Development and Economy
Amy Henn, Cory King
Jeff Lewis, and Marianna Panova
Please Note: These materials may be used for research, study, and education, but please credit the authors and source.
tourist's dream. Where else could you find white sandy beaches, glorious sunsets, and hula
girls greeting you with leis? Hawaii is paradise...the perfect vacation. Although Hawaii
seems irresistible in every way, it faces many problems not seen by those who merely visit
the islands. Residents see a very different picture than the "paradise" seen by
the hundreds of thousands of tourists who visit Hawaii each year. Residents see the
sacrifices being made to support the tourist industry; the loss of public lands, beaches,
and the decrease of wildlife. To them, Hawaii may be heading towards an environmental
The current debate concerning the development of North Beach on Maui island offers both promise of economic growth as well as destruction of the environment. This debate centers around Amfac/JMB Hawaii Inc. and their desire to build a resort on North Beach. This developer believes that this project is essential to financially sustain Amfac and the island of Maui. The current economy of Maui, along with it's growth rates, must be considered in order to determine how necessary it is to develop North Beach. Maui is the second largest of the Hawaiian islands. It has a population of 117,013, most of which is concentrated in the four centers of Kahului, Kihei, Wailuku, and Lahaina. It is significant to point out that Maui's population has tripled in less than forty years from 43,100 in 1959 to 110,313 in 1995. While this increase in population might support the notion that Hawaii is becoming increasingly attractive, the fact that visitor units have increased in astronomical proportions provides further evidence of Hawaii's growing tourist market. Visitor units increased from 291 in 1959 to 19,552 in 1992. The above trends illustrate Maui's emphasis on tourism and the subsequent development that has occurred as a result. To look at the current development of the area known as North Beach, the great number of hotels and resorts may come as a surprise. Important information on the size of the hotel, the size of the property on which it stands, and the number of rooms should be studied to make an informed decision. Why would there possibly be the need for yet another resort developmen t? However, it may be deceiving at first glance. According to a real estate agency known as Maui Style, the percentage of land used for hotel/resort development in Maui County is quite small. In fact, the land used for one of three major industries across Maui County is a mere .1%. Agriculture and cattle ranching, two other major industries, account for 53% and surprisingly 42.3% of the land is used for conservation purposes. Within this protected area are many areas that the tourists may access.This information offers a very different picture of the development of the island, a far cry from the lack of public lands and need for preservation. However, this information should be viewed skeptically. One should take notice of where the hotels/resorts are being developed; on the beaches. This may have many different implications for wildlife, aquatic, and public beach preservation.
Hawaii is experiencing something that many though impossible, a recession in its economic growth. Moreover, it looks like a change will be needed in order to lift itself back up. How could this happen? How could the mecca of tourism be losing it's appeal? In order to answer this we must go back a few years and look at the factors that have lead up to the decline, as well as the consequences of this problem. We should also look at the history of Hawaii's economy with reference to this decline, and what can be done to fix it. The decrease in the economic growth of the state began in 1990 when, suddenly, the surge of Japanese investors, that had been the backbone of the economy, began to cease, ultimately coming to a halt in the early '90's. Most of these investments were concentrated in Hawaii's number one economic resource- tourism. It wasn't long after the slow in funding that another unforeseeable event occurred. The Persian Gulf War almost brought international tourism to a halt. Finally in September of 1992, Hurricane Iniki raged over the islands causing extensive damage. Here we see three factors that caused a decline in the economic growth of Hawaii. The recession in Japan caused investments to decline, the Gulf War lead to international tension, and a natural disaster made it's final strike. Yet, the last of these events happened over five years ago? Why has Hawaii not recovered? According to many on the island, all of these are just symptoms of an economy that had been headed in the wrong direction for years. Ever since Hawaii's statehood, tourism has been the main source of economic growth. To many, the state has relied too much on that tourism in order to keep the economy afloat. It has only been since the steady decline that it looked to other areas, mainly agriculture, to pick up the slack. The attempts at encouraging agriculture as an economic resource have been met with many obstacles. The most prevalent of those being the state failure to present an attractive setting, such as reasonably priced land or a cut on taxes, in which to farm. Agriculture has not been the only venue that the Hawaiian government has looked at in regards to restoring the economy. There has been speculation that Hawaii could become a "mid-Pac ific financial hub", because of its location to the east. Yet, we see that the idea becomes mute when one considers the technological advances that have been made, allowing one to do business halfway around the world from a computer. The cost of land also plays a very big role in the development of this idea. The state of Hawaii is coming to the point where it is either "sink" or "swim". The government of Hawaii is trying to rebuild an economy that has been dependent on tourism for so long they don't know how to survive without it. A major criticism of the government is that they are looking for one industry to make up all the slack from tourism's decline. This idea becomes even harder when we realize that one in five jobs in Hawaii results from tourism. This is a very big problem that faces the government and the people of Hawaii, in order to overcome the decline; they must find an answer to their economic slump. Whether that answer comes from within the industry of tourism, by incorporating ecotourism and new attractions, or elsewhere, the solutions must be able to withstand the trials of the economy.
Amfac/JMB Hawaii Inc.
Amfac/JMB, once Hawaii's largest development company, now has 950 employees and a network of operations across the state. According to Hawaii Inc., results from financial performance of the company are filed with the Securities and Exchange Commission by the parent Northbrook Corp. Northbrook, an associate of JMB Realty Corp., Chicago, IL, which acquired Amfac in 1988.
As the land on Hawaii devaluates, Amfac faces significant financial losses. For 1996, the company announced a net loss of $34.2 million as compared with a net income of $12.7 million in 1995. Amfac's revenues for 1996 amounted to $97.4 million, which is a 4. 1 percent drop from $101.6 million in 1995. The company's President Oary Grottke was quoted by Hawaii Inc. as saying that the value of Amfac's local properties decreased by $18.3 million. The financial turmoil the company is going through is worsened by the upcoming date of repayment of its debts in 1999. In order to pay its dues Amfac is selling 11,400 acres of land, introducing significant changes in the management structure as well as adding value to its remaining properties by developing them into new resort facilities on North Beach. In the interview with Janice D. Casco and Teney Takahashi, senior vice president of Amfac Maui, described the importance of the project at North Beach as "a 'must do' project for a real estate company such as Amfac after six years of recession". Maui News announced that mayor Linda Lingle and Amfac, together with its development partner Tobishima, came to an agreement that would allow the county to pay $15 million for 33.8 acres in North Beach for a public park. The deal will reduce the number of hotel units from 3,200 to 2,000. According to Chris Kanazawa, president of Amfac Property DevelopmentCorp., the development will cost approximately $80 million, creating 200 temporary jobs, and a $7 million annual payroll for 200 permanent employees.
In the North Shore area, there is only one hiking trail. The Waihee Ridge trail is 2.5 miles long and is well kept. The area allows no camping and has no man made facilities. Thus the trail is kept in a natural state while allowing visitors and permeanant residents to have an opportunity to experience the beauty of the area. Overall there are nine different hiking trails of various distances on Maui.
For those who enjoy camping, Maui offers eight designated camping areas. Though none of these are in the vicinity of the North Shore, they do cover a large area of land on the island. The lack of land at the western sector of Maui is the main reason for the shortage of both hiking and camping areas. However, an attraction need not be in North Beach in order for visitors to take advantage of it.
There are approximately 17 large hotels or resorts in the North Beach area. Of these, we were able to find three examples that seem to represent the diversity of accommodations in this area. Maui Marriott Resort has 720 guest rooms and 19 suites. The Ritz-Carlton is located on 50 acres and has 548 rooms. The Aston Kaanapali Shores has 11 types of room choices with the number of occupants ranging from 2 to 6 with the possibility of having extra people and cots for an additional nightly charge. Only the Ritz-Carlton and Embassy Suites described the acreage of land that they occupied. The Ritz-Carlton encompasses 50 acres while the 12 story Embassy Suites resort rests on only 7 acres of Kaanapali Beach waterfront.
Back to Top
Back To Psy 412 Home Page
Lynch, Russ. (1997, July 22). Help Wanted, A
Special report; Hawaii's
Economic Crisis: Who's to Blame? [WWW Document]. URL http://starbulletin.com/
Lynch, Russ. (1997, July 22). Help Wanted, A Special report; Hawaii's
Economic Crisis: Tourisms Glory Days Gone For Good? [WWW Document]. URL
Borreca, Richard. (1997, July 22). Help Wanted, A Special report; Hawaii's
Economic Crisis: Boom Gone Bust [WWW Document]. URL http://starbulletin.com/
(Retrieved September 14, 1997). Maui Population Analysis [WWW Document].
Psy 412 Miami University. Last revised: Wednesday, March 12, 2014 at 17:06:33. This document has been accessed 1 times since July 15, 1997. Comments & Questions to R. Sherman . Also See: Social Psychology at Miami University