What To Expect In A Hawaii Recession

If at all possible, consider a dramatically price-reduced Hawaii vacation between now and next May.

Why? You will not see these values again, probably ever.  Without the crowds, this is truly the idyllic Hawaii of yesteryear.

This isn’t the first time I’ve pondered the economy and how it impacts those of us who live here in Hawaii as well as visitors coming on vacation.  Here are some additional thoughts:

1.  What deals will you find and how should you shop differently for a recessionary Hawaii vacation?

• Monitor for deals closely and be ready to pounce. If you have the flexibility, make it a relatively last minute vacation.  That will provide by far the best values in both air and hotels.  If you aren’t that flexible, you’ll still find unprecedented deals.
• Generally don’t buy a package.  In most instances, you’ll do better if you shop the airfare and accommodation deals separately.  Cut out the third-party online travel agencies, and go to the source.  Buy air travel from airlines, car rentals from car rental companies, hotel bookings from hotels directly, etc.
• Consider higher end properties.  These are the truly exceptional deals right now.  As I’ve said previously, don’t hesitate to call the hotel and ask if they can do any better on the price than the best deal that you’ve already found.  Chances are that between now and next summer, they can and will.
• Consider lower end properties too.  These deals are so cheap that they can seem to be too good to be true. We’ve seen reasonable accommodations in the $50/night range, and very nice rooms for under $70.  I’ll keep looking for and reporting on more of these.
• Negotiate excursions directly with tour providers.  If you’re too shy to do it yourself, have someone else call for you.  Try offering 50% of the asking price.  Maybe they can squeeze you in at the last minute if no one else shows.  Hawaii excursions have been very expensive and they are often the first thing to be cut on a budget vacation.  So this is a chance to get that helicopter ride or zipline tour at a highly affordable price.
• Gas prices are down.  Today we paid $2.30 a gallon.

2.  What is likely to happen next?

I expect the economy in Hawaii to stay at its current recessionary level or get worse over the next 6 months.  We’ll see visitors numbers continue to drop (down 9% so far and expected to drop another 5% next year) and have higher unemployment (now 4.2% and going up to perhaps 5.5% next year).

The first likely opportunity for improvement in Hawaii’s economy is summer 2009, and my guess is that any improvement then will be minor.  Therefore, next summer might bring somewhat higher air, hotel and car rental prices.  By next Fall though, they will likely decline again.  In the following year, 2010, I think we’ll start to see growth returning.  All of this is based of course on the larger national economy not sustaining any further dramatic events.

3.  Hawaii 2008 economy in review.

What has happened so far this year is a series of concomitant negative blows that have included:

• Aloha and ATA Airlines going out of business.
• NCL removing two of the three ships doing 7-day inter-island cruises.
• Inter-island transport issues of high airfare costs and multiple Superferry problems.
• A decline in disposable cash among both visitors and residents.

4.  What other things might we expect to see happen in Hawaii’s recession?

I don’t have a crystal ball, but here is some of what I see looming out there:

• Superferry is likely to cease operations.  They have too high cost, too few riders, a rough winter ocean ahead, and an upcoming decision about a complete environmental impact study, among other problems.
• Go! Airlines will probably fail.  Mesa Airlines (Go!’s parent) is not looking like they can stay in business.  I believe we’ll know by the Spring, which is traditionally when weak airlines fail.
• NCL may pull their last ship from Hawaii, resulting in no inter-island cruises.

I feel certain that we will be bringing you previously unimaginable Hawaii deals between now and next summer and I hope that you can be some of the lucky ones to take advantage of them.  Sign up so that we can drop them in your mailbox or reader.