According to the latest projections released by the state, Hawaii’s tourism, which has long been the backbone of our economy, is now projected to have its recovery stretch for an additional two years until 2027. This delay comes after hopeful Hawaii visitor arrival data from October. It reflects a fast-evolving economic landscape where construction and real estate emerge as primary drivers, reshaping the islands’ path forward.
Visitors and residents alike may notice the shifting priorities, and there are profound implications for Hawaii’s future.
Tourism delays signal a longer road ahead.
Tourism’s road to recovery has been uneven since the pandemic, followed by the tragic Maui wildfires in the summer of 2023. While statewide visitor arrivals are improving, there are significant disparities.
International tourism continues to lag badly, with Japanese visitors recovering to less than half of their previous levels. The important Canadian visitor market is also running about 25% behind. International arrivals to Hawaii remain sluggish due to economic and logistical challenges. Japanese travel is hindered by a weak yen, high costs, and changing preferences, while Canadian tourism faces similar issues.
The challenges on Maui are are even more pronounced, with visitor arrivals still down 25% compared with 2019. That reflects multiple factors, including the Lahaina fire and the perception of Maui being too expensive and anti-tourist.
In sharp contrast, Honolulu has rebounded almost fully, down just six percent since pre-COVID. This highly uneven recovery highlights some of the islands’ ongoing hurdles. That deficit also has a rippling effect, including not only accommodations but also retail, restaurants, and activities. These all remain well below pandemic levels.
Construction is the unlikely driver of Hawaii’s economic rebound.
As tourism takes a backseat, the state says that construction and then real estate will step forward. State Tourism (DBEDT) is now forecasting a 2% economic growth rate in 2025, driven primarily by a surge in construction projects. Those include the rebuilding of Lahaina and the replacement of Honolulu’s Aloha Stadium. In addition, the completion of the Honolulu rail and affordable housing will play a role.
What does this shift mean for Hawaii’s travel future?
Hawaii’s shifting economic focus raises important questions about the islands’ long-term trajectory and impact on its tourism engine. The newfound diversification will reduce reliance on tourism, but that will not come without new challenges, including economic ones for those in the visitor industry.
For visitors, these changes may alter their experiences.
While tourism recovery continues, the slower pace may encourage a pivot in multiple directions. One is Hawaii’s desired focus on more sustainable and community-oriented travel experiences. Maui, in particular, which faces significant rebuilding efforts ahead, could see new tourism offerings focused on sustainability and cultural authenticity.
There is also the distinct possibility that other changes will impact visitors. There is no indication of more options, and in fact, we anticipate a further contraction in Hawaii air travel routes and flights.
That will come first in the spring with Southwest first planned set of Hawaii reductions, and could be followed by others. In addition, fewer visitors might also result in more opportunities for price reductions, especially in the off- seasons of 2025. Time will tell if this will play well for Hawaii visitors or if the industry has just learned how to reap financial success with less occupancy and fewer travelers.
Hawaii is no doubt navigating another pivotal moment. With construction and real estate pushing Hawaii travel out and driving growth, the islands are set to be in yet another era of tourism transformation. What remains constant is Hawaii’s need to balance its economic priorities, which largely will remain focused on tourism, with its identity.
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“One is Hawaii’s desired focus on more sustainable and community-oriented travel experiences. Maui, in particular, which faces significant rebuilding efforts ahead, could see new tourism offerings focused on sustainability and cultural authenticity.”
A restoration at Mokuʻula and Mokuhinia could be the epicenter of a rebuilt Lahaina. Has there been any discussions about this?
Basically Hawaii is pricing itself out of existence. There’s also been a significant loss of character. Places such as Pau Hana or the old International Marketplace have been destroyed and extremely expensive New York style stores have taken their place. And of course the tragic loss of Lahaina altered the character of Maui. Right now a person can go to Cancun and spend about half as much money as Hawaii and enjoy less expensive food and much better beaches. It’s really unfortunate there isn’t someone with sufficient power who has a clear vision and plan for the future of Hawaii.
It’s very simple. Accommodations in Hawaii have become so expensive tourists have been forced to go elsewhere. What was $300/ night five years ago is now doubled or more. I would prefer hawaii every year but have to go elsewhere simply for that reason.
Construction is a short term blip and not an alternative industry that the islands can rely on. The islands don’t have the desire for large scale construction to fill in ever space possible and there is limited demand for any commercial construction. Even the stadium and rail projects are very limited in scope and the economic benefit is limited to a specific sector of workers versus the benefit to services, lodging, maintenance, restaurants, etc that tourism provides. This is a fluff piece for the state who is realizing how absolutely dependent they are on tourism and how badly they are mucking everything up by trying to placate the loud minority. The county and the state will both continue to push out estimates and blame everything outside their control without ever taking responsibility for their critical involvement in destroying the local economy.
I would be very surprised if construction and real estate could come anywhere close to the over 21 billion that tourism brings annually to the Hawaiian economy. Good luck.
As sad as I was to sell my condo in Maui, I knew it was the right thing to to financially. It is going to be awhile and more people will be having to move.