The president and CEO of one of Hawaii’s most unique hotel chains told BYU-Hawaii business students how the company has evolved over the past 50-plus years from a spare bedroom through a string of affordable lodgings spread throughout Waikiki, to an international network of properties that include luxury service at premium rates.
Speaking at the Mar. 4 School of Business Entrepreneurship Lecture series, David Carey traced the growth of Outrigger Enterprises back to its founders, Roy and Estelle Kelly who started leasing out spare bedrooms in their Waikiki home not long after World War II, then started building their own hotels or buying them and converting them into the Outrigger chain which featured limited services at affordable rates.
Carey explained Roy Kelley was one of the first to recognize that "the introduction of jet service made a Hawaii vacation suddenly possible to a large number of people,” and that many of them would be looking for a bargain.
“At one time we had approximately one-fourth of all the rooms in Waikiki,” Carey said. He added that this dynamic changed with increased competition from Mexico and Las Vegas along with the development of mega-resorts.
“The time it takes to travel to a resort becomes a factor,” he said. “That time becomes precious, so what was it going to take to get people to take the time to come here.”
Carey said Outrigger Enterprises became much more conscious of their Waikiki environment, and is working toward developing a major plaza concept along Lewers Street, similar to idea of going to Bourbon Street in New Orleans.
Outrigger has also differentiated their properties by creating the ‘Ohana label’ for budget hotels, while upscale products now fly the Outrigger flag.
The company now manages properties for others, even has a co-branding relationship with Marriott on Maui and in Kona, and also got into the condominium business.
“Hotel guys usually don't want to do that,” he said. “We got into the condominium business to serve our repeat customers, who usually like to travel with their families. It was inconsistent with our roots, but it was very consistent with the growing market."
Outrigger has also expanded to the mainland and throughout the Pacific islands. “In 1970 we had one property on the neighbor islands, and everything else was in Waikiki. Today, Waikiki is only about half our business. We've made progress by diversifying,” Carey said.
He explained this meant exporting its expertise with authentic island hospitality to wherever they operate. “What I truly take home from a trip is the people I touch; and what's really important in our business is having guests want to return. Customer satisfaction is pretty much a mantra for our company.”
Carey said that since their customers come from all over the world, marketing is a global effort for Outrigger.
“Of course, no discussion about distribution today would be complete without the Internet,” Carey said. “It's changed the way we do business. We spend an enormous amount of time and money to make sure it works.”
Asked to share his advice with the business students, Carey said in his experience, “People that are the most successful, and I 'm not necessarily talking about money, are people who follow their passion. Do something you really like.”
He added, “Never stop learning. There's always something to be learned. And take time for your family. Give back to your community and church.”
Asked how the hotel business has been faring recently, Carey said Outrigger’s occupancy percentage rates are currently running in the “high 70s, but in our peak years, we were running in the high 90s. People make their decisions about traveling about 60 days out. March is okay on our books right now, but that could change in a week.” He also stressed that a long war could drastically impact Hawaii tourism.
"The great unknown is how deep, and how long, and to a lesser extent when,” Carey said. “I’m optimistic if it's a short conflict.”