Hawaii economy top of mind in the new year
Maui’s struggle following the Aug. 8 wildfires should continue to drag down Hawaii’s overall economy this year even as 9.8 million visitors are forecast statewide.
While the tragic Maui wildfires will continue in the forefront of discussions around the future of the state, 2024 should also bring more overhead guiderails and stations that are on track as construction of Skyline pushes into Honolulu, and the completed acquisition of Hawaiian Airlines by Alaska Airlines, representing one of the biggest island business deals in years.
It is a big political year, and state officials already are contending with online conspiracy theories ahead of the November election, a likely rematch between President Joe Biden and former President Donald Trump.
With Hawaii’s historically anemic voter turnout, the Biden-Trump race in 2020 resulted in a modern-day record turnout of 69.6% of registered voters casting ballots. By comparison, in the nonpresidential general election that followed in 2022, Hawaii voters returned to their apathetic ways, and only 48.7% of registered voters bothered to cast ballots.
State politics in 2024 likely will remain focused on finding solutions to Hawaii’s chronic shortage of affordable housing, but after the Maui disaster and the ongoing threats of future wildfires, hurricanes, volcanic eruptions and tsunamis, Gov. Josh Green’s proposed budget keeps the state’s $1.5 billion rainy day fund intact, with $827 million in reserve for 2024 and more than $750 million for 2025.
Economic outlook
The state of the economy will play a major role in 2024.
Visitor arrivals by air to Maui were expected to fall 17.8% in 2023, and the University of Hawaii Economic Research Organization predicts that air arrivals to the Valley Isle will drop another 9.6% this year.
Convention bookings have already been canceled for the first six months of the year on an island that relies on business from convention attendees and their families.
Also critical to Maui’s post-fire recovery will be how successful the county, the governor and the Federal Emergency Management Agency will be in convincing owners of 3,000 short-time vacation rentals to take advantage of zero property taxes and above-market rental rates and convert to long-term rentals for 3,000 families still living in Maui hotels.
The plan would both free up hotel rooms for visitors to West Maui and get fire survivors settled for the next phase of their lives for at least the next year.
The uncertainty of finding long-term housing for survivors means Maui’s “rebuilding path will be long, and there are considerable uncertainties about how it will proceed,” according to UHERO.
Other than Maui, economists see signs of economic optimism.
The highly coveted Japanese travel market plummeted when the COVID-19 pandemic took hold in 2020, and has struggled to recover due to travel restrictions and the strength of the U.S. dollar compared with the yen.
But in 2024 the state Department of Business, Economic Development and Tourism expects a 73.7% increase in Japanese travel for the first six months compared with the same period in 2023, which “is promising given that the current level of air seats from Japan is at 60 % of the 2019 capacity,” DBEDT said.
More rail construction
The Honolulu Authority for Rapid Transportation plans to build 5.2 miles of overhead track and four more stations in 2024: at Joint Base Pearl Harbor-Hickam, Daniel K. Inouye International Airport, Lagoon Drive and Middle Street.
HART plans to have trains running on the new segment as early as February to test its systems, but no ridership is expected until 2025 on the second leg.
By March the second phase of “construction should be substantially complete,” Lori Kahikina, HART’s executive director and CEO, told the Honolulu Star-Advertiser.
In early January the City Council is expected to consider approving an updated full-funding grant agreement between the city and Federal Transit Administration to cut the original route short by nearly three miles and two stations, ending instead at the so-called Kakaako Civic Center.
The original plan envisioned in 2012 was to build a 20-mile, 21-station route from East Kapolei to Ala Moana Center.
The new route calls for only 19 stations and 18.75 miles of track.
Cutting the route to save money for the $9.8 billion project was Mayor Rick Blan giardi’s idea and enabled the first leg to open on June 30.
If approved by the Council, Blangiardi’s signature on the full-funding grant agreement also will free up $125 million in federal funds for HART, perhaps in March.
“HART has not received any funds since 2017,” Kahikina said.
Then in the fall, Kahikina hopes to award a contract to build the Civic Center guideway and station, which will free up another $250 million from the FTA.
Blangiardi has repeatedly said he hopes to build rail further into Kapolei and as far into town to his alma mater, the University of Hawaii.
Hawaiian Airlines
Sometime in early 2024, stockholders in Hawaiian Holdings Inc. — Hawaiian Airlines’ parent company—could vote on whether to sell the airline.
The purchase plan includes the assumption of $900 million in Hawaiian Airlines debt and payment to stockholders of $18 a share.
The $1.9 billion deal was announced Dec. 3 and is subject to regulatory approval expected in the subsequent 12 to 18 months. If that happens, Alaska Air Group Inc. could become the new owner of Hawaiian Airlines in late 2024 or mid-2025.
Alaska Air intends to continue operating Hawaiian Airlines from Hawaii under the same, long-held name with the vast majority of existing employees while also maintaining Alaska Airlines operations.
