditures Expenditures

(per person per day) (per person per day) $20.00 $30.00

$18.00 $25.00 $16.00

$14.00 $20.00

$12.00 $15.00 $10.00

$8.00 $10.00 $6.00

$4.00 $5.00

$2.00 $- $- Total Fashion Jewelry / Cosmetics/ Leather Hawaii food Unallocated Total Ground Other Unallocated Souvenirs Rental vehicles Shopping and clothing watch perfumes goods products shopping Transportation transportation transportation transportation Hotel $18.08 $0.84 $14.02 $1.22 $2.01 Hotel $28.52 $9.37 $5.94 $0.30 $0.48 $1.79 $4.96 $5.68 Condo $15.83 $0.40 $12.89 $1.14 $1.40 Condo $20.98 $6.94 $3.40 $0.28 $0.35 $1.70 $4.49 $3.83 Timeshare $16.33 $0.48 $12.64 $1.58 $1.63 Timeshare $21.55 $6.42 $4.78 $0.32 $0.31 $2.17 $4.29 $3.26 Friend & Relative $9.93 $0.48 $7.06 $1.37 $1.02 Friend & Relative $17.78 $7.07 $2.32 $0.35 $0.08 $2.02 $2.84 $3.10

Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT 2004 Total Maui Per Person Per Day Visitor 35 36 Expenditures by Type of Accommodations 2004 Maui Expenditures by Accommodation Friend & (per person per day) Hotel Condo Timeshare Relative $120.00 Total Food & Beverage $49.55 $31.94 $33.51 $23.40

$100.00 Food at Restaurants $30.12 $16.04 $17.64 $13.34 Dinner Shows $4.58 $3.91 $4.21 $1.89 $80.00 Groceries $4.11 $6.66 $5.95 $4.46 Unallocated F&B $10.75 $5.33 $5.70 $3.71 $60.00 Total Entertainment $24.26 $14.22 $16.38 $6.27 $40.00 Attractions/entertainment $4.78 $2.98 $3.45 $1.19 Recreation $7.31 $5.03 $5.69 $2.62 $20.00 Other entertainment & tours $6.30 $3.09 $4.03 $1.15

$0.00 Unallocated entertainment $5.87 $3.13 $3.21 $1.31 Total Food & Total Total Total Lodging Total Shopping All Other Beverage Entertainment Transportation Total Transportation $21.52 $17.79 $17.68 $10.41 Hotel $104.80 $49.55 $24.26 $21.52 $30.11 $9.51 Ground transportation $0.91 $0.47 $0.57 $0.60 Condo $68.97 $31.94 $14.22 $17.79 $20.77 $10.73 Timeshare $30.22 $33.51 $16.38 $17.68 $20.65 $8.51 Rental vehicles $16.59 $13.66 $13.63 $7.15 Friend & Relative $15.07 $23.40 $6.27 $10.41 $19.92 $4.02 Other transportation $1.70 $1.66 $1.74 $1.41 Unallocated transportation $2.33 $2.00 $1.75 $1.25 Source: State of Hawaii DBEDT

37 Maui U.S. West Visitor Expenditures by Type of 38 2004 Maui Expenditures by Accommodation Accommodations

Hotel visitors on Maui tend to spend more across all categories. Condo/hotel and Timeshare share similar Friend & expenditure patterns for all categories except lodging costs as timeshare visitors pre-pay for lodging with the Hotel Condo Timeshare Relative purchase of timeshare intervals. $120.00 Total Shopping $30.11 $20.77 $20.65 $19.92

Fashion and clothing $9.28 $6.84 $6.12 $7.30 $100.00 Jewelry / watch $6.13 $3.21 $3.92 $2.71 Cosmetics/perfumes $0.31 $0.25 $0.26 $0.35 $80.00 Leather goods $0.48 $0.29 $0.23 $0.10 $60.00 Hawaii food products $1.97 $1.75 $1.98 $2.14 Souvenirs $6.22 $4.64 $4.45 $4.10 $40.00 Unallocated Shopping $5.72 $3.79 $3.70 $3.22 $20.00 All Other $9.51 $10.73 $8.51 $4.02

Cruise per person per day $0.14 $0.03 $0.02 $0.03 $- Total Food & Total Total Total Lodging Total Shopping All Other Unallocated exp in total $0.54 $0.32 $0.34 $0.27 Beverage Entertainment Transportation Total spending per person per day $240.44 $164.77 $127.31 $79.40 Hotel $107.15 $46.86 $19.86 $21.83 $27.48 $10.95 Condo/Hotel $67.47 $30.87 $12.85 $17.00 $19.65 $6.95 Total spending without lodging $135.64 $95.80 $97.09 $64.32 Timeshare $28.54 $31.67 $15.31 $17.40 $19.10 $7.24 Friend & Relative $13.99 $23.51 $6.45 $10.51 $18.84 $4.37 Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT Maui U.S. West Non-Lodging Visitor 39 Maui U.S. East Visitor Expenditures by Type of 40 Expenditures by Type of Accommodations Accommodations U.S. East visitors tend to spend more than U.S. West visitors overall. U.S. East timeshare visitors tend to (per person per day) spend slightly more than condo/hotel visitors on food and beverage, entertainment, and shopping. Condo/hotel visitors tend to spend slightly more on transportation and other expenditures. Overall, there is $50.00 not a significant spending difference between timeshare visitors and condo/hotel visitors. $45.00 $120.00

$40.00 $100.00 $35.00

$30.00 $80.00 $25.00

$20.00 $60.00

$15.00 $40.00 $10.00

$5.00 $20.00 $- Total Food & Total Entertainment Total Transportation Total Shopping All Other Beverage $- Total Food & Total Total $46.86 $19.86 $21.83 $27.48 $10.95 Total Lodging Total Shopping All Other Hotel Beverage Entertainment Transportation Condo/Hotel $30.87 $12.85 $17.00 $19.65 $6.95 Hotel $102.57 $52.10 $28.41 $21.24 $32.61 $8.14 Timeshare $31.67 $15.31 $17.40 $19.10 $7.24 Condo/Hotel $71.78 $33.97 $16.80 $19.28 $22.86 $17.82 Friend & Relative $23.51 $6.45 $10.51 $18.84 $4.37 Timeshare $32.87 $36.39 $18.06 $18.12 $23.10 $10.49 Friend & Relative $17.19 $23.17 $5.93 $10.21 $22.06 $3.33 Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT

Maui U.S. East Non-Lodging Visitor 41 2004 Maui Domestic Visitor Non-Lodging 42 Expenditures by Type of Accommodations Expenditures Per Person Per Day

(per person per day) Visitors staying in hotels tend to spend more than visitors staying in condo/hotels, timeshares, or with friends and relatives. $60.00

$50.00 $160.00

$140.00 $40.00

$120.00 $30.00 $100.00

$20.00 $80.00

$10.00 $60.00

$40.00

$- Spending per person per day in $ Total Food & Total Entertainment Total Transportation Total Shopping All Other Beverage $20.00 Hotel $52.10 $28.41 $21.24 $32.61 $8.14 Condo/Hotel $33.97 $16.80 $19.28 $22.86 $17.82 $- Hotel Condo/Hotel Timeshare Friend & Relative Timeshare $36.39 $18.06 $18.12 $23.10 $10.49 $127.82 $87.60 $91.12 $64.05 Friend & Relative $23.17 $5.93 $10.21 $22.06 $3.33 U.S. West U.S. East $143.03 $111.21 $106.49 $64.86

Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT 2004 Maui Non-Lodging Visitor Expenditures by43 2004 Maui Visitor Expenditures by Hotel Users: 44 Type of Accommodations First Time vs. Repeat

(per person per day) (per person per day)

$60.00 $120.00

$50.00 $100.00

$40.00 $80.00

$30.00 $60.00

$20.00 $40.00

$10.00 $20.00

$0.00 Total Food & Total Entertainment Total Transportation Total Shopping All Other $0.00 Beverage Total Food & Total Total Total Lodging Total Shopping All Other Hotel $49.55 $24.26 $21.52 $30.11 $9.51 Beverage Entertainment Transportation Condo $31.94 $14.22 $17.79 $20.77 $10.73 First Time Hotel Visitors $102.01 $51.20 $29.15 $20.26 $29.53 $9.17 Timeshare $33.51 $16.38 $17.68 $20.65 $8.51 Repeat Hotel Visitors $113.09 $47.91 $19.35 $18.08 $28.52 $11.33 Friend & Relative $23.40 $6.27 $10.41 $19.92 $4.02

Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT

2004 Maui Visitor Expenditures by Condo Users: 45 2004 Maui Visitor Expenditures by Timeshare 46 First Time vs. Repeat Users: First Time vs. Repeat

(per person per day) (per person per day)

$80.00 $40.00

$70.00 $35.00

$60.00 $30.00

$50.00 $25.00

$40.00 $20.00

$30.00 $15.00

$20.00 $10.00

$10.00 $5.00

$0.00 $0.00 Total Food & Total Total Total Food & Total Total Total Lodging Total Shopping All Other Total Lodging Total Shopping All Other Beverage Entertainment Transportation Beverage Entertainment Transportation First Time Condo Visitors $64.14 $33.97 $23.12 $17.74 $21.35 $4.09 First Time Timesharel Visitors $33.42 $32.78 $21.47 $16.73 $19.63 $12.47 Repeat Condo Visitors $69.62 $34.90 $16.16 $15.83 $20.98 $6.65 Repeat Timeshare Visitors $25.61 $36.56 $16.14 $16.33 $21.55 $4.44

Source: State of Hawaii DBEDT Source: State of Hawaii DBEDT 2004 Maui Visitor Expenditures by Friends and 47 48 Maui County Unemployment Rates by Island Relatives Visitors: First Time vs. Repeat

(per person per day) 16.0% $30.00

14.0% $25.00 12.0%

$20.00 10.0%

$15.00 8.0%

$10.00 6.0%

4.0% $5.00

2.0% $0.00 Total Total Food & Total Total Total Lodging Transportatio All Other 0.0% Beverage Entertainment Shopping 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 n Maui Island 6.7% 6.4% 6.5% 5.9% 4.8% 3.3% 3.8% 3.8% 3.8% 2.8% 2.6% First Time Friends and Relatives Visitors $13.51 $22.59 $9.04 $9.10 $15.05 $2.71 Molokai 10.9% 14.8% 13.6% 13.6% 13.1% 13.3% 11.9% 7.4% 7.4% 10.7% 7.8% Repeat Friends and Relatives Visitors $14.00 $27.62 $8.00 $9.93 $17.78 $4.95 Lanai 5.0% 5.3% 5.3% 3.1% 3.9% 3.0% 3.9% 4.2% 4.2% 2.6% 1.5%

Source: State of Hawaii DBEDT Source: Maui Data Book, Department of Labor and Industrial Relations

49 50 Maui Island Job Count by Industry Kauai Unemployment Rate

12.0% 12,000

10.0% 10,000

8,000 8.0%

6,000 6.0% 11.3% 10.7%

4,000 10.2%

4.0% 9.0% 6.9%

2,000 6.5% 5.1% 4.6% 2.0% 4.6%

- 3.3%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2.7% Arts, Entertainment & Recreation 1,800 1,600 1,600 1,700 1,800 1,900 1,900 1,850 1,850 1,950 1,900 0.0% Accommodation 10,300 10,100 10,000 9,900 10,200 10,600 10,700 10,100 10,350 10,850 11,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Food & Drinking Places 5,600 5,500 5,700 6,100 6,200 6,800 7,100 7,100 7,200 7,550 7,700 Full-Service Restaurants 3,700 4,000 4,000 4,200 4,400 4,800 4,950 4,950 4,900 5,050 5,200 Source: Maui Data Book, Department of Labor and Industrial Relations Source: Maui Data Book, Department of Labor and Industrial Relations 51 Percentage Change in Maui County Population vs.52 Kauai Job Count by Industry Total Maui Visitor Daily Census

4,500 6.0%

4,000 4.0% 3,500

2.0% 3,000

2,500 0.0%

2,000 -2.0% 1,500

1,000 -4.0%

500 -6.0% - 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Arts, Entertainment & Recreation 900 700 700 800 800 800 850 900 950 1,000 1,050 -8.0% 2000 2001 2002 2003 2004 Accommodation 3,100 3,300 3,400 3,600 3,800 3,900 3,800 3,600 3,800 4,000 4,100 Food & Drinking Places 2,600 2,700 2,700 2,800 2,900 3,100 3,050 3,050 3,200 3,400 3,450 % Change in Population 2.2% 2.2% 1.3% 1.9% 1.8% Full-Service Restaurants 1,600 1,800 1,900 1,900 2,000 2,200 2,150 2,100 2,300 2,400 2,400 % Change in Total Maui ADC -0.3% -7.3% 5.1% 4.1% 2.3%

Source: Maui Data Book, Department of Labor and Industrial Relations Source: Maui Data Book, State of Hawaii DBEDT

Incremental Change in Maui County Population 53 Percentage Change in Maui County Population vs.54 vs. Total Maui Visitor Daily Census Hotel Visitor Daily Census

4,000 10.0%

8.0% 3,000 6.0% 2,000 4.0% 1,000 2.0%

- 0.0%

-2.0% (1,000) -4.0% (2,000) -6.0% (3,000) -8.0%

(4,000) -10.0% 2000 2001 2002 2003 2004 2000 2001 2002 2003 2004 Change in Population 2,771 2,816 1,689 2,490 2,421 % Change Population 2.2% 2.2% 1.3% 1.9% 1.8% Change in Total Maui ADC (138) (3,203) 2,091 1,768 1,007 % Change Hotel ADC -3.7% -8.3% 6.4% 0.9% 7.8%

Source: Maui Data Book, State of Hawaii DBEDT Source: Maui Data Book, State of Hawaii DBEDT Incremental Change in Maui County Population 55 Percentage Change in Maui County Population vs.56 vs. Hotel Visitor Daily Census Condo/Hotel Visitor Daily Census

4,000 15.0%

3,000 10.0%

2,000 5.0%

1,000 0.0% -

-5.0% (1,000)

-10.0% (2,000)

(3,000) -15.0% 2000 2001 2002 2003 2004 2000 2001 2002 2003 2004 Change in Population 2,771 2,816 1,689 2,490 2,421 % Change Population 2.2% 2.2% 1.3% 1.9% 1.8% Change in Hotel ADC (844) (1,827) 1,287 201 1,708 % Change Condo ADC -5.0% -9.4% 5.3% 11.3% 2.0%

Source: Maui Data Book, State of Hawaii DBEDT Source: Maui Data Book, State of Hawaii DBEDT

Incremental Change in Maui County Population 57 Percentage Change in Maui County Population vs.58 vs. Condo/Hotel Visitor Daily Census Timeshare Visitor Daily Census

3,500 30.0%

3,000 25.0% 2,500

2,000 20.0% 1,500 15.0% 1,000

500 10.0% -

(500) 5.0%

(1,000) 0.0% (1,500)

(2,000) -5.0% 2000 2001 2002 2003 2004 2000 2001 2002 2003 2004 Change in Population 2,771 2,816 1,689 2,490 2,421 % Change Population 2.2% 2.2% 1.3% 1.9% 1.8% Change in Condo ADC (840) (1,517) 769 1,738 348 % Change Timeshare ADC -2.7% 27.0% 7.2% 12.3%

Source: Maui Data Book, State of Hawaii DBEDT Source: Maui Data Book, State of Hawaii DBEDT, ARDA Incremental Change in Maui County Population 59 60 vs. Timeshare Visitor Daily Census County Park Density Comparison

3,000

2,500 Square Sq. Ft. %∆ Sq. Ft. Acre Footage Population ADC /Resident /Visitor %∆ 2,000 2000 1,198 52,184,880 128,931 43,854 405 1,190 1,500 2001 1,198 52,184,880 131,747 40,651 396 -2.1% 1,284 7.9% 2002 1,307 56,932,920 133,436 42,742 427 7.7% 1,332 3.8% 1,000 2003 1,307 56,932,920 135,926 44,510 419 -1.8% 1,279 -4.0% 500

-

(500) 2000 2001 2002 2003 2004 Change in Population 2,771 2,816 1,689 2,490 2,421 Change in Timeshare ADC 2,252 (60) 592 200 368

Source: Maui Data Book, State of Hawaii DBEDT, ARDA Source: Maui Data Book

2004 Maui U.S. Visitors Annual Expenditure by 61 Accommodations

Hotel Condo Timeshare

Total Maui U.S. visitors spending $240.44 $164.77 $127.31 per person per day Total spending per person per day $135.64 $95.80 $97.09 without lodging Average Length of Stay 6.34 10.18 6.6 Visitor Arrivals 1,351,104 625,163 185,439 Total annual expenditure $2,059,605,100 $1,048,615,717 $155,809,458 Total annual expenditure w/o $1,161,909,751 $609,707,447 $118,823,738 Lodging

Source: State of Hawaii DBEDT, ARDA 1

Appendix E

Tax Impact 2 Table of Contents

¾ Timeshare Policy 3 ¾ Real Property Tax 7 ¾ Maui Tax Revenues „ General Excise Tax 13 „ Transient Accommodations Tax/Transient Occupancy Tax 14 ¾ Comparison of Pre- and Post-Conversion Taxes 17 ¾ Estimated 2010 Tax Collections 18 3 Timeshare Licenses by Island and Ownership 4 Hawaii Timeshare Regulation Type

There are 63 timeshare licenses in Maui County, all of which are located on the island of Maui. ¾ Hawaii Revised Statutes Chapter 514E – Timesharing Plans „ 514-E1 Definition – less than 60 days „ 514-E4 County Authority – allows counties to limit timeshare ¾ Hawaii Admin Rules Section 16-106 – Timesharing Corporation Location Individual Partnership Sole Owner Other Total „ Timeshare Licensing: DCCA „ License Type: Board 910 Oahu 7 26 2 35 ¾ Timeshare Plan Registration Requirements Hawaii 1 21 22 „ Nature of Timeshare Plan • Right to use vs Ownership Maui 2 60 1 63 • Number of Units Kauai 48 7 55 • Interests per Unit • Number of Weeks per Interest Molokai 0 „ Location Lanai 0 „ Fees • Application - $750 Mainland 6 4 10 • Registration - $750 • Compliance Resolution Fund - $150 + $200/unit (up to 25) Foreign 0 Other 2 2 Total 10 163 1 13 187

Source: State of Hawaii DCCA

5 6 Timeshare Regulation by County Timeshare Zoning by County

¾ County of Maui Code County Zone Notes „ Chapter 19.37 Maui Hotel Conditional Permit also required ¾ City & County of Honolulu Ordinance Timeshare zone new for FY 2005 Timeshare „ 21-3.80-1 A-2 permitted if within 3,500 feet „ 21-3.100-1 Honolulu Resort of resort district more than 50 acres and part of master plan „ 21-5.640 Apartment A-2 „ 21-9.80.6 As designated on County of Kauai Kauai Resort RR-10 Destination Area maps. ¾ County of Kauai Code Resort RR-20 Prohibited in Residential R-1, R-2, R-4, R-6 „ 8-17 Hawaii Resort Except retreat resort areas ¾ County of Hawaii Code Areas designated by „ 25-1-5 Council

Source: Maui County Code, Honolulu C&C Ordinance, Kauai County Code, Hawaii County Code 7 8 Real Property Tax Rates by County Maui Real Property Tax Rates

Oahu Maui Hawaii Kauai The real property tax rate has been stable since FY 2000 for hotel/resort parcels. In FY 2005, a new designation for timeshare zoning was created and is taxed at a higher rate than hotel/resort parcels. Property Land Building Land Building Land Building Improved Residential 3.75 5.86 5.86 9.10 9.10 4.30 4.00 16.00 14.0 Unimproved Residential 5.72 5.86 5.86 9.85 9.85 14.00 Apartment 3.75 5.86 5.86 9.85 9.85 7.95 6.95 Hotel and Resort 11.37 8.30 8.30 9.85 9.85 7.95 6.95 12.00

Commercial 11.37 6.75 6.75 9.85 9.85 7.95 6.95 10.00 Industrial 11.37 6.75 6.75 9.85 9.85 7.95 6.95 8.48 8.3 8.3 8.3 8.3 8.3 8.3 8.00 Agricultural 8.57 4.93 4.93 9.85 9.85 4.30 6.95

Vacant Agricultural 8.57 ------6.00 Preservation 9.57 ------4.00 Public Service ------

Conservation -- 4.93 4.93 9.85 9.85 4.30 6.95 2.00 Homeowner -- 3.50 3.50 5.55 5.55 -- -- - Timeshare -- 14.00 14.00 ------1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

Homestead ------3.44 4.00 Hotel/Resort Timeshare Source: Maui County Data Book, County of Maui, Department of Finance

9 Maui Hotel/Resort Tax Base and 10 Maui Hotel/Resort Real Property Tax Base Collections The real property tax base for Maui hotel/resort parcels has been increasing at an average rate of 5.3% Hotel/resort parcels represent approximately a quarter of Maui’s tax base, but represent over a third of its per year for land and 9.2% for improvements. collections. This ratio demonstrates the importance of hotel/resort parcels, and by extension the visitor industry, to Maui County’s finances. In FY 2005, a zoning designation was created for timeshare. While representing $6,000,000 only 2% of Maui’s tax base, timeshare parcels represent 5% of Maui’s real property tax revenues. 40.0%

$5,000,000 $4,835,251 35.0% $4,522,441 30.0%

$4,000,000 $3,739,235 25.0% $3,424,136

$3,173,969 20.0%

$3,000,000 $2,841,594 $2,681,250 15.0% $2,358,814 $2,346,723 $2,210,710 10.0% $2,000,000 $1,490,422

$1,391,638 5.0% $1,212,092 $1,178,686 $1,118,337 $1,066,582 $1,066,560 $975,562 $954,858 $1,000,000 $951,692 0.0% 1996 - 1997 - 1998 - 1999 - 2000 - 2001 - 2002 - 2003 - 2004 - 2005 - 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 % Hotel/Resort Tax Base 23.1% 24.1% 24.2% 26.2% 25.8% 25.6% 24.8% 24.6% 26.4% 23.5% $- % Hotel/Resort Tax Collections 32.9% 35.1% 34.7% 36.8% 37.2% 37.2% 36.1% 34.5% 37.0% 32.1% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 % Timeshare Tax Base ------2.2% Land Improvement % Timeshare Tax Collections ------5.0% Source: Maui County Data Book Source: County of Maui, Department of Finance 11 12 Real Property Tax Valuation Real Property Assessment Methodology

The percentage growth in increased assessed values for converted properties were similar for non-converted hotels in Kaanapali. Condo properties had the highest increase in assessed values in Kaanapali, whereas converted ¾ According to the Maui County Real Property Tax Division, the timeshare properties generally rose at the same rate as hotel properties. resort condominiums are assessed based on its per unit market value. Resort condominiums tend to have more current sales activities, therefore, it is easier to assess the market value of 1995 2000 % ∆ 2005 % ∆ resort condominium properties. ¾ Hotel properties do not have as frequent of sales activities as Kaanapali Area $880,726,610 $1,220,772,800 38.6% $1,931,783,300 58.2% individual condominium units, therefore the cost of replacement less depreciation for the hotel properties are taken into Kaanapali Hotel $314,987,810 $497,651,100 58.0% $599,941,600 20.6% consideration when assessing hotel properties for tax purposes. Kaanapali Condo $425,130,800 $501,670,300 18.0% $960,724,600 91.5% ¾ Timeshare properties are assessed using the same methodology as the hotel properties (cost of replacement less depreciation). Kaanapali Timeshare $140,608,000 $204,311,900 45.3% $249,026,600 21.9% Interval sales are not considered in determining the market value for the timeshare properties. ¾ Mixed use properties are assessed using the same methodology as resort condominiums.

Source: County of Maui, Department of Finance

13 14 Maui County GET Collections Maui County TAT Collections

Maui County GET collections have been on the rise, reflecting Maui’s robust economy. Despite the net decrease in hotel inventory, transient accommodations tax collections have increased for Maui county from 1997 – 2004.

180,000,000 40,000,000

160,000,000 36,625,943 35,000,000 140,000,000

30,000,000 29,016,339 120,000,000 27,119,822 24,704,568 24,687,659 25,000,000 24,408,845 100,000,000 20,000,000 80,000,000 15,916,406 15,300,807 15,000,000 60,000,000 162,539,134 143,345,491 136,218,134 133,864,675

129,339,853 10,000,000 117,923,716

40,000,000 109,863,184 105,128,667 102,572,429 96,420,134 5,000,000 20,000,000

- - 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Source: Maui Data Book Source: State of Hawaii Department of Taxation Growth in TAT per Available Room vs. Percentage15 Maui County Lodging Accommodations Inventory16 Change in RevPAR vs. TAT and TOT Collections

On a per available room basis, TAT collections rose in the late 1990s, however, dropped off post 9/11 partly due The inventory fluctuation between 2001 and 2003 were driven primarily by the number of condo/hotels to increase in lower-yielding lodging units, such as apartment hotels and individually owned vacation units, in available during the three year period post 9/11. TAT and TOT collections have since rose by 45.1%, or Maui County as well as lower occupancy and average room rates in 2001 and 2002. TAT collections per approximately $10 million, since 2002. available room has recovered since 2002 along with the return of occupancy and higher room rates. $2,000 14.0% 18,800 $35,000,000

$1,800 12.0% 18,600 $30,000,000 $1,600 10.0% 18,400 $25,000,000 $1,400 8.0%

$1,200 6.0% 18,200 $20,000,000

$1,000 4.0% # Units 18,000 $15,000,000 $800 2.0% TAT Per Room in $ % Change RevPAR 17,800 $10,000,000 $ in TAT, TOTFees and $600 0.0%

$400 -2.0% 17,600 $5,000,000

$200 -4.0% 17,824 18,552 18,650 18,609 18,270 18,234 17,992 18,578 18,485 17,400 $- $- -6.0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 1996 1997 1998 1999 2000 2001 2002 2003 2004 TAT per Available Room $1,203 $1,095 $672 $1,115 $1,504 $1,492 $1,257 $1,482 $1,775 Total Maui Accommodation Inventory Total TAT, TOT and Fees % Change RevPAR 5.3% 5.8% 3.9% 10.0% 12.3% -3.7% -4.3% 7.8% 8.1% Source: State of Hawaii DBEDT, Maui County Data Book, Smith Travel Research Source: State of Hawaii DBEDT, Maui County Data Book

17 18 Tax Comparison Pre- and Post-Conversion Estimated 2010 Maui County Tax Revenues

Tax revenues are expected to increase for all Maui lodging types. In comparing the tax contributions of the three properties that converted from hotel to timeshare, there was a net loss of approximately $1 million in tax revenues to the State. The impact to the County of Maui is TAT, TOT 2000 2005 2010 estimated to be $230,663. Hotel $ 30,949,111 $ 33,780,478 $ 37,817,165 Net Change from Condo-Hotel $ 21,763,265 $ 24,603,567 $ 21,624,815 Pre-Conversion Post-Conversion Conversions Timeshare $ 1,596,685 $ 2,939,013 $ 7,598,280 TAT $2,902,044 $1,244,541 -$1,657,503 Other $ 662,499 $ 949,223 $ 1,072,827 TOT $16,467 $591,038 $574,571 $ 54,971,560 $ 62,272,281 $ 68,113,087 GET $2,140,865 $2,212,115 $71,250

Conveyance Tax $172,496 $172,496 Inventory 2000 2005 2010 Total $5,059,375 $4,047,694 ($1,011,682) Hotel 8,577 8,541 8,460 Condo-Hotel 7,005 7,225 8,366 Maui County's TAT After Allocation ($230,663) Timeshare 973 1,519 3,503 (at 22.8% of Statewide TAT) Other 918 1,200 1,200 17,473 18,485 21,529 1

Appendix E

Tax Impact 2 Table of Contents

¾ Timeshare Policy 3 ¾ Real Property Tax 7 ¾ Maui Tax Revenues „ General Excise Tax 13 „ Transient Accommodations Tax/Transient Occupancy Tax 14 ¾ Comparison of Pre- and Post-Conversion Taxes 17 ¾ Estimated 2010 Tax Collections 18 3 Timeshare Licenses by Island and Ownership 4 Hawaii Timeshare Regulation Type

There are 63 timeshare licenses in Maui County, all of which are located on the island of Maui. ¾ Hawaii Revised Statutes Chapter 514E – Timesharing Plans „ 514-E1 Definition – less than 60 days „ 514-E4 County Authority – allows counties to limit timeshare ¾ Hawaii Admin Rules Section 16-106 – Timesharing Corporation Location Individual Partnership Sole Owner Other Total „ Timeshare Licensing: DCCA „ License Type: Board 910 Oahu 7 26 2 35 ¾ Timeshare Plan Registration Requirements Hawaii 1 21 22 „ Nature of Timeshare Plan • Right to use vs Ownership Maui 2 60 1 63 • Number of Units Kauai 48 7 55 • Interests per Unit • Number of Weeks per Interest Molokai 0 „ Location Lanai 0 „ Fees • Application - $750 Mainland 6 4 10 • Registration - $750 • Compliance Resolution Fund - $150 + $200/unit (up to 25) Foreign 0 Other 2 2 Total 10 163 1 13 187

Source: State of Hawaii DCCA

5 6 Timeshare Regulation by County Timeshare Zoning by County

¾ County of Maui Code County Zone Notes „ Chapter 19.37 Maui Hotel Conditional Permit also required ¾ City & County of Honolulu Ordinance Timeshare zone new for FY 2005 Timeshare „ 21-3.80-1 A-2 permitted if within 3,500 feet „ 21-3.100-1 Honolulu Resort of resort district more than 50 acres and part of master plan „ 21-5.640 Apartment A-2 „ 21-9.80.6 As designated on County of Kauai Kauai Resort RR-10 Destination Area maps. ¾ County of Kauai Code Resort RR-20 Prohibited in Residential R-1, R-2, R-4, R-6 „ 8-17 Hawaii Resort Except retreat resort areas ¾ County of Hawaii Code Areas designated by „ 25-1-5 Council

Source: Maui County Code, Honolulu C&C Ordinance, Kauai County Code, Hawaii County Code 7 8 Real Property Tax Rates by County Maui Real Property Tax Rates

Oahu Maui Hawaii Kauai The real property tax rate has been stable since FY 2000 for hotel/resort parcels. In FY 2005, a new designation for timeshare zoning was created and is taxed at a higher rate than hotel/resort parcels. Property Land Building Land Building Land Building Improved Residential 3.75 5.86 5.86 9.10 9.10 4.30 4.00 16.00 14.0 Unimproved Residential 5.72 5.86 5.86 9.85 9.85 14.00 Apartment 3.75 5.86 5.86 9.85 9.85 7.95 6.95 Hotel and Resort 11.37 8.30 8.30 9.85 9.85 7.95 6.95 12.00

Commercial 11.37 6.75 6.75 9.85 9.85 7.95 6.95 10.00 Industrial 11.37 6.75 6.75 9.85 9.85 7.95 6.95 8.48 8.3 8.3 8.3 8.3 8.3 8.3 8.00 Agricultural 8.57 4.93 4.93 9.85 9.85 4.30 6.95

Vacant Agricultural 8.57 ------6.00 Preservation 9.57 ------4.00 Public Service ------

Conservation -- 4.93 4.93 9.85 9.85 4.30 6.95 2.00 Homeowner -- 3.50 3.50 5.55 5.55 -- -- - Timeshare -- 14.00 14.00 ------1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

Homestead ------3.44 4.00 Hotel/Resort Timeshare Source: Maui County Data Book, County of Maui, Department of Finance

9 Maui Hotel/Resort Tax Base and 10 Maui Hotel/Resort Real Property Tax Base Collections The real property tax base for Maui hotel/resort parcels has been increasing at an average rate of 5.3% Hotel/resort parcels represent approximately a quarter of Maui’s tax base, but represent over a third of its per year for land and 9.2% for improvements. collections. This ratio demonstrates the importance of hotel/resort parcels, and by extension the visitor industry, to Maui County’s finances. In FY 2005, a zoning designation was created for timeshare. While representing $6,000,000 only 2% of Maui’s tax base, timeshare parcels represent 5% of Maui’s real property tax revenues. 40.0%

$5,000,000 $4,835,251 35.0% $4,522,441 30.0%

$4,000,000 $3,739,235 25.0% $3,424,136

$3,173,969 20.0%

$3,000,000 $2,841,594 $2,681,250 15.0% $2,358,814 $2,346,723 $2,210,710 10.0% $2,000,000 $1,490,422

$1,391,638 5.0% $1,212,092 $1,178,686 $1,118,337 $1,066,582 $1,066,560 $975,562 $954,858 $1,000,000 $951,692 0.0% 1996 - 1997 - 1998 - 1999 - 2000 - 2001 - 2002 - 2003 - 2004 - 2005 - 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 % Hotel/Resort Tax Base 23.1% 24.1% 24.2% 26.2% 25.8% 25.6% 24.8% 24.6% 26.4% 23.5% $- % Hotel/Resort Tax Collections 32.9% 35.1% 34.7% 36.8% 37.2% 37.2% 36.1% 34.5% 37.0% 32.1% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 % Timeshare Tax Base ------2.2% Land Improvement % Timeshare Tax Collections ------5.0% Source: Maui County Data Book Source: County of Maui, Department of Finance 11 12 Real Property Tax Valuation Real Property Assessment Methodology

The percentage growth in increased assessed values for converted properties were similar for non-converted hotels in Kaanapali. Condo properties had the highest increase in assessed values in Kaanapali, whereas converted ¾ According to the Maui County Real Property Tax Division, the timeshare properties generally rose at the same rate as hotel properties. resort condominiums are assessed based on its per unit market value. Resort condominiums tend to have more current sales activities, therefore, it is easier to assess the market value of 1995 2000 % ∆ 2005 % ∆ resort condominium properties. ¾ Hotel properties do not have as frequent of sales activities as Kaanapali Area $880,726,610 $1,220,772,800 38.6% $1,931,783,300 58.2% individual condominium units, therefore the cost of replacement less depreciation for the hotel properties are taken into Kaanapali Hotel $314,987,810 $497,651,100 58.0% $599,941,600 20.6% consideration when assessing hotel properties for tax purposes. Kaanapali Condo $425,130,800 $501,670,300 18.0% $960,724,600 91.5% ¾ Timeshare properties are assessed using the same methodology as the hotel properties (cost of replacement less depreciation). Kaanapali Timeshare $140,608,000 $204,311,900 45.3% $249,026,600 21.9% Interval sales are not considered in determining the market value for the timeshare properties. ¾ Mixed use properties are assessed using the same methodology as resort condominiums.

Source: County of Maui, Department of Finance

13 14 Maui County GET Collections Maui County TAT Collections

Maui County GET collections have been on the rise, reflecting Maui’s robust economy. Despite the net decrease in hotel inventory, transient accommodations tax collections have increased for Maui county from 1997 – 2004.

180,000,000 40,000,000

160,000,000 36,625,943 35,000,000 140,000,000

30,000,000 29,016,339 120,000,000 27,119,822 24,704,568 24,687,659 25,000,000 24,408,845 100,000,000 20,000,000 80,000,000 15,916,406 15,300,807 15,000,000 60,000,000 162,539,134 143,345,491 136,218,134 133,864,675

129,339,853 10,000,000 117,923,716

40,000,000 109,863,184 105,128,667 102,572,429 96,420,134 5,000,000 20,000,000

- - 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Source: Maui Data Book Source: State of Hawaii Department of Taxation Growth in TAT per Available Room vs. Percentage15 Maui County Lodging Accommodations Inventory16 Change in RevPAR vs. TAT and TOT Collections

On a per available room basis, TAT collections rose in the late 1990s, however, dropped off post 9/11 partly due The inventory fluctuation between 2001 and 2003 were driven primarily by the number of condo/hotels to increase in lower-yielding lodging units, such as apartment hotels and individually owned vacation units, in available during the three year period post 9/11. TAT and TOT collections have since rose by 45.1%, or Maui County as well as lower occupancy and average room rates in 2001 and 2002. TAT collections per approximately $10 million, since 2002. available room has recovered since 2002 along with the return of occupancy and higher room rates. $2,000 14.0% 18,800 $35,000,000

$1,800 12.0% 18,600 $30,000,000 $1,600 10.0% 18,400 $25,000,000 $1,400 8.0%

$1,200 6.0% 18,200 $20,000,000

$1,000 4.0% # Units 18,000 $15,000,000 $800 2.0% TAT Per Room in $ % Change RevPAR 17,800 $10,000,000 $ in TAT, TOTFees and $600 0.0%

$400 -2.0% 17,600 $5,000,000

$200 -4.0% 17,824 18,552 18,650 18,609 18,270 18,234 17,992 18,578 18,485 17,400 $- $- -6.0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 1996 1997 1998 1999 2000 2001 2002 2003 2004 TAT per Available Room $1,203 $1,095 $672 $1,115 $1,504 $1,492 $1,257 $1,482 $1,775 Total Maui Accommodation Inventory Total TAT, TOT and Fees % Change RevPAR 5.3% 5.8% 3.9% 10.0% 12.3% -3.7% -4.3% 7.8% 8.1% Source: State of Hawaii DBEDT, Maui County Data Book, Smith Travel Research Source: State of Hawaii DBEDT, Maui County Data Book

17 18 Tax Comparison Pre- and Post-Conversion Estimated 2010 Maui County Tax Revenues

Tax revenues are expected to increase for all Maui lodging types. In comparing the tax contributions of the three properties that converted from hotel to timeshare, there was a net loss of approximately $1 million in tax revenues to the State. The impact to the County of Maui is TAT, TOT 2000 2005 2010 estimated to be $230,663. Hotel $ 30,949,111 $ 33,780,478 $ 37,817,165 Net Change from Condo-Hotel $ 21,763,265 $ 24,603,567 $ 21,624,815 Pre-Conversion Post-Conversion Conversions Timeshare $ 1,596,685 $ 2,939,013 $ 7,598,280 TAT $2,902,044 $1,244,541 -$1,657,503 Other $ 662,499 $ 949,223 $ 1,072,827 TOT $16,467 $591,038 $574,571 $ 54,971,560 $ 62,272,281 $ 68,113,087 GET $2,140,865 $2,212,115 $71,250

Conveyance Tax $172,496 $172,496 Inventory 2000 2005 2010 Total $5,059,375 $4,047,694 ($1,011,682) Hotel 8,577 8,541 8,460 Condo-Hotel 7,005 7,225 8,366 Maui County's TAT After Allocation ($230,663) Timeshare 973 1,519 3,503 (at 22.8% of Statewide TAT) Other 918 1,200 1,200 17,473 18,485 21,529 1

Appendix F

Social Impact 2 Table of Contents

¾ Interview Contact List 3 ¾ Summary of Studies Consulted 9 3 Contact List

¾ The following slides list the organizations who were contacted for interviews (phone and in-person) or who were asked to complete surveys. ¾ For all interviews, we requested to speak to owners or senior level mangers. In the case of dining establishments we requested to speak to owners or general managers but accepted interviews from floor managers as well. ¾ Many of the interviewees requested that we not use their names as a condition of their willingness to speak to us. Thus, specific individuals are not listed in this public document. 4 Contact List

¾ Event planning companies and event coordinators for major Maui events that were interviewed:

¾ DeSilva Meeting Consultants ¾ Mercedes Championship ¾ Hula Bowl, AFCA Office in ¾ Pacific Destination Services Texas ¾ Panache Destination ¾ Imagination Destinations Management, Inc. ¾ Kaanapali Beach Resort ¾ Wendy’s PGA Championship Association ¾ Lahaina Town Action Committee, Halloween in Lahaina ¾ Maui Film Festival ¾ Maui Invitational/EA Sports 5 Contact List

¾ Event planning companies and event coordinators for major Maui events that were contacted but who declined to or did not respond:

¾ Hawai‘i Meeting Builders ¾ Island Partners Hawai‘i ¾ Kathy Clark Meetings & Incentives ¾ MC&A ¾ Maui Marathon ¾ Maui Writers Conference 6 Contact List

¾ Travel industry businesses and suppliers who were contacted and interviewed or completed survey responses:

¾ Costco ¾ Mortgage/Finance office, ¾ Deli in Dolphin Plaza, Kihei Whaler’s Village ¾ Dolphin Galleries, Whalers ¾ Rimfire Imports Village ¾ Spices Restaurant, Kihei ¾ Giovani’s Restaurant, near ¾ Tiffany’s, Whaler’s Village Whaler’s Village ¾ Hula’s Grill Restaurant, Whaler’s Village ¾ Leilani’s Restaurant, Whaler’s Village ¾ Maui Chemical ¾ Morrad Food 7 Contact List

¾ Travel industry businesses and suppliers who were contacted but who declined to or did not respond:

¾ Haleakela Trading Gifts, Kihei ¾ Maui Farm Bureau ¾ PM Real Estate, Kahana Gateway Plaza Management Office ¾ Whaler’s Village management office ¾ Whalers Village Museum 8 Contact List

¾ Other organizations who were contacted and interviewed or completed survey responses:

¾ Maui Chamber of Commerce ¾ Hawai‘i Carpenters Union, Local 745 ¾ ILWU, Local 142, Maui Division ¾ Workforce Development Division, Worksource Maui 9 Summary of Studies Consulted

¾ The following slides summarize the major studies related to timeshare conversions that were reviewed by the consultant. The are listed in chronological order, beginning with the most recent. For quick reference each study is categorized according to the specific issues/impacts that are raised in the study. These issues are as follows:

„ Environmental impacts ¾ Room shortages „ Property tax / property values ¾ Consumer protection „ Occupancy tax ¾ Benefits / costs „ Other tax issues ¾ Demographic issues „ Valuation issues ¾ Regional issues / specific cases „ State regulations ¾ Other general issues 10 Summary of Studies 11 Summary of Studies 12 Summary of Studies 13 Summary of Studies 14 Summary of Studies 15 Summary of Studies 16 Summary of Studies 17 Summary of Studies 18 Summary of Studies 19 Summary of Studies 20 Summary of Studies 21 Summary of Studies 22 Summary of Studies 23 Summary of Studies 24 Summary of Studies Appendix G

Kaanapali Occupancy and ADR for Major Maui Events Mercedes Championships: 1/3/05 - 1/9/05 Hula Bowl: 1/22/05

77.5% 194

84.0% $350.00 77.0% 192 82.0% $300.00 190 80.0% 76.5%

78.0% $250.00 188 76.0% 76.0% $200.00 186 74.0% 75.5% 184 $150.00 72.0% 75.0% 182 70.0% $100.00 74.5% 68.0% 180 $50.00 66.0% 74.0% 178 16-Jan 17-Jan 18-Jan 19-Jan 20-Jan 21-Jan 22-Jan 64.0% $- Occupancy 77.3% 76.5% 75.6% 75.2% 76.7% 76.3% 75.8% 1-Jan 2-Jan 3-Jan 4-Jan 5-Jan 6-Jan 7-Jan 8-Jan 9-Jan 10-Jan 11-Jan 12-Jan 13-Jan 14-Jan ADR 192.76 193.13 191.26 188.62 188.07 183.71 190.55 Occupancy 81.0% 77.1% 77.8% 78.3% 77.8% 78.4% 82.3% 76.0% 75.9% 71.3% 74.8% 76.8% 81.7% 81.1% ADR $297.5 $292.5 $268.1 $251.8 $240.4 $224.4 $224.8 $228.8 $218.6 $219.6 $206.4 $214.4 $216.4 $217.2 Source: Smith Travel Research, Hospitality Advisors LLC Source: Smith Travel Research, Hospitality Advisors LLC

Wendy's Champion Skins: 2/4/05 – 2/6/05 Maui Film Festival: 6/15/05 – 6/19/05

82.0% 208 94.0% 245

206 240 80.0% 92.0% 204 235 78.0% 90.0% 230 202 76.0% 88.0% 225 200 74.0% 220 198 86.0% 72.0% 215 196 84.0% 210 70.0% 194 205 82.0% 68.0% 192 200 80.0% 66.0% 190 195

64.0% 188 78.0% 190 1-Feb 2-Feb 3-Feb 4-Feb 5-Feb 6-Feb 7-Feb 8-Feb 12-Jun 13-Jun 14-Jun 15-Jun 16-Jun 17-Jun 18-Jun 19-Jun 20-Jun 21-Jun 22-Jun 23-Jun 24-Jun 25-Jun Occupancy 70.1% 73.5% 76.3% 77.9% 80.6% 77.5% 76.4% 75.8% Occupancy 84.2% 84.9% 84.6% 88.4% 88.7% 88.0% 86.3% 83.9% 86.0% 88.0% 89.8% 91.7% 92.9% 91.4% ADR 201.26 195 199.56 194.85 196.03 202.48 205.51 203.22 ADR 208.94 208.31 217.79 212.24 213.97 214.2 216.59 226.6 238.73 233.06 232.91 230.64 229.5 229.85

Source: Smith Travel Research, Hospitality Advisors LLC Source: Smith Travel Research, Hospitality Advisors LLC Maui Writers Conference & Retreat: Maui Marathon: 9/18/05 8/26/05 – 9/5/05

88.0% 250 92.0% 192 86.0%

90.0% 84.0% 200 190 82.0% 88.0% 80.0% 150 188

78.0% 86.0% 186 76.0% 100 84.0% 74.0% 184 72.0% 50 82.0%

70.0% 182 80.0% 68.0% 0 21- 22- 23- 24- 25- 26- 27- 28- 29- 30- 31- 1-Sep 2-Sep 3-Sep 4-Sep 5-Sep 6-Sep Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug 78.0% 180 Occupancy 77.3% 75.5% 75.0% 77.3% 77.9% 80.5% 81.8% 77.0% 76.7% 75.3% 74.3% 79.1% 84.4% 86.3% 84.7% 78.1% 77.3% 15-Sep 16-Sep 17-Sep 18-Sep 19-Sep 20-Sep 21-Sep 22-Sep ADR 227.4 227.2 229 213.3 214.3 207.9 200.2 203.7 198.7 203.5 195.1 195.5 188 183.8 187.3 186.6 191 Occupancy 82.2% 86.4% 90.5% 89.8% 85.8% 82.8% 83.3% 83.2% ADR 186.19 184.62 187.76 188.34 185.99 186.35 191.14 188.59

Source: Smith Travel Research, Hospitality Advisors LLC Source: Smith Travel Research, Hospitality Advisors LLC

XTERRA World Championships: 10/23/05 Halloween in Lahaina: 10/31/05

88.0% 198 80.0% 206

86.0% 196 78.0% 204

84.0% 194 202 76.0%

82.0% 192 200 74.0% 198 80.0% 190 72.0% 196 78.0% 188 70.0% 194 76.0% 186 68.0% 192 74.0% 184 66.0% 190 72.0% 182 64.0% 188 70.0% 180 20-Oct 21-Oct 22-Oct 23-Oct 24-Oct 25-Oct 26-Oct 27-Oct 62.0% 186 30-Oct 31-Oct 1-Nov 2-Nov 3-Nov 4-Nov 5-Nov Occupancy 85.9% 85.0% 83.3% 76.6% 79.0% 79.9% 79.1% 80.5% Occupancy 68.1% 73.4% 67.6% 72.8% 77.9% 78.4% 78.8% ADR 193.42 192.99 186.42 190.39 190.02 196.87 190.13 191.69 ADR 197.63 196.53 204.71 201.59 198.41 194.97 192.49

Source: Smith Travel Research, Hospitality Advisors LLC Source: Smith Travel Research, Hospitality Advisors LLC Maui Invitational: 11/21/05 – 11/23/05

90.0% 220

80.0% 215 70.0%

60.0% 210

50.0% 205 40.0%

30.0% 200

20.0% 195 10.0%

0.0% 190 20-Nov 21-Nov 22-Nov 23-Nov 24-Nov 25-Nov 26-Nov Occupancy 77.7% 80.9% 81.9% 82.3% 75.0% 67.8% 64.7% ADR 216.57 212.26 216.99 216.85 213.39 202.42 199.76 Source: Smith Travel Research, Hospitality Advisors LLC 1

Appendix H

Council Member Requests from April 12, 2006 presentation 2 Council Member Requests/Questions

Request/Questions Slide Council Member Response # displaced workers retired? 27 Pontanilla Information not readily available. Outside scope. Find out what happened to 28 Pontanilla Impractical. Outside scope. displaced employees Vehicle registration figures Pontanilla Yes, but increases in Maui drivers include rental cars? licenses show similar growth. Interview construction union Molina Interviewed by TIM School representatives How many people are 24 Hokama State of Hawaii reports FTE. Additional represented by FTE counts? research outside scope.

Include counts from other 26 Hokama Included in Appendix C industries How many people are 27 Hokama Data not available from interviewees. represented by FTE counts? Clarify “cruises” 32 Hokama Dinner and day cruises How many hotel rooms are Hokama No prior study available. Additional needed for the local Hawaii research outside scope. Could be a market? separate study. 3 Council Member Requests/Questions

Request/Questions Slide Council Member Response How many hotel rooms are Hokama, Carroll Outside scope. needed to support the Hawaii Convention Center? Elaborate on Highland study Hokama, Included in Appendix E Anderson Table headings are confusing. 14 Anderson Edits made. Need to change. How can Maui be involved in Anderson Department of Planning has a process to approval of conversion plans? approve conversion plans in the permitting stage. Provide sample size for DBEDT 36 Anderson Included in report study Expand resident survey sample 54 Anderson Resident survey was not included in or exclude from report. Current Carroll scope and was performed on an informal sample not representative of and courtesy basis at request of Council. Maui residents Not able to expand. Excluded from report as the was not part of the scope. Expand planner survey 48 Carroll Not able to expand beyond original scope. Pre-bankruptcy levels of Anderson Data not available. employment for converted properties? 4 Council Member Requests/Questions

Request/Questions SlideCouncil Member Response Analyze Kapalua Bay Hotel pre- Anderson Not possible because conversion has not and post- conversion employment occurred. levels. Provide Council with copies of Anderson Provided by Department of Finance contract/scope Research long-term maintenance Kane Researched, but no literature available. issues for timeshare Further research on timeshare 47 Kane Included in Appendix E issues in other locations Calculate tax impacts to Maui Kane Included in report and Appendix D Include first time and repeat data Pontanilla Included in Appendix A for all Maui visitors