Hawaii's High Prices Put a Dent in Tourism Numbers; Industry Sees More Visitors but Less Spending
Allison Schaefers | The Honolulu Star-Advertiser | August 30, 2013 8:37am
Aug. 30--July is historically one of the best months for Hawaii's visitor industry.
But tourism slowed last month as price sensitivity to the increasing cost of a Hawaii vacation, rising oil prices, a fragile world economy and the strengthening of the dollar affected arrivals.
Spending was flat at $1.3 billion as visitors spent 0.7 percent less than they did in 2012, while arrivals grew only 4.6 percent to 757,969, according to data released Thursday by the Hawaii Tourism Authority.
At the same time, visitors from every major market but Canada and Oceania cut their trips shorter.
Even with July's contraction, however, arrivals rose 5.5 percent to nearly 4.9 million for the first seven months of the year. Spending during that period also rose 5.7 percent to $8.7 billion.
"Year to date, we've continued to exceed 2012 numbers," said David Uchiyama, HTA vice president of brand management.
HTA still expects continued growth for its tourism economy during the second half of the year, but said the factors that weakened July's results could continue into the future.
"Therefore, we must be innovative and work harder to remain price competitive, while offering a quality and authentic visitor experience that best highlights our people, place and culture," Mike McCartney, HTA president and CEO, said in a written statement.
McCartney said visitors have spent an average of $41 million per day so far this year -- $20 million on Oahu, $11 million in Maui County, $5 million on Hawaii island and $4 million on Kauai. Those arrivals have supported more than 167,000 jobs and provided $911 million in state tax revenue so far this year, McCartney said.
But July results were weaker than would have been expected given earlier forecasts for the industry. Hotel prices are rising as demand for a Hawaii vacation has outpaced availability, particularly on Oahu.
"Airlines are critically aware of the inventory concerns in Waikiki," said Brad DiFiore, managing partner of Ailevon Air Service Consulting."We've already talked with three of them about it."
Additionally, the state earned the dubious honor of having the most expensive average room rate in the nation during the first quater and was second highest during the second quarter. In some cases, hotel room price gains have been accompanied by other rises in travel costs, causing some visitors to shorten or rethink their Hawaii vacations.
To be sure, total expenditures dipped in July, partly because U.S. West visitors, the state's core market, spent only $145.50 per day, which equated to 2.7 percent less per person than they did in July 2012. Visitors from this market also cut their trips by 0.6 percent and spent 3.3 percent less per trip than they did the prior year.
The U.S. East, Hawaii's second-largest visitor market, also saw daily spending decline 4.5 percent to $190.90 per visitor. These visitors cut their lengths of stay by 0.8 percent and spent 5.2 percent less per trip then they did in July of 2012.
Likewise, a 2.9 percent drop in arrivals from Japan, the state's largest international market, affected spending. It didn't help Hawaii's performance that those who came from Japan spent only $250.10 per day, which was 16.5 percent less than they did a year ago. While visitors from Japan cut their stays only 0.2 percent from the prior year, these visitors spent 16.7 percent less per trip and 19.1 percent less overall. Stronger growth from Canada and the other-Asian visitor market -- which includes China, Korea and Taiwan -- helped balance the industry. However, on a per trip basis, July spending fell from every market but Canada.
Still, HTA had some good news to report. Its July data show improvement on the neighbor islands in length of stay and visitor days. If that trend continues, it could alleviate some of the compression on Oahu and help normalize prices. It is also a positive sign that travel sellers are succeeding, at least some of the time, in diverting people to other islands, where vacancy rates are higher.
All islands showed increases in visitors in July, while all but Oahu, Molokai and Lanai saw spending gains. But Uchiyama said as the visitor industry moves into 2014 and compression eases on Oahu, the neighbor islands could start to see downward trending.
"Maintaining and increasing air access, distributing visitors across all of the Hawaiian Islands, and diversifying our market mix by increasing our meetings, conventions and incentives business will be priorities as we look to the second half of the year," McCartney said.
Future destination planning also should include the development and redevelopment of master-planned communities throughout the state, such as Ko Olina; Banyan Drive in Hilo; Wailea, Maui; Princeville, Kauai; and Kona, he said.