Summer tourism bump going flat as fall nears
Visitors to Hawaii continued to decline in July, although the downturn was offset by strengthening in arrivals from Hawaii’s core U.S. West market and from Japan, Hawaii’s top international market.
But the late-summer travel boost, which mostly affected Oahu, is already showing signs of cooling as Hawaii moves past the important Labor Day travel period into fall. The Transportation Security Administration is preparing to screen a record volume of more than 17 million people nationwide from Thursday through Wednesday. The peak travel day is projected to be Friday, when TSA expects to screen 2.86 million people.
While summer travel to Hawaii has been down in the wake of the Maui wildfires, TSA had been expecting higher volumes of travelers for Hawaii, too. Still, members of Hawaii’s visitor industry say softness has been present in Hawaii’s visitor industry since the Aug. 8, 2023, Maui wildfires, and even in July, Maui’s more than 20% drop in visitor arrivals and nearly 18% decrease in spending were dragging down the statewide tourism performance, according to preliminary statistics released Thursday by the state Department of Business, Economic Development and Tourism.
It’s been more than a year since the deadly wildfires that destroyed much of Lahaina, yet the dampening continues to affect tourism performance statewide. To be sure, arrivals to the Hawaiian Islands dropped 1% year over year to 925,935 visitors, DBEDT said. And, even though July was a better month than most, statewide visitor arrivals in July were still only 93% of the pre-pandemic July 2019 level.
And there’s another threat. Some 5,000 hotel workers belonging to Unite Here Local 5 have authorized a strike at the Sheraton Kauai Resort and seven Waikiki hotels: the Hilton Hawaiian Village Waikiki Beach Resort; Hyatt Regency Waikiki Beach Resort &Spa; Moana Surfrider — a Westin Resort Spa; The Royal Hawaiian, a Luxury Collection Resort; Sheraton Princess Kaiulani; Sheraton Waikiki; and the Waikiki Beach Marriott Resort &Spa.
The union has not made its strike plan clear, but has the power to call for a walkout at any time. Hoteliers report that the threat alone already is disrupting bookings, along with Local 5’s phone campaign encouraging travelers, especially group travelers, to stay home.
An added complication is that the travelers who helped offset tourism losses to Hawaii in July with growth in arrivals and spending — Hawaii’s core U.S. West market and visitors from its top international market, Japan — are the least likely to cross a picket line.
July arrivals fell from Canada, cruise ships and the category called “All others,” which includes international markets outside of Japan and Canada. Spending fell for the U.S. East, cruise ships and Canada and was flat for the “All others” category, which includes foreign nations outside of Japan and Canada.
Total visitor spending measured in nominal dollars in July was nearly $2.07 billion, 2.6% higher than July 2023. Total visitor spending was 22% higher than in July 2019, when nominal spending was nearly $1.69 billion.
An issue with DBEDT’s spending data is that nominal numbers are not adjusted for inflation, so their real contribution to Hawaii’s economy has not been calculated.
Daniel Naho‘opi‘i, Hawai‘i Tourism Authority interim president and CEO, told the HTA board Thursday that HTA’s 2023 Annual Visitor Research Report, when 2023’s total nominal visitor spending of more than $20.8 billion is adjusted for inflation using the Hawaii Tourism Price Index, was actually 10% lower than total spending in 2019. The HTA reported nominal spending of $17.8 billion in 2019.
Also, visitors in July did not spend as much time vacationing in Hawaii, which tends to curb spending. DBEDT reported that the average length of stay by all visitors in July dropped 2.6% to 8.81 days, compared with 9.05 days in July 2023. On any given day in July, there were 273,051 visitors in the Hawaiian Islands, down 3.6% from July 2023, DBEDT said.
Results were mixed across the islands, with Oahu, Hawaii’s busiest visitor destination, posting the only arrivals increase of the major islands. Hawaii Hotel Alliance President Jerry Gibson said Oahu benefited from the biennial Rim of the Pacific — the world’s largest naval training exercise — which brought together forces from 29 nations.
“RIMPAC really helped Oahu. It was a boon to the economy. We got a lot of last-minute reservations, and that’s why Oahu arrivals were up 7.2% in July,” Gibson said. “But Maui is still hurting, and I can’t stress enough the importance of getting that welcoming messaging out there.”
Keith Vieira, principal of KV &Associates, Hospitality Consulting, said Hawaii’s visitor industry has put high hopes on the upcoming fall marketing saturation campaign, which is slated for Sept. 15-22 in Los Angeles, Hawaii’s top source market for visitors. HTA has put $1.6 million into the campaign, which will be executed by the Hawai‘i Visitors and Convention Bureau. Vieira said he expects the private sector will fund another $40 million to $60 million in additional marketing to take Hawaii beyond the fall.
“If there’s any place people want to go, it’s Maui,” Vieira said. “That’s why they get the highest rates and have the biggest resorts. But we aren’t seeing the demand. The saturation campaign isn’t just for Maui, it’s for Hawaii. Every island needs the business until the Japanese business comes back. We are fortunate that Hawaii has done so well off the U.S. West Coast, but we need a more balanced mix. The U.S. West market is the least likely to come in a strike situation, and it’s the easiest market for travelers to rebook.”
State Business, Economic Development and Tourism Director James Kunane Tokioka said in a statement that the visitor industry is still recovering from the COVID-19 pandemic and Maui wildfires, but noted that the July visitor statistics showed some reasons for encouragement.
“Visitor arrivals from the U.S. West market at more than half of a million in July 2024 were the highest during the past two years. The 66,557 visitors from Japan in July were the third highest since March 2020 for this market,” he said. “Visitation to the island of Maui continued to improve in July 2024 with 237,495 visitor arrivals — the highest since the wildfires — which represents a recovery rate of 79.9% from the pre-wildfire level.”
Tokioka added, “It is expected that visitor arrivals from the U.S. markets will remain above the 2019 levels for the remainder of the year and arrivals from Japan will continue recovering as the Japanese exchange rate has been improving during the past few weeks.”
Vieira said July was somewhat better than expected, “but that was then.”
He added that Hawaii’s visitor industry had hoped that after the anniversary of the Maui wildfires on Aug. 8 that the market would begin improving. However, he said, “It’s been more of the same.”
Gibson said although there’s some pickup in October, “booking pace has slowed to a crawl through the end of the third and fourth quarter, and there aren’t a lot of big group moments in between.”
“So far, the festive season, the holiday period from Dec. 22 to Jan. 4, has not picked up like the industry expected, and right now bookings are meager, to say the least,” he said.
If the slowing continues, the downward trajectory evident in DBEDT statistics at the seven-month mark could worsen. More than 5.7 million visitors arrived in the first seven months of 2024, a decline of 3.3% from the first seven months of 2023. Arrivals through July declined 7.5% when compared with nearly 6.2 million visitors in the first seven months of 2019.
In the first seven months of 2024, total nominal visitor spending was $12.33 billion, down 3.9% from the same period in 2023 but 16.9% higher than the first seven months of 2019.
