November 2009

IMPORTANT MESSAGE

To: All Ohana Beach Rentals Hawaii Property Owners

As we begin our steady march to the close of this year, and look toward the beginning of what we hope is "a much improved high season", I would like to take this opportunity to update all of you, our valuable property owners. It has been a very challenging year to say the least for us all. I have heard from a great many of you throughout the year, regarding the personal challenges you have faced in these difficult economic times, as well as your concerns over your Hawaiian real estate investments.

Hawaii, in general, seems to have "faired better" than a good deal of the mainland in most all respects. However, we have had our share of pain and it has changed tolerances and perceptions on a number of issues. We have had historic lows this summer in Hawaii hotel/rental occupancies and rates. The dramatic downturn of Hawaii’s number one “industry” has been severe enough for the Honolulu City Council’s Zoning Committee to pass a bill that could potentially legalize hundreds, if not thousands of Bed and Breakfasts on Oahu; something that has not been allowed in over three decades here on island.

As tolerances seem to be growing in the city for revenue streams that once were considered undesirable, those same tolerances swing toward the sympathies of the homeless. The number of homeless has indeed grown and their presence is more visible than ever before and especially in our parks at night. The local police sympathize with their plight and enforce the vague laws with little enthusiasm. The impact on vacationers is uncertain but Hawaii did experience its worst "visitor count" this summer in its history.

In the last year our real estate brokerage had precious few "closings" and properties that were for sale received few calls and even fewer requests for showings. Twenty five percent of all licensed real estate agents on island were reported to have gone "inactive", as they could no longer survive in the real estate market. However the tide has seemed to turn. Our agency has placed several properties into escrow the last 30 days and had several more closings in the same period. Nothing was selling and now product is beginning to move; but at prices up to 35% off of listing prices of just one year ago. The "opportunists" with cash have emerged and inventory is beginning to be snapped up including a dwindling supply of "short sale" product. We are even seeing short sale product being "bid up" with multiple offers to the lien holder "above listing price"... We believe that if this trend continues for another 6 months we may see a relatively normal "real estate summer in 2010".

The rental market has also seen its fair share of changes in 2009. At first it was an economic "bright spot" for our company that our category of product out performed most major hotels. We offer more space, more privacy, and often more amenities and for "less than the cost of hotel room". However the hotels did not sit idly by as their occupancy numbers turned "morose". We all had to fight hard to win the consumers "lodging dollars" who were visiting this year. This meant that many of you experienced a reduction in gross income dollars while occupancy was similar to or even ahead of 2008. The consumer was keenly aware that they could negotiate "any published price" and would even boldly ask for a "recession discount". Our policy internally adapted to a "get the owner money now" strategy as opposed to staying firm on price, and losing the bookings altogether. Hotel rates in Waikiki were dipping to $69.00 per night on special along the strip such as Hyatt and Marriott. Even the New Otani Hotel on the Gold Coast here advertised ocean front suites at $99.00 per night.

Now that the dismal summer and "low season" (September and October) is behind us we look forward to an improved Holiday Season for Hawaii and Oahu specifically. Typically our customer books with us 5-8 months out but that has been altered dramatically by the economy as well. Last minute bookings are now commonplace and we see it in our pasts months’ numbers that we can add 10-15% more volume "within the booking month", which historically was not the case. Occupancies for this Holiday are also positively firming up overall as our intense marketing and advertising campaign of the last year "pays off" as well our constant acquisition of competitor market share. As a company we spent more on advertising of all kinds in 2009 than in any previous year. In addition, as many of you know, Ohana Beach Rentals Hawaii became the exclusive hotel operator of the Diamond Head Beach Hotel and Residences on the Gold Coast as well as the only "authorized third party rental vendor to date" at the Trump Tower Waikiki Project.

The good news is that as a company we are strong and healthy and with the best, most highly trained staff in our history. We recently added a "china desk" and welcome Lee Zai who runs this new division. It was "big news" here last month that "direct flights from Beijing to Hawaii on China's Hainan Airlines was announced". (Honolulu Advertiser Business article October 12, 2009). Our real estate division has added several new "high profile" real estate agents from competitors that have gone out of business such as Hawaii Realty Associates who recently went bankrupt.

In closing, we hope to spread some Holiday Cheer this year by hosting a Holiday Bash at the Diamond Head Beach Hotel on December 19th from 5 to 8:30pm. Music, Pupus, Wine, Art exhibits, and other surprises will be on hand for all our Property Owners, Guests and Friends to say "thank you" for your support and "lets make it a great year in 2010. All of us at Ohana Beach Rentals Hawaii hope you can make it and if not then we will consider you "here in spirit"... Invitations will be arriving by email soon to everyone

Warmest Aloha
Warren Daniel and Staff