Pendulum Swings | Hawaii Now Worries About Not Enough Tourists

Hawaii Panics. Not Enough Tourists. Diversification Never Happened.

Many in Hawaii travel are worried about the latest visitor statistics and data just starting to come in about our fast-cooling and non-diversified economy. It’s becoming increasingly evident that managing tourism may not be as big an issue as was thought a month ago. Wasn’t it just yesterday that people were complaining about too many tourists? And well, now, to be honest, we hear that far less frequently.

In August, when Hawaii was still jamming, on average, visitors across the state paid close to $400/night to sleep. That was an increase of 32% over 2019. Yet even then, signs of a natural slowing began to creep in as occupancy rates slipped 7% from pre-pandemic 2019.

The next benchmark for 2023 Hawaii travel will be the Christmas and New Year holidays.

The season typically sells out far in advance, but this year is lagging behind expectations, according to hotels.

Another thing that’s still hurting Hawaii travel is this: demand for group business has not returned in earnest. That, combined with the lack of international visitors.

In August, Honolulu hotels charged, on average, $286, up 12%. Maui was $621/night, up 58% compared with August 2019. But at the same time, Maui’s occupancy rate fell 10% and reached a threshold regarding what the market will bear. On Kauai, hotels were busy, with rates up 46% to an average of $415 per night. While on the Big Island, rates were up 46% to an average of $409/per night.

The state says to expect worse than predicted results.

The latest forecast by the state’s UH Economic Research Organization (UHERO) shows that the state of Hawaii’s economy is worse than it had predicted six months earlier. That is due to high inflation, with the US heading towards a recession and a slipping global economy. The only bright light at this point is the return of Japanese visitors, which recovery is finally underway.

And yet, despite difficulties, the Hawaii travel industry continues to progress. International visitors are returning, adding to relatively strong albeit waning domestic travel. UHERO said, “The timing of Hawaii’s international tourism recovery will provide a much-needed lift as growth in other sectors slows in 2023.”

Hawaii failed to use Covid to move towards economic diversification.

UHERO said that Hawaii’s exclusive focus on tourism “Exposes the economy of Hawaii to external shocks that trigger collapses in tourist numbers. Furthermore, Hawaii’s economic growth has diminished for decades as the dominance of tourism has not generated productivity growth.”

And while Hawaii policymakers continue to talk about diversification, nothing has happened or is on the horizon. UHERO points out that this situation isn’t unusual for similar isolated, small economies. They suggest that Hawaii should target new industries that use related know-how or Hawaii-specific resources.

Beyond that, UHERO points out the valid concern “That diversification policy will fund special interests rather than genuine economic development initiatives.” And so it goes in Hawaii. While short on many specifics, you can read the 27-page UH diversification report below.


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93 thoughts on “Hawaii Panics. Not Enough Tourists. Diversification Never Happened.”

  1. I spent 3 week on the Big Island. Have you seen the new tourism commission commercial?

    Scenes of things like planting taro, with voice-over of tourism encouraging comments like “everybody should get the same, no more, no less”.

    This is not the message to encourage tourism. . . .


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