Over the weekend, I noticed two encouraging signs for the near future improvement of our economy.

First is an increase in available passenger arrivals from Japan. The airlines have agreed to increase capacity by 3 1/2% starting just before our winter season. These customers are our highest spending visitors, leaving many dollars here in our economy to stay.

Second, I had a conversation with the general manager of a major Waikiki hotel, who said that 50% of his business is from Japanese customers. He also noted that as of this weekend, the yen was at 90 per dollar. This is exceptionally strong for this foreign currency, and is almost at the strongest point we’ve seen it in the past 15 years. If these Japanese visitors continue to arrive, particularly here on Oahu, we will see a nice, steady upturn in spending on the island of Oahu and hopefully, neighbor islands as well.

Today I was reviewing a list of 18 properties in Hawaii that were either in foreclosure or some form of distress. The majority of these properties are hotels that have had the tables turned over on them. They were bought in 2005 or 2006 as average daily rates were increasing and today the hotels have had to reduce their rates by as much as 40% to keep occupancy up. We seem to be trailing most major cities in the United States on these distressed properties, but it is becoming evident that in some of our resort and hotel properties there will be some great buys from the lenders.

The next question is how long will the lenders be willing to hold on to these properties?