Hawaiian PUNCH

No one area represents the evolution of sprawling Honolulu better than Pucks Alley, a cluttered mish mash of shops and hole-in-the-wall restaurants a block from the University of Hawaii.

On one end, the smell of barbecued chicken from a traditional plate lunch eatery clashes with the odor of stale beer from the neighboring upstart pizza joint complete with its pot-planted palm trees. On the other, barefoot, bleached-haired college kids suck on slurpees from a run down convenience store while other shoppers filter through the new furniture store across the way.

The tenants here come and go as quickly as a UH senior class and chances are, many won't be around the next time you're in town.

If they were smart, they would consider moving into equipment rental.

A mile down the road on South Beretania Street is a tribute to longevity, a 35-year tenant who has seen the city change and has enjoyed the ride. It's a business that is recognized by the locals for the creative language on its signboard outside as much as it is for the range of rental equipment inside.

Much has changed in Hawaii and in island rental since RER last visited with Hawaiian Rent-All president Gordon Loui in 1974. The state has moved away from pineapples and sugar cane as a primary income source in favor of tourism and its latest attempt to lure big business — the massive $350 million Hawaii Convention Center, a stone's throw from Waikiki — opened last year. Loui himself has gained a few pounds and lost a little hair but he is infinitely more knowledgeable on the rental business than he was more than two decades ago.

In late 1974, Loui had just ended his relationship with now-defunct United Rent-All after the West Los Angeles-based chain opted not to renew the contract with its island dealer. Loui said “mahalo” (thank you) and has never looked back, turning his firm into the $1.5 million-a-year outfit it is today.

“Seventy four was a pivotal year for us,” he says, adding that United was not even aware its contract with Hawaiian Rent-All had expired until he brought it to their attention. “Hawaii is a small market and I'm not sure there is enough volume for the big [rental] companies.”

United's apathetic attitude towards Loui's firm was not unusual then and neither is it now with none of the RER 100 companies having a Hawaii branch. But the thriving independents might prefer it that way.

Twenty-five years ago, Hawaiian Rent-All was the only general rental store in town. Today, it is still the largest but there are more than a dozen construction and tool rental outlets scattered across the five main Hawaiian Islands plus a handful of others geared to party rentals.

“Business is really picking up again and we've always had high utilization here because we don't have weather problems.”
— Gordon Loui

About 40 percent of Loui's business comes from contractors with the remainder a mix of homeowners, industrial and hotel clients. The 9-employee store specializes in mini-excavators, pressure washers, small generators and air power tools.

Island style

After battling through Hawaii's cash-strapped economy a decade ago, local political decisions as much to blame as the floundering Japanese economy on which the state is so reliant upon, Loui says, his business has rebounded to about 70 percent of its peak in the early 1980s. And there is plenty to go around.

While competition for that business has increased, the rental stores here often work together, sharing equipment and ordering in bulk from the mainland United States then distributing that equipment to other rental stores locally to lower shipping and other costs.

Aiding the process, transportation has become more streamlined thanks primarily to the development of long-term relationships with several suppliers. Equipment that once took weeks to arrive now arrives in days.

Still, as anyone who has been to Hawaii can attest, nothing comes cheap, including shipping. To compensate, Hawaiian Rent-All keeps its larger equipment for up to 10 years. With an average year-round temperature of 77 degrees in the Aloha state that equipment isn't subject to a harsh climate and likely lasts longer than machines on the mainland. And the long equipment life can do wonders for the bottom line.

“Business is really picking up again and we've always had high utilization here because we don't have weather problems,” he says.

Lost at sea?

The many benefits of being stranded in the tropics notwithstanding, it doesn't mean doing business is any easier than it was in 1974.

“It's like kneading bread, you stretch it and pull it different ways. “We do the same thing with words. We try to keep the signs topical and often they reflect what's going on in town.”
— Gordon Loui

Loui has had his share of difficulties since. Hawaiian Rent-All's former location in Waipahu on the tough east side of Oahu closed 20 years ago after repeated burglaries. The company considered opening a new location in Honolulu's industrial district but exorbitant land prices stifled that idea. Stringent federal regulations regarding emissions standards are another never-ending challenge as is the keeping up with equipment that is in style one year and out the next.

That said, Hawaiian Rent-All doesn't figure to be going out of style anytime soon.

Loui, 64, has no immediate plans to step away from his business and sees a bright future ahead with online equipment rentals.

While the majority of Loui's mainland counterparts have struggled to realize any benefit from online equipment rentals, he is optimistic that it can be a viable revenue generator. Loui pinpoints the need for new clients to book their equipment in advance, particularly those who are coming from out of state and are not familiar with either the type or amount of equipment available.

Word savvy

Creative minds won't hurt the company's future either.

Hawaiian Rent-All occupies a nondescript brick building on a 5,700-square-foot lot overshadowed by the splashy colors of a gas station and a fast food franchise across the street. The store's inventory is kept inside and behind the building so to the casual observer the place could be a furniture store, restaurant or any one of a host of other establishments. What draws one's eye to the building, and often elicits a chuckle, is the company's signboard that is as much a tradition and talking point as a Hawaiian sunset or the surf on the North Shore.

Messages are compiled from employee thoughts and submissions from the general public. Consider some of the recent offerings: “Love quickens all the senses, except common sense,” “Why do fishermen catch fish by the tale?” “As you speed thru life, remember where the brakes are,” and one of the latest during the close of UH's spring semester, “Celebrate your graduation with our tables and chairs.”

“It's like kneading bread, you stretch it and pull it different ways,” Loui says. “We do the same thing with words. We try to keep the signs topical and often they reflect what's going on in town.”

Perhaps some of the university's aspiring writers could take a lesson from the rental veteran on how to get a start on a successful career. Other rental center owners obviously have.

No Aloha for Consolidators

Hawaii has no trouble drawing vacationers from around the globe to its sandy beaches, crystal clear waters, luxury hotels and luaus. Luring America's leading rental chains into the Pacific is a different story.

Not one of the RER 100 companies has a branch on the islands. In fact, none has ever had a branch there.

“You grow where you think there's going to be a need for equipment,” says Fred Bratman, vice president of corporate communications at No. 1 United Rentals, which has 755 locations scattered across North America. “I wouldn't say we don't have an interest in Hawaii but there just hasn't been an opportunity for us.”

That sentiment is shared by many, most of whom joke they would love a location in the 50th state to visit. It appears that luxury will have to wait.

“The nature of Hawaii is it's going to be a tough market for a national firm to break into,” says Phil Petrocelli, executive vice president at No. 4 NationsRent. “We look at forecast growth rates and logistics such as [ease of] equipment delivery and management time and the numbers just wouldn't make it work.”

National Equipment Services, No. 6, has considered acquisitions as far west as Alaska and Washington but has veered away, choosing to focus closer to its Evanston, Ill. headquarters.

“The farther away we go from here the bigger the headache,” says senior vice president Paul Ingersoll. “We don't have an aversion to [Hawaii] but you would have to make sure it's worth your while.”

Rental volume plays a large part in determining what is worthwhile and most rental stores on the islands only earn in the $1 million-a-year range. Potential for growth is also evaluated although the Hawaiian rental market apparently lacks that too.

“We're opportunistic and we go where we can grow,” Bratman said. “When we look at businesses, nothing in Hawaii has been on our radar screen.”

Hold the mai tais.
— P.C.

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