Projected air seat declines underscore Hawaii tourism softening

Total trans-Pacific airline seats for Hawaii’s top U.S. market are projected to drop in November and December, with losses widening at the start of next year and remaining evident into April, according to Hawai‘i Visitors &Convention Bureau market data.

Total U.S. trans-Pacific airline seats for November are projected to drop 2% from the same period in 2022, while December seats are expected to fall 4% from 2022, said Jeffrey Eslinger, senior director of market insights for the Hawai‘i Visitors and Convention Bureau, who presented an air service outlook Wednesday at a Pacific Asia Travel Association Hawaii chapter event.

Eslinger said he is comparing December and November to the same months in 2022 and January, February, March and April to the same months in 2023 to help prevent skewing from the significant tourism drop after the Aug. 8, 2023, Maui wildfires an from the movement of Easter, which was in March in 2024 and will be in April in 2025 as it was in 2023.

He said U.S. trans-Pacific airline seats in January are forecast to fall 5.2% from the same month in 2023 and in February to fall 7%, with a 2.2% drop expected in March and a 1.5% decline in April.

Eslinger was joined by Jennifer Chun, director of tourism research for the state Department of Business, Economic Development and Tourism, who shared the latest global tourism trends, and by James Wilson, Outrigger Hospitality Group’s corporate director business intelligence and distribution, who spoke about the effects of the downturn on Hawaii hotels.

Keith Vieira, principal of KV &Associates, Hospitality Consulting, said, “There’s really not any good news on the horizon. A lot of people are comparing numbers to 2023, which is useless because of the fire. When you compare numbers to 2022 and look at where we are with air seats and advance bookings, we are still behind — that’s not good at all when you consider that in 2022 we were still coming out of the pandemic.”

Vieira said the coming festive season, which includes the Christmas and New Year’s holidays, has seen some pickup from 2023, but added “that was four months after the fire and last year was a really bad festive season. If you compare it to pre-pandemic levels, it’s not good at all.”

Chun said United Nations World Tourism Organization data shows that international tourism arrivals globally have almost recovered to the pre-pandemic 2019 level; however, data from the National Travel and Tourism Office shows that international arrivals by air to the U.S. have further to go.

She said the DBEDT third-quarter 2024 data shows that while spending by all visitors coming to Hawaii already had surpassed the 2019 level by 2022, visitor arrivals are not expected to recover to pre-pandemic times until 2027.

Wilson said the annual pacing performance for hotels is 13.5% better than the same time last year; however, the fourth quarter “is a bit of a struggle” and is pacing 13.9% behind the same time last year.

“Across the board we are still chasing 2019,” he said.

Chun said booking data from ARC /ForwardKeys Destination Gateway shows that bookings to Hawaii for the six-month period that will end in March are expected to stay below the pre-pandemic level.

Softness is evident across all the major islands and was heavily impacted by continued fallout from last year’s tragic wildfires on Maui, which is heavily dependent on U.S. visitors, as well as the sluggish recovery of international travelers to Hawaii since the COVID-19 pandemic.

Eslinger added that total international demand to Hawaii has dropped 34 % since the pandemic and Hawaii’s international seat capacity is down 29 % from pre-pandemic levels.

“The decline in air service from Japan is in response to the prevailing market dynamics, ” he said. “Issues such as the unfavorable exchange rate and high fuel surcharges are impeding demand. Economic conditions in Australia and New Zealand have dampened demand to Hawaii and other markets. Increased nonstop capacity from the U.S. mainland to both countries has had a sharply negative impact on fares to Hawaii in these markets.”

Eslinger said he expected the impending merger of Korean Air and Asiana would profoundly change the competitive environment from South Korea, which already has been impacted by many of the same issues as Japan, including an increased aversion to foreign travel and demographic change.

He said direct scheduled service from China and Taiwan to Hawaii is still nonexistent in this year’s schedule, and recovery is contingent on macro-political and economic factors.

Eslinger said Southeast Asia service grew more challenging after Air Asia X ended its Kuala Lumpur-­Osaka-Honolulu service in April 2020 and Scoot ended its Singapore-Osaka-­Honolulu service in June 2019.

Wilson said a bright spot, however, is that the 2025 hotel pacing for international market is optimistic, with “Japan already pacing nearly 50 % ahead of last year ” and “Canada up 6%.”

Vieira said he celebrates every small gain, but that it will take more investment in visitor marketing by the state to sufficiently recover Hawaii’s tourism-dependent economy and protect air-seat capacity.

“When the frequent travel programs at every airline grew, they had to continue to put seats in Hawaii because that’s where their clients wanted to go,” Vieira said. “They wanted to use their rewards and redemption, but if they don’t have demand, they are not going to have to increase air seats. As we all know, it’s pretty simple to move a plane around.”

Vieira, a former Hawai ‘i Tourism Authority board member, said the agency had a much larger tourism budget years ago when visitor arrivals were more robust and marketing costs were lower.

“At one time they had about $95 million to $100 million. Now they have $63 million, which is split between destination stewardship and marketing,” he said.

Vieira said greater state spending triggers more industry spending due to cooperative opportunities.

“If tourism doesn’t come back, it’s the smaller mom-and-pop restaurants and businesses that will suffer the most,” Vieira said. “Almost all of these businesses make money on the last 20 % of business. If they are down 30% to 40%, they can’t cut themselves into profitability.”