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The Big Picture

Fingers crossed: Hawai‘i’s tourism industry is stabilizing

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Cover image for Feb 10, 2010

Hawaii’s sandalwood industry is long gone. Even sugar operations are a distant memory. For now, tourism is the industry in Hawaii. So often we hear about fluctuations in hotel occupancy, rising and falling visitor arrivals and rollercoaster rates of tourist spending, it can be hard to pinpoint where we stand. The Weekly sat down with State tourism liaison Marsha Wienert for a look at the big picture.


We get so many numbers pertaining to tourism, month-to-month. It’s up, it’s down, it’s good, it’s bad: It’s hard to determine where we really stand.

Where were we, where are we, and where are we going? [Laughs] But, quite honestly, that is the big question today. For tourism in the state and, consequently, for the economy of the state, we peaked in 2007. In 2007, we welcomed just about 7.6 million visitors. Now, that would be visitors who came here via the airlines or via cruise ships.

Those visitors spent $12.8 billion while they were here in the Islands and 2008 was when we started feeling the economic challenges and the reduction of air seats coming into the state, and the loss of two cruise ships. So it was like one after another after another after another of impacts that affected tourism in our economy. We lost about $1.4 billion in visitor spending in 2008. We lost probably another $1.4 billion in visitor spending in 2009… So at the end of the day, at the end of two years, a decrease of about $2.8 billion dollars in direct spending.

That’s money that would have gone to local vendors.

It would have gone everywhere: their lodging, food and beverage, shopping, everything they do for entertainment, ground transportation–whether it be a taxi or a rental car–any money they’re spending on the ground, and that does include inter-island flights.

We have had a couple of tough years. Thank God 2009 is over. We’re projecting this year to really be our stabilizing year. Visitor arrivals will probably stabilize this year. We’re going to have a lot more air seats coming into Hawaii. That, coupled with phenomenal pricing that’s available for a Hawaiian vacation.

I recently saw tickets between New York and Hawaii for around $500.

It’s true! There are great prices in the market right now. We’re not projecting a whole lot of an increase in visitor spending, though. A lot of that, I think, has to do with consumer confidence overall.

Everybody’s having a hard time.

Not only that but everybody is more conscious than ever of what they buy. It’s not really the free-spending environment we were in a few years ago. So, our spending will probably stay about the same as it was in 2009, about $9.9 billion. That’s still good but it’s a lot lower than what it once was and it doesn’t make up for what was lost over the last two years.

In January 2010, we’ll probably be flat in visitor arrival as compared to last year. But that doesn’t mean that our economy is going to grow a lot because in January 2009, we lost 12.5 percent in visitor arrivals.

That’s where it can start to get confusing if we don’t stop to assess the older data.

Right. So our benchmark year really is going to be 2007. We had a fairly good first quarter in 2008 before everything just started, you know, hitting the fan. Then it just kept going down and down. So when you see us talking about stabilization this year, it’s stabilization compared to last year, but doesn’t necessarily mean the health of the industry.

So it’s stabilization at a level that’s not optimal?

Exactly. And it’s stabilization that’s not only not optimal but is going to have to change. We need to be able to increase visitor spending here in order to get people back to work and get back to doing some of the things that we’ve had to cut back on.

We see a little bit of that happening in 2011. Just slightly! You’re really not going to see increases until 2012, 2013, even 2014 to get fairly close to back to where we were in 2006–2007. So that’s a long way out.

One of the biggest challenges is that we’ve become very dependent on just one geographic segment, the U.S., and when that market hiccups for any reason, we get a huge shock.

When the economy started going down in the U.S., it impacted us dramatically. When 9/11 happened, it impacted us. When the Gulf War happened, it impacted us. When United went on strike. These are all past shocks. So what we want to try to do is to diversify our geographic mix of visitors. That’s kind of the direction we’re going right now–looking at all of these new markets. And how we develop them to the level that can help offset decreases we have from other areas.

Talk about those emerging markets. I know the governor visited China with tourism in mind, for example.

I think all of Asia. Korea has huge potential for us here in Hawaii. They can’t just have a passport and travel here but they have received visa waiver privileges in December 2008, so they wouldn’t have to actually apply for a visa to travel to the U.S.

China, on the other hand, still requires a visa to travel to the U.S., but in working with the consulate and the U.S. ambassador in China, they are working very hard to streamline that process–not change it, I mean, still the security rules and regulations would be in place–but to make it a little more user-friendly, to be able to get that visa.

Do you ever look at places like Europe? It’s so far away, I know.

The European market has been a market for Hawaii for a long time. Primarily, it has come out of the United Kingdom and out of Germany and it’s been steady, year after year after year. The biggest challenge we have is the amount of time it takes to get here.

And competition from their beautiful beaches in culturally rich environments?

They do have them, and a lot closer. But Europe will always be a market for us. Does it have the potential to grow at the same rate as the Asian countries? Probably not. Only because it is so difficult to get here. Now if we were able to solve that, then that’s another ballgame.

The emphasis really is Asia right now. I mean, Japan has even more opportunity for continued growth. So we are very hopeful, knock on wood, that that’s going to continue in an upward trend. There is also opportunity in South America as well. The wealth is growing, people are traveling.

Not to mention the surfing connection between South America and Hawaii.

Absolutely. And that’s one of the things with Germany, actually. They come here for windsurfing. They come here for the activities. They participate a lot in the running events. They come here for those. They are into surfing. It’s very interesting.

That calls to mind some of these segmented groups–runners who travel here for the Honolulu Marathon, for example–who come here for reasons other than just the beauty of Hawaii.

Well first and foremost, people do come here for the environment and the scenery. That’s the number one thing. And we’ve really tried to go after active travelers, those who like to see and do everything while they’re here.

Think of eco-tourism: Hawaii could write the book in regards to eco-tourism because almost every activity we have here, whether it’s on the ocean or land, is an eco-tourism activity. The honeymoon market and the destination-weddings market is always big for us. The destination-weddings market has decreased from where it was, but that’s probably just an effect of the economy.

Agricultural tourism is very big throughout so many areas. Unique produce, fields and fields of flowers–people are just amazed at that kind of stuff. We have also positioned ourselves as a destination to attract those who are looking for a place to rejuvenate with the scenery, the spa offerings, all of that.

New market niches coming up: One of the things we’re seeing out of Japan is multi-generational travel, where grandma and grandpa and the kids and the grandkids are all traveling together. We’re also seeing that in the U.S. mainland, where the grandparents and the grandkids are the ones traveling. Because of the challenges we’ve had, economically, people have grown a lot closer together. We’ve had to rely on each other more than we did a couple of years ago.

Back to weddings for a minute: A lot of people say that passing the civil unions bill would have bolstered tourism enormously.

I don’t know how I can quantify that. The governor has been very vocal in saying she doesn’t believe it should be discussed. We’ve got some major challenges, so let’s not distract ourselves.

But people would have come here to have ceremonies like weddings, and that would benefit the local wedding economy.

I don’t know that there’s data that substantiates that. We track weddings through the Department of Health, so that’s based on wedding licenses with the bride and groom from out-of-state. In 2008, it started declining. We saw further declines in 2009. It’s declining at about the same rate as overall visitor arrivals are declining. We saw a little bit of an uptick right at the end of last year, but I don’t think it’s enough to say it’s a trend.

What other leading industries do you see as being able to take the pressure off of tourism?

For as long as I can remember, we’ve been trying to diversify our economy. But as all of our economists say, at the end of the day, tourism is still the economy. There are some industries that are emerging. I think the energy sector will boom and help stabilize our economy in the next few years. Will it take the place of tourism? I don’t think so. But I do think it will help stabilize and diversify.

You’ve mentioned 2007, but looking at the larger history, when was the golden era of tourism in Hawaii?

I think the golden era of tourism would depend upon our development cycle. The 1960s was one golden era of tourism because it was just developing. As we moved forward, there was golden age of tourism in the 1990s, when we had such a large, booming industry–especially from the Japanese–and the economy was just going wild. I’m from Maui and the golden age of tourism on Maui was really the late 1980s. Kauai would be the same thing. The development part of tourism plays a part. And I think generational perspectives come into play. In the 1960s, it was the romance. The Bing Crosbys and the Bob Hopes and Elvis. Hawaii still had that mystique. It was exotic.

How much has that image changed?

I think Hawaii has grown up in regards to our brand. We have refined it. From a traveler’s point of view, that mystique is still there but–in a day of being able to get information [snaps fingers] that fast–people are much more aware of what the destination offers and what the experience actually is.

And there are so many more cultural resources, for those interested in Hawaiian history.

Yes, and they don’t get off the plane and go [gasps]. But I’ll tell you, I had a group of Chinese visitors recently. They were people who did a lot of research before they came. And I asked them what they found here that they didn’t get from what they read about or what they looked up on the Internet about, and they said, ‘We had no idea the sky would be so blue.’

Oh wow. I love that.

They had no idea the sky would be so blue.

It’s almost poetic, isn’t it?

In this day when you can get this information as easy as snapping your fingers, to have that kind of reaction from someone, you go, ‘Oh yeah, that’s right.’ There’s no way you can sell that. It is an experience that has to be experienced.


Hawaii Visitor Arrivals 2007-2009