A full 25% percent of all Hawaii businesses have closed as a result of the COVID-19 pandemic and recession.
The findings come from a business survey published by the state Department of Business, Economic Development and Tourism.
The numbers are even worse in tourism-dependent industries like hotels, retail, and entertainment, where nearly half of businesses are closed.
The situation appears poised to get worse before it gets better. Bank of Hawaii CEO and President Peter Ho, who also sits on the State House of Representatives Select Committee on COVID-19, said the overall number of closed businesses could double in the coming months.
“If we push out 6 plus months, that number could easily go to 50%,” Ho said in a recent meeting of the committee.
“Think about the process of restarting your economy with half of your small businesses gone. It's not like they reopen on day one because they’ve been stripped of capital and liquidity,” the banker noted.
The much-awaited traveler testing program recently launched by the state has brought some visitors back to the islands, but that may not be enough to stop the economic bleeding.
Airline data collected from last week shows collected by DBEDT shows that around 5,000 people per day arrived in Hawaii. That represents only around 20% of pre-pandemic levels.
That likely will not be enough to prevent more businesses from closing according to Carl Bonham, who directs the University of Hawaii Economic Research Organization.
“You’re talking about occupancy rates in the 20-30% range. Hotels don’t make money at 20-30% occupancy. Restaurants don’t make money when they’re 50% full,” said Bonham, who also sits on the House COVID Committee.
“That is not enough to sustain all the small businesses,” he added.
What could sustain them is another round of financial support from the federal government. The $2 trillion CARES Act, passed in March, poured billions of dollars into Hawaii’s economy in the form of stimulus checks, expanded unemployment benefits, and emergency loans for small businesses.
Those resources helped businesses survive the initial spring lockdown during which many were shuttered by state and county mandate.
CARES Act funds for businesses have long since been depleted and with Congress deadlocked ahead of a presidential election, more fiscal support appears unlikely in the short term.
The state and counties have attempted to provide help through programs like the Hawaii Restaurant Card, but Peter Ho says those programs will not enough to turn the tide.
“That’s all helpful, but it probably requires a larger dose of capital than what’s available,” he noted.
With more federal stimulus potentially off the table until next year, Hawaii’s workers and businesses may be in for a long winter.