As Kalakaua Avenue bustled with tourists below, lonely kiosk vendors on the Waikiki Shopping Plaza's third floor sometimes outnumbered customers. Across the street at the Royal Hawaiian Shopping Center — which is in the middle of a more than $84 million renovation — some longtime stores were open but virtually empty.

While tourists are visiting Hawai'i at near-record levels and hotels are making more revenue than ever, some small businesses in Waikiki are struggling, in part because of their location.

Business has been slow for many vendors on the Waikiki Shopping Plaza's third floor — called Big Kahuna's Marketplace — which opened in January and features about 60 kiosks and a "3-D glow" mini-golf course. Even with the Marketplace's clean, air-conditioned environment, getting customers to venture up two floors in the building and shop has been a challenge.

"Up here on the third floor, everybody has a hard time with sales," said Evan Moniz, who sells Crocs footwear in the Marketplace and got a second job to help pay his bills.

"One lady, she gets one to two customers a day," Moniz said as he looked around the area. "That ... shop, they didn't get any customers today so they shut down early. ... If a lot of these businesses were out on the street, like on the sidewalk in Waikiki, they'd get a lot of customers because people would be going by it. A lot of people have good products. ... But it's just bad location."

Jennifer Doan, who owns two jewelry kiosks at Big Kahuna's Marketplace, said she's breaking even but isn't making a profit.

"It's so hard to get people onto the third floor," said Doan, who also is a part-time Realtor. "In Waikiki, when you walk right out, you can see hundreds of people walking ... but here, I don't think you even get 10 percent of that."

Doan said plaza owners and managers "are doing everything they can" to bring customers to the third floor, and stressed that location is not the only factor hindering businesses at the Marketplace. More Japanese tourists, for example, are bargaining for lower prices, she said. Some vendors also just don't seem to be trying. Many "sit and do nothing," some leave, and others even fall asleep, she said.

Waikiki Shopping Plaza leasing manager Jaysey Choi agreed that the third-floor location is a challenge, noting that customer traffic in general typically declines from the first floor to upper floors.

"If it was (on the) first floor, this would be the best place to shop," he said. "All the vendors would be very, very, very happy."

But Choi added that a handful of vendors have been successful and that many tenants also have other obstacles, including a lack of business experience. Many vendors also sell items similar to those found at the street-level International Market Place.

"International Market Place vendors just sit there and they make money; because they've been there so long, it's a destination for tourists," he said. "It's not a destination for tourists in our case yet."

Choi was optimistic that business will improve. Plaza management officials began holding Polynesian shows on the third floor most nights, and beginning in January will offer additional cultural classes like hula, 'ukulele and quilting lessons. Management also has been offering vendors business counseling with local retail sales consultant Ron Martin of Success Dynamics.

ONE SUCCESS STORY

Not everyone on the plaza's third floor is complaining.

Kenneth Harper, owner of Smile Now Cry Later Clothing Co., said he has added more kiosks and wall space at Big Kahuna's Marketplace since he opened in July. He has three employees.

"I've doubled in five months," Harper said. He said sales are "decent" and that he's among the vendors on the third floor who are "meeting their goals."

Everything in retail is about location, said local commercial real-estate consultant Stephany Sofos. She said customers generally don't like to go to higher floors to shop unless there are popular, "destination" stores or restaurants.

"People don't like to go ... upstairs; they feel uncomfortable," she said. "It's always hard to get up past the second floor."

"When you shop in today's world, it's always about comfortability, convenience, security and pricing. And so even in Waikiki, you're not used to where you're going, you don't know the place, and you're nervous ... unless it's very open and very comfortable."

ROYAL HAWAIIAN'S WOES

Some stores and restaurants in the Royal Hawaiian Shopping Center across the street also have suffered a drop in business, in large part because of the heavy construction that began in July 2005 to renovate the property. On a recent day, about a dozen trucks and construction vehicles lined Kalakaua Avenue in front of the center, which is mostly surrounded by fencing, boards and barriers. Many tenants also are remodeling or haven't opened yet. The project is expected to be completed in mid-2007.

Since construction began in the shopping center — as well as the nearby Outrigger Enterprises' Waikiki Beach Walk project — The Little Hawaiian Craft Shop has seen a considerable drop in customers. The store has been in the Royal Hawaiian Shopping Center for more than 20 years.

Sales have "dropped off significantly," said manager Kimberlee Nihei. "We've seen a dramatic decrease in the amount of traffic."

"Hopefully (the project) will be worth all of the stress and the headache right now. ... It will be beautiful after it's done. But to get to that point, it's been very frustrating."

The days also can be pretty boring for Polynesian Cultural Center reservations employee Karine Molale. Her kiosk in the Royal Hawaiian Shopping Center has been temporarily moved to an area near walkways cluttered with construction barriers. She said she only sees half as many customers now compared with last year.

"We used to be by the stage; everybody could see us from the roadside from every direction," she said. "But here hardly anybody can see us. It's hard for them to find out who we are."

"I do support (the construction) to make it better and to look better, but I'm just hoping that it will be a little faster and sooner," Molale said.

Business at Faces Studio & Salon is "not so great," said manager Etsuko Hedden, who added that local customers have helped cushion the drop in tourists. "Not everything is open, so some customers think we're also closed."

Still, Hedden said she supports the construction.

"We needed it," she said. "For the long term, you think about the future, it will be better anyway. So we just hang in there."

Xavier McClure, development manager for The Festival Cos., the developer and property manager for Royal Hawaiian Shopping Center, acknowledged the challenges involved for tenants during construction and said officials are doing "the best we can" to work around them and minimize the impact.

"Our tenants, of course, have been very patient and they understand the nature of the improvements that we're doing here," McClure said. In the long term, "the tenants will be able to ride the wave of increasing sales, increasing traffic, better product here, better tenant mix. Of course, it's going to take a while to get there, but we're certainly seeing the light at the end of the tunnel for the project."

Scott Shimoda, manager of Island Snow in the Royal Hawaiian Shopping Center, appreciates the value of a good location. The store, which has moved five times over the past several years, is in a good spot on the ground floor now, he said.

"Location is pretty important," he said. The store is now close to the center's elevators as well as near to the Waikiki Beach Walk stores and restaurants, which are beginning to open. "It's going to be amazing."

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com.