Borders bankruptcy won’t affect Maui stores
Two branches on Big Island, Kauai will be shut down

By MELISSA TANJI, Staff Writer
Article from: The Maui News

KAHULUI – Maui shoppers are pleased that the two Borders bookstores on the island would not be closing despite Borders’ parent company filing for bankruptcy protection Wednesday.

The Borders Books Music Movies & Cafe at Maui Marketplace and the Borders Express store at the Queen Ka’ahumanu Center will remain open and are not affected by the bankruptcy, store officials said Wednesday morning.

Kevin Tanaka, the service manager at the Maui Marketplace store, said it was “business as usual,” and customers were waiting outside the store’s door before it opened, which is a common occurrence.

Only two stores in Hawaii will be closed, one in Kailua-Kona on the Big Island and the other in Lihue on Kauai, according to a bankruptcy filing.

The company said it will close about 200 of its 642 stores in the next few weeks. It cited cautious consumer spending, negotiations with vendors and a lack of liquidity as reasons for its troubles.

Kihei resident Stella Saadnia, who visits the Maui Marketplace Borders about once a week, said she likes the store’s variety of CDs, books and magazines and enjoys its cafe, where she can meet people and hang out.

“I like that it has a lot of different things,” she said outside the store Wednesday morning.

She also said it would be sad if the store were on the chopping block, noting that she still likes to read books despite the trend of people turning to electronics to read stories.

“I like the old-fashioned way,” she said.

Pukalani resident Robert Tomlinson said he feels the same way.

“I have a library at home,” he said outside the Maui Marketplace store. He added that he reads five books at a time and loves to give books away as gifts. Tomlinson said Borders has a good selection of Buddhist books as well as other religious books.

The Borders stores in Kahului and the Barnes & Nobles bookstore in Lahaina are the only two large major bookstore chains on the island.

Borders store officials said the Borders Express store at Piilani Village in Kihei closed about a month ago. Borders Express stores at the Whalers Village in Kaanapali and Lahaina Cannery Mall closed in January 2009.

Some times I get so caught up working I forget to take a moment to slow down and enjoy Hawaii for what it has to offer. So for all of those who are trapped in poor weather and are over worked, take a deep breath and take a mini vacation with me.

In other news, and in an effort to enjoy my dog’s company more, Deagle and I will be blogging pet related information such as pet friendly complex reviews, top picks, and quarantine processes.

Aloha from Maui

Fed Forecasts Faster Growth as Economy Improves

By SEWELL CHAN
Published: February 16, 2011
Article from: NYTimes.com

WASHINGTON — The Federal Reserve revealed Wednesday that its policy makers had substantially upgraded their forecasts for how much the United States economy will grow this year, though they expect unemployment to remain painfully high for some time.

Top Fed officials now expect the output of goods and services to grow by 3.4 percent to 3.9 percent this year, up from the previous forecast, released in November, of 3 percent to 3.6 percent. But their grim outlook for the job market was largely unchanged: 8.8 percent to 9 percent unemployment this year, only one-tenth of a percentage point lower than in the November forecast.

Growth expectations were lifted by an improvement in consumer spending in the fourth quarter, though Fed officials were uncertain how long that would last, according to minutes released on Wednesday of the Fed’s policy meeting in late January.

“On the one hand, the additional spending could reflect pent-up demand following the downturn, or greater confidence on the part of households about the future, in which case it might be expected to continue,” the minutes noted. “On the other hand, the additional spending could prove short-lived, given that a good portion of it appeared to have occurred in relatively volatile categories such as autos.”

At the meeting, the Federal Open Market Committee, the Fed’s main policy arm, voted unanimously to continue a plan announced in November to purchase $600 billion in Treasury securities, the second round of a strategy that is intended to push down long-term interest rates and lift share prices. The strategy, known as quantitative easing, has been controversial — critics say it could set the stage for future inflation and asset bubbles — but the Fed has been fairly unified behind it.

The minutes indicated that Fed officials saw a diminishing risk of deflation, a protracted fall in prices of the sort that has afflicted Japan for more than two decades. That fear of deflation was a principal factor behind the decision in August to set the stage for the bond purchases.

Other economic reports issued on Wednesday supported the Fed’s view of an economy starting to gather some steam. The Commerce Department reported that new home construction rose by the largest amount in 20 months, and the Labor Department reported that wholesale prices rose sharply in January, driven up by gasoline and pharmaceuticals. Excluding the volatile food and energy categories, the index rose by the most in more than two years.

The Federal Reserve’s own report on industrial production in January was more mixed. Factory output rose for the fifth straight month, spurred by strong car and struck sales, but utility and mine output fell, leaving the overall level of production lower, the first month-to-month decline in 19 months.

For their part, investors have been bidding up stock prices steadily since late November. In midafternoon trading, the S. & P. 500 index was about 0.6 percent higher for the day and 6.2 percent higher for the year.

The minutes painted a picture of a committee that was not quite certain about how long and painful the recovery would take from the 2007-9 recession — the longest downturn since the Depression.

“On the downside, participants remained worried about the possible effects of spillovers from the banking and fiscal strains in peripheral Europe, the ongoing fiscal adjustments by U.S. state and local governments, and the continued weakness in the housing market,” the minutes stated. “On the upside, the recent strength in household spending raised the possibility that domestic final demand could snap back more rapidly than anticipated. If so, a considerably stronger recovery could take hold, more in line with the sorts of recoveries seen following deep economic recessions in the past.”

Although food and energy prices have increased recently, especially in fast-growing emerging markets, the committee did not have a consensus on whether that development would lead to higher inflation in the United States, noting that the factors affecting businesses’ ability to pass higher costs through to their consumers were “complex and hard to monitor in real time.”

The minutes noted that most Fed officials viewed the large slack in the economy — that is, the economy’s underperformance relative to its potential — as “likely to remain a force restraining inflation,” and believed that while price declines were unlikely, inflation was likely to remain below its desired level (2 percent or slightly below) “for some time.”

Some participants also said that if the public doubted the Fed’s willingness to reduce its huge balance sheet — by selling the financial assets it acquired as a response to the crisis — when the time comes to do so, “the result could be upward pressure on inflation expectations and so on actual inflation.”

In recent months, the Fed chairman, Ben S. Bernanke, has been adamant in saying that the Fed was ready and willing to curb inflation — and could even raise interest rates at a moment’s notice if it needed to.

The committee’s unanimous vote in January to consider the $600 billion bond-buying program, which is to continue until the end of June, surprised some observers, because a small but vocal minority on the committee had questioned the need for the program. But the minutes revealed that for now, the committee was unified on continuing the purchases, viewing the risks to doing so as manageable.

“A few members noted that additional data pointing to a sufficiently strong recovery could make it appropriate to consider reducing the pace or overall size of the purchase program,” the minutes stated. “However, others pointed out that it was unlikely that the outlook would change by enough to substantiate any adjustments to the program before its completion.”

Government of Singapore offers to buy Grand Wailea

Proposal is for 5 elite resorts

February 15, 2011 – By HARRY EAGAR, Staff Writer
Article from: The Maui News

According to Bloomberg News, the government of Singapore is offering to buy the Grand Wailea and four other resorts that the Paulson & Co. group put into bankruptcy Feb. 1.

The reported offer of $1.5 billion is close to what the five elite resorts have been valued at in a complicated change of ownership that resulted from Morgan Stanley’s takeover of CNL Resorts.

Bloomberg said the offer was revealed in the U.S. Bankruptcy Court in Manhattan on Monday.

The bidder is the Government of Singapore Investment Corp., a sovereign-wealth fund.

Sovereign-wealth funds are investment businesses run by governments that, like Singapore, enjoy large trade surpluses and need to find ways to use their foreign currency balances. The fund has $100 billion and, according to Bloomberg, is one of the creditors of the resorts.

An investment group led by the Paulson hedge fund managed to take over the Grand Wailea by foreclosing on the previous owner. But the five resorts were pledged as collateral for a billion-dollar loan, and while the new owners tried to work out a restructuring and extension of the debts, they did not do so by a Feb. 1 deadline.

Hence, the bankruptcy filing.

At Monday’s hearing, Judge Sean Lane approved an order allowing the resorts to use the cash collateral of lenders until Feb. 28. “Without access to the cash, the resorts won’t be able to operate and the ‘entire restructuring may be jeopardized,’ lawyers said in court papers,” according to Bloomberg.

Hotels ended 2010 with higher rates, occupancy

By Allison Schaefers
Article from: Star-Advertiser

Hotel Occupancy and room rates in December helped push Hawaii’s hotel room revenue to $2.55 billion in 2010, according to hotel consultancy Hospitality Advisors LLC.

While the 8.7 percent year-over-year gain was good news for the beleaguered industry, room revenue was still well below the 2006 peak of $3.12 billion.

“What we saw in 2009 and 2010 was that the revenues essentially evaporated from the market, dampening profitability and short-circuiting debt services,” said Joseph Toy, Hospitality Advisors’ president and CEO.

In mid-2010, Hawaii’s hotel industry began to turn around, Toy said. After two years of discounting, Hawaii hoteliers finally saw the statewide average daily room rate (ADR) increase during four of the last six months of 2010, Toy said.

December provided a strong finish to the year, he said.

In December, statewide occupancy rose 6.8 percentage points to 69.4 percent. At the same time, ADR increased 3.8 percent to $203.56, and revenue per available room (RevPAR), a key measure of profitability, climbed 15 percent to $141.88.

For the year, Hawaii’s statewide occupancy rose 5.9 percentage points to 70.7 percent, earning it the nation’s third-best occupancy behind New York City and San Francisco. Hawaii’s year-end ADR fell 1.56 percent to $174.33, but the state’s nightly rates came in second only to New York. The state’s year-end RevPAR, which also lagged only New York, rose 7.39 percent to $123.25.

Hawaii’s hotel industry might have held its own against other U.S. destinations; however, it has a long way to go before matching the peak levels of several years ago.

“The occupancy has returned to more normal levels, but the average rate is still down about 15 to 20 percent from the peak and costs have risen 5 to 10 percent,” said David Carey, president and CEO of Outrigger Enterprises Group. “Hotels and their owners continue to be squeezed.”

Factors such as rising oil prices, increased labor and operational costs and loan terms could make or break some hotels this year, he said.

Hawaii’s tourism recovery gained momentum in 2010 as hoteliers regained some of the nearly 25 percent in revenue per available room that was lost during the industry downturn in 2008 and 2009. However, Toy said that most of the improvements were related to occupancy gains from price discounting. Moving forward, the challenge for hoteliers will be to sustain consistently high enough occupancies to achieve lasting rate growth, he said.

“When we see occupancies that are sustained above 78 percent, we’ll see hoteliers with the ability to raise rates,” Toy said.

For instance, hoteliers raised rates 21.9 percent from 2005 — the year occupancy peaked at 81.8 percent — to 2008 when statewide ADR topped out at $202.64.

While Hawaii hoteliers are hoping this year to continue building on the strides made during the latter half of 2010, soaring rates are still far away, said Keith Vieira, senior vice president and director of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia.

“We are still six years away from even achieving the profitability of 2006 and 2007,” Vieira said.

Save for Hawaii’s highest-demand periods, consumers probably will see similar prices this year, Vieira said.

“We’ll probably take away some of the value-adds like free breakfasts and room nights, but it’s hard to drive prices without consistent yield,” he said.

In addition, commitments that were made last year when the market was down to travel wholesalers and package providers will lock about half of the state’s hotel inventory into softer prices through December, Carey said.

“It’s hard to respond quickly when the market changes,” he said.

While some sought-after properties in Waikiki and Maui are seeing pockets of high occupancy now, Toy said statewide recovery is uneven. Waikiki hotel rates likely will recover next year, followed by Maui, he said. The Big Island and Kauai probably won’t see significant gains until compression in Waikiki and Maui sends more travelers their way, Toy said.

“It could be 2013 or longer before the state’s entire hotel industry begins to regain rate,” he said. “Profitability is even longer out.”