Hertz Equipment expands to Hawaii

Hertz Equipment Rental Corp. said it has acquired Western Machinery, a construction equipment rental company based in Kapolei.

Terms of the deal were not disclosed.

Founded in 1985, Western Machinery has locations on Oahu, the Big Island and Maui. In addition to equipment rental, the company is also an equipment dealer for Gradall, JLG, Bobcat, Liebherr, Linkbelt and Allied Hammers.

Hertz Equipment Rental Corp. is a wholly owned subsidiary of The Hertz Corp.

“We’re excited to have acquired Western Machinery as this marks Hertz Equipment Rental’s first foray into the Hawaiian market,” said Mark Frissora, chairman and chief executive officer of the Hertz Corp.

Hawaii’s construction industry was one of the harder hit sectors during the recent recession. Construction spending, which declined by 18 percent in 2009, is forecast to drop by another 15.9 percent this year before rising by 2.8 percent in 2011, according to a recent report by the University of Hawaii Economic Research Organization.

WAILUKU – The state Board of Land and Natural Resources on Friday unanimously granted Kaheawa Wind Power II the land lease it needs to make way for 14 additional wind turbines along the Lahaina pali.

Kaheawa Wind is a subsidiary of Boston-based wind energy company First Wind, which already provides electricity to Maui Electric Co. with 20 wind turbines above Maalaea.

“We are committed to the stewardship of the land,” said Project Manager Kelly Bronson.

He also touted the renewable-energy project’s benefits to the environment and economy, both on Maui and across the state. The project also will need permission from the state Public Utilities Commission and U.S. Fish and Wildlife Service before full construction can begin.

Work could begin as early as next month, and Bronson said it would take about a year. He didn’t have immediate estimates of how many construction jobs or full-time jobs operating machinery would be provided, or of the overall budget.

In its official vote, the board granted its next chairperson the authority to negotiate a 20-year site lease for the wind farm expansion, along with easements and utility access. Current Chairwoman Laura Thielen’s term ends in December.

The expanded wind farm, located in a line below the existing one, is expected to provide 21 megawatts on 143 acres in the Kaheawa pasture.

Thielen said there’s a lot of effort going into green energy projects in Hawaii and told her colleagues to expect many more such applications to come before the board in the near future.

The expansion of green energy sources and of efforts to wean Maui off oil was applauded during public testimony in the county Department of Planning conference room.

“This (project) is not just a talking point or an idea, it’s here now,” said former Maui Tomorrow Foundation board member Sean Lester, who urged support of the application.

Jeanne Unemori Skog, president and chief executive officer of the Maui Economic Development Board, said the project will support much-needed efforts to diversify Maui’s economy and bolster the technology sector.

A few individuals questioned whether the state has the authority to lease ceded Hawaiian monarchy lands, while others called the gigantic turbines eyesores.

“Every time I come down from Haleakala, I can see these money machines,” said opponent Jim Smith of Haiku.

Friday’s decision paves the way for Kaheawa II to clear brush and start the groundwork for the larger facility that will include an electrical substation, battery-energy storage system, underground electrical-collection system, overhead transmission line, meteorological-monitoring tower and service-access roads.

Bronson also sought and received from the board permission to start most work that does not include installing the turbines, while the company completes a draft habitat conservation plan in addition to the already-complete environmental impact statement.

The board Friday amended the conservation habitat protection plan to require a qualified biologist and archeologist be on-site during construction. The company also must notify the state when it is about to begin construction, and must get proper state and federal permits to build “vertically” or install the turbines, Thielen said.

Irene Bowie, executive director of the Maui Tomorrow Foundation, said she wanted to make sure the public continues to have safe access to the Lahaina Pali Trail.

Bronson said fences will surround the turbines and the rotating turbine blades will come no closer than 90 feet above the ground.

The subsidiary Kaheawa Wind II also has developed the conservation plan in coordination with the state DLNR as part of an application for an “incidental take” permit for endangered species.

The large wind turbines are known to cause accidental injury or death to birds. The U.S. Fish and Wildlife Service requires the take permit for four species identified as the endangered nene goose; Hawaiian petrel, or ‘ua’u; Hawaiian hoary bat, or ‘ope’ape’a; and the threatened Newell’s shearwater, or ‘a’o.

The company also plans to take steps to safely capture and relocate birds found in the area, and will continue its ongoing habitat management and reforestation efforts of native plant species, officials said.

Lucienne de Naie of the Sierra Club’s Maui group, called for the protected pueo, or Hawaiian owl, to be added to the list of birds in the permit application. She also said First Wind’s various native species restoration and educational efforts are “great examples of cooperation.”

In a separate action, the U.S. Fish and Wildlife Service is reviewing the project’s permit applications. The public can comment before Dec. 9 on a draft habitat conservation plan. For more information, visit http://www.fws.gov/pacificislands/.

Kaiser earns $3 million in quarter as membership jumps

Kaiser Foundation Health Plan Inc. recorded a $3 million profit in the third quarter as a result of increased membership and cost-controlling efforts.

The state’s largest health maintenance organization’s quarterly gain compares to net income of $100,000 in the year-earlier period.

The company, which is seeking to raise rates 12.6 percent on Jan. 1, said it continues to “leverage new technologies” to improve clinical outcomes and patient safety and reduce costs.

Kaiser posted $242.6 million in operating revenue and $241.1 million in expenses, resulting in operating income of $1.5 million in the quarter ended Sept. 30.

By comparison, the HMO reported $239.1 million in operating revenue and $240.1 million in operating expenses in the 2009 quarter, when its operating loss totaled $1 million.

Meanwhile, net investment income was up to $1.5 million from $1.1 million in the year-earlier quarter.

Kaiser attributed part of its $3 million profit to rising membership, which was up by more than 3,800, to 227,275 at the end of the third quarter.

“Hawaii is experiencing modest job growth and we’re welcoming new members as a result,” said Thomas Risse, Kaiser’s chief financial officer.

Nonetheless, the HMO earlier said rising health care costs have affected the business.

If approved by the state Insurance Division, Kaiser’s 12.6 percent rate increase will be the largest in seven years, affecting about 6,800 employers and 164,000 members.

The company also is seeking an average 8.6 percent rate increase for about 14,000 individuals.

State Insurance Commissioner Gordon Ito said he is hoping that the financial picture will improve for both HMSA and Kaiser, so that no further rate increases will be necessary and that rate reductions might even be possible.

Revenues in Hawaii have risen 7.1% so far this year

Hawaii hostelries, led by Maui, continue to scramble back toward financial health, but although they have come a long way, they have yet a long way to go.

In the Hospitality Advisors report for the first three quarters, released Monday, revenues statewide were up 7.1 percent to a total of $1.9 billion for nine months.

But that was still 20.6 percent lower than for the first nine months of 2006, the visitor industry’s best year.

Hospitality Advisors President Joseph Toy said Hawaii, New York City and San Francisco are leading the industry nationally. Maui is leading statewide, and the Big Island is trailing.

This is expectable. As the travel market collapsed in 2008, hoteliers first began to try to attract customers by “adding value, by adding a day or a room.” Operators hate to lower posted rates, because they learned by experience in the 1990s that travelers quickly become accustomed to cheaper prices and resist when they go back up again.

But when a downturn is as deep and long-lasting as this one, price discounting is sooner or later forced on operators. There is really nothing they can do to resist, Toy said, and not much they can do to prepare to put rack rates back up.

Operators everywhere face the same pressure, he said.

Through September, Maui’s hotel occupancy rate is way up, by more than 10 percentage points, from 59.9 percent in January-September 2009 to 68.9 now. A sustained rate under 60 percent had been unheard-of in Maui County, though it was common fare for Big Island resorts.

Oahu’s occupancy did not fall so low in 2009, and it has not recovered as fast as Maui’s, but it is up from 72.1 percent to 78.3 percent.

Discounting is not so obvious on Oahu, either. Posted rates this year have averaged $147, less than $3 below 2009 rates. By contrast, Maui’s posted rates of $225 are $15 lower than last year.

During a downturn, Toy said, rates tend to compress. The lowest don’t fall as much as the highest, and from the customers’ point of view, two things happen.

One, the traveler becomes more price conscious, choosing a cheap price over a more highly regarded lodging. On the other hand, some customers maintain the same level of expenditure but are able to trade up to a more fashionable resort.

With bigger inventories and a wider selection of places to stay, Oahu and Maui have a better chance of selling a room to either sort of buyer.

The smaller islands lag the larger ones in good times and bad, and especially in bad. Kauai’s occupancy rate this year has risen slightly, from 58.9 percent to 61.0 percent; and its operators have dropped average rates from $189 to $184. The Big Island occupancy is up slightly, too, from 54.5 percent to 56.5 percent; and rates are down from $184 to $182.

However, other things also are going into the mix, Toy noted.

Larger numbers of visitors encouraged airlines to add more seats to Maui, and more seats encouraged more visitors. Seats from Maui’s biggest catchment area, the western states, are up by 12.8 percent. From Canada, seats are up 39 percent.

The object of all this maneuvering is total take, and revenue per available room (RevPAR) is up by $11 to $155 on Maui.

It is up by $7 to $115 on Oahu, by less than a dollar to $112 on Kauai and by $2 to $103 in Hawaii County.

Owners – usually not the managers nowadays – continue, however, to struggle. Many, perhaps most, Hawaii resorts are more or less in default on their loans, but for the most part lenders are not rushing to foreclose.

The situation is different now from what happened in the mid-1990s, Toy said.

Then, owners were typically Japanese with little to no experience in the lodging business, and many properties were seriously deteriorated. In order to straighten things out, ownership had to change.

Today, the physical problem is not as acute, although capital infusions are going to be needed, and lenders are more willing to try to work with owners to restructure debt. It’s called putting the note into “special services.”

The statistics are compiled for Hospitality Advisors by Smith Travel Research, although Las Vegas does not participate in the voluntary surveys.

Of the destinations that do, Hawaii is holding up comparatively well.

In occupancy this year, the top five markets are New York City, 80.9 percent occupancy; San Francisco, 76.2 percent; Hawaii, 71.2 percent; Miami, 70.1 percent; and Boston, 70.1 percent.

The top five in average daily rate are New York City, $217; Hawaii, $173; Miami, $146; Washington, D.C., and surrounding areas, $143; and Boston, $140.

As usual, luxury properties are taking in half or more of all the lodging dollars in Hawaii: $1.09 billion so far this year.

Luxury resort revenue is up 9.1 percent.

The budget class (which does not exist on Maui) shows the same relative gain, up 9.7 percent, but its effect is negligible in the big picture: only $77 million.

The compression shows in the revenue gains of the sandwiched classes: Upscale resorts have taken in 4.8 percent more ($384 million); as have economy ($86 million). In the middle, midprice resorts have moved up the least, 2.5 percent, with a total of $264 million.