As predicted, the most recent month tracked by the state’s Hawaii Tourism Authority, revealed yesterday, continued to confirm a downhill tourism slide compared with last year. We first reported on that as far back as last fall. Is this good or bad? Read on for our analysis of what’s happening.
While Hawaii hotel occupancy, one important measure of tourism’s health, was still a relatively robust 73%, down a modest 1% compared with last year, prices are still going in the wrong direction, up 1.5%. More interesting, however, is that this decline came after an additional occupancy slide of 2% the prior month amid weakness that continues to grow. These follow a line of successes Hawaii has achieved in travel recovery following Covid.
Hawaii’s marketing mess complicates matters.
The ongoing problems at HTA and its marketing partners are confusing and complicated, making delivering any concise tourism message difficult. Last week it was announced that the head of HTA will be departing, whether of his own volition or that of the state (HTA). Hawaii’s marketing issues interfere with the state’s ability to compete domestically and internationally for visitors. John De Fries, who has been head of HTA for the past three years, said only that he will not seek to extend his contract that ends this summer. His imminent departure follows a very long line of ongoing planned and unexpected departures at HTA.
Hawaii cozies up to fewer visitors who are spending more.
What’s happening is that Hawaii tourism, which has been stating its desire to reduce travel, is paying off: Fewer visitors, but they are paying more. That’s true even though it means lower occupancy, among other things. This is consistent, however, with HTA plans. The State Legislature has been on the brink of scrapping the HTA altogether. If that were to happen, these roles and responsibilities would be assumed by the Hawaii Department of Business, Economic Development, and Tourism. Rep Quinlan’s plan is that the focus there would be exclusively on destination management rather than destination marketing.
Hawaii accommodation rates continue to climb, but more slowly.
While room rates have continued to climb, that trend has begun to slow at last. Hawaii accommodation rates are outrageous, as we’ve pointed out multiple times. We are still awaiting more data points in that regard for May, but as we last mentioned, there was a reported 10% drop in west coast arrivals in April. Hawaii vacation rentals, another important measure, will also be reported separately by the state.
Hawaii lawmakers are looking at entirely eliminating the Hawaii Tourism Authority.
Fewer airline seats for now, but are more coming?
HTA’s partner HVCB said that in May, there were not as many Hawaii airline seats. They indicated that the capacity for all of 2023 is down over 3% compared with 2022. However, reliable source OAG/Cirium says that Hawaii airline seats will be up 6% compared with 2019, at least for July through September. We’ll await more clarification on these data points.
Data doesn’t reflect the true increase in Hawaii visitor costs.
The state says that so far this year, accommodations are costing, on average, 35% more than before Covid (2019). That is simply nonsense, as any Hawaii visitor can confirm. Instead, in total real numbers, including all fees and taxes, hotels and vacation rentals have increased by multiples. We recently mentioned an upcoming editors’ trip to a Kapolei Oahu business meeting, where the least expensive hotel, the Hampton Inn, including all taxes and fees, was more than $500 per night! No one likes being gouged, be it visitors or residents.
In Honolulu, the state says that rates in May were up 7.5% compared with 2022, with just slightly higher occupancy (2.5%) to a still healthy 78.3%. Kauai’s room rates went up another 8.2% compared with last year, with a slide in occupancy to a not-as-healthy 74.2%. The Big Island’s room rate, on the other hand, was down 3.1%, while occupancy was down 7% to just 66.9%. Maui saw its rates decline to an average of $539 (before approx. 18% taxes and various other fees), which was down 1.8% on 4.1% less traffic than last year.
West Coast and return visitors dropping.
The most important market for Hawaii travel is where the trouble is most apparent. In the last month for which we have complete details (April), arrivals from the West Coast declined 10% compared with last year. That as visitors choose destinations other than Hawaii.
Visitors still have an outsized impact on island infrastructure
The strain of tourism remains palpable still, in spite of the thus far modest declines. That is evident on the roads, at beaches, and everywhere else. US visitor arrivals for the remainder of the year and visitor spending are difficult to predict.
Still waiting for better value in Hawaii travel!
We have previously said that eventually, less demand will lead to better value in Hawaii travel. For now, the industry is happy to see fewer visitors spending more. But there is a point at which you can’t squeeze more out of everyone, and that point has arrived, in our opinion.
This will ultimately lead to Hawaii deals. Editor Jeff previously said, “We see significant softening in demand ahead this summer, which could bring hotel and rental car prices back down while airfares waver or continues to rise.” That is still true.
We’ve seen this coming for the past six months.
The warning signs about less demand for Hawaii travel bookings began during the December 2022 holiday season. There was an unexpected lack of Hawaii travel performance during a time of year that has always been the best performing.
There remains a glimmer of hope for late summer bookings, although that likelihood is becoming less and less. We reported last month that “Advance bookings for traditionally stellar July are currently off by up to one-third.”
We have recently been able to take advantage of some lower-priced Honolulu accommodation offers even in July. For example, a 3* Diamond Head location for $300 (including all taxes and fees). That is an unexpected improvement in price.
As you know, two Beat of Hawaii editors were in Europe last month. And there are more trips planned for this summer. We mention that because values in Europe, as confirmed by your comments, are much better overall than in Hawaii. That is across the board, including accommodations, car rentals, and restaurants, among other things. Airfare, well, not so much!
Airlines try to forecast the demand for Hawaii travel.
We confirm what HVCB previously said. That is, “A recent trend toward travelers booking rental cars and hotel rooms before airlines also has made it harder for airlines to forecast traveler demand.”
What is the best strategy for Hawaii visitors at this time?
As we have said before: “The current environment speaks to the benefits of last-minute bookings as yielding the best results. You can be sure that this isn’t what airlines, hotels, and car rentals want us to say. But that is clearly the situation at hand. On the other hand, this approach can also backfire if you wait too long. Those with more flexible travel plans will benefit most.”
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Hawaii can’t decide whether they want tourists or not. We’ve been going to Maui with another couple for the last fours years, returning in April. This will probably be our last trip since there are other places that will appreciate our business. We love Maui but they want to gauge you for every little thing now. Caribbean here we come.
It’s been 12 years since my last trip to Maui. I would love to go back but the hotel/rental rates + extra fees are ridiculous. Price gouging is the real cause of the drastic decline in visitors. A one week stay isn’t worth 3 months of mortgage payments.
Try a short-term rental, in a resort area like Wailea, so that you don’t take housing away from locals and the displaced. One-third the price of hotel for double the space, especially right now and for the foreseeable future. You can actually go to Maui pretty reasonably if you know where to look. I know because I’m here.
Oahu infrastructure is dying. Hotel 400 plus insane taxes dinner 250 lunch 186 breakfast 2 smoothies 32.00. Collapse of Waikiki beach because they won’t back fill sand. Flights: 800 r/t car 946 for 10 days, hotel parking 500 for 10 days. Unfortunately, I have family on islands. Hawaii is going to get the California treatment. People are going to stop coming here anymore. Crime on Waikiki is bad too. I can go elsewhere and get an equivalent experience. The locals appreciate the visitors who inject money into the economy. Years and years of horrific mismanagement and corruption on State and local levels will finish off the Hawaiian economy.
I totally get the farmers markets are mostly frequented by residents, in some areas, maybe not Princeville! I don’t go to the market to pay less. We found prices are the same for the same item as in stores. I go to get better quality vegetables and fruit. It isn’t any one thing alone. It’s the accumulation of price, airfare, reservations, car rental, and convenience to get here from the east coast. We have to ask ourselves if the benefit is worth the trouble? For us, our conversation now is what do other places have to offer that we would never have considered in the past, because Kauai was our place to relax and surround ourselves in the beauty the island offers. Sadly, for the first time we have no time or plans to return.
We are in Kauai now. We’ve been coming here since 2004. We have not seen traffic like we are use to seeing. At Waimea Lookout parking was $10 plus it’s $5 a person. On a Sunday we got a parking spot right away. At the farmers market we paid $3 for a bunch of radishes, $5 for a bell pepper, $3 for a cucumber. At JoJo’s in Hanalei it’s $7.50 for a shave ice. We walked right in and sat down at our favorite fist stop Hamuras Saimin where a regular Special Bowl is now $10.50, a scoop of Lapperts is $7.50. Hawaii will get what it’s hoping for, less visitors. They should be careful what they wish for. After this we’re taking a break from Hawaii. We feel gouged. So many long time favorites have closed too. Very sad!
Hi Andie.
You may not realize that the farmers markets are largely frequented by residents. Check the prices at supermarkets if you think that $3 is too much for locally grown produce. It’s actually reasonable. And the farmers aren’t exactly getting rich at those prices. Keep in mind that all of their expenses are very high.
Aloha.
On Memorial Day we visited Akaka Falls and were surprised at the $10 parking fee plus $5 a person. My husband is a Veteran and we got free parking and free access saving us $35 to visit a waterfall we enjoy but we’ve already gone to several times over the years. If we had to pay $35 I’m not sure we would have stayed to view the waterfall.
We also felt price gouged and skipped a couple local interests we would have liked to visit but felt the price was too much. $3 for a cucumber and $5 for a bell pepper? The fact that everything is so expensive will stop some people from visiting–or at least. not visiting as long or as often.
I love visiting Kauai. However, I keep reading articles about limiting visitors to beaches such as Tunnels and having ti make reservations months ahead. Also, so many articles about how the locals don’t want us there. There was one article with a huge list of places the locals don’t want us to go, and it was practically every bite able beach and landmark. I do not feel welcome.
All of this is good for our islands.. but sucks for us that have been displaced and living away from our home. There is no discounts for born and raised Hawaiians to go home and visit.
I agree….I had to leave my home because I could not afford to live there any longer. Does that mean former kama’aina are not welcome either? Where’s the aloha?
I booked our accommodations on the BI for next year three months ago. We will be staying for 10 weeks. Anyway, used the same management company but split our stay between two units, based upon availability. One of the units is currently for sale and under contract. Concerned that the new owner might not be willing to honor our reservation, I cancelled our reservation and extended our stay on the other unit for the entire 10 weeks. I was then offered a 10% discount–I am interpreting this as a “softening” of rates. The management company also refunded my deposit on the 1st unit in full.
I honestly think a lot of the issue is the state cracking down on Airbnb’s and VRBO units. They made it more affordable for the regular family. Who can afford $300 plus per night is a hotel, eating out constantly and the other expenses associated. Atleast the state should start re issuing TVU’s to owners that want to do short term rentals.
Pat G: Interesting. We would always rent a place on Maui at a low rise oceanfront development. We have been going there since 1995. A three br OF depending on the unit usually ran $400 – $500 a day – once Covid hit the price has skyrocketed to as much as $1000 – $1500/day. Better than a hotel if you figure 3 br, but honestly that is a huge increase and not affordable.
I agree – I know I could never afford that. It is still half the price of 3 rooms in the hotels around there, though, plus you get a full kitchen, large lanai, etc.
About your oceanfront condo….If you go one block away from the water on Maui, you can get beautiful, large 2-bedroom condos with ocean views for $350 to $600 depending on the season. That’s a no brainer, IMO.
PAT G Agreed, but I come to see the Ocean. I live in San Diego and can drive to it, but when I’m on Maui I want to see, hear and smell it every minute.
How about these:
airbnb.com/rooms/23482500?source_impression_id=p3_1687544654_fWwUKPA%2FdB4SHOAq
My family has been visiting the islands twice a year since my kids were born. We are west coast so it was the natural vacation spot for us. The last few times I just couldn’t shake the feeling of being gouged and taken advantage of everywhere we went. I love Hawaii but I don’t feel welcome anymore after COVID. We used to only eat out but the last few times it was Costco and home cooking only in order to keep the costs down. Spent a lot more time on the beach and much less on paid activities. This year was our first time we haven’t gone to HI and we went to Florida and had a blast.
Having been in the communications business in many ways, from radio, tv,telecommunications (for many Hawaii hotels) and data communications, I must observe this:
1. Multiple star hotels aren’t making a profit until 85% occupancy or more. Below that amount they usually have to lay people off (except operations).
2.) If you can reserve a room or condo for a good price in advance, remember it helps to have a cancelation clause up to 30 days before your vacation.
3. The same thing for a Turo car rental car (they offer same).
The true measure of Hawaii economy is the number of layoffs reported by hotel and rental car employees-be they short term or long term. Why doesn’t the state give us those numbers?
Can B of H get those figures for us?
Hi MJ
We have some meetings coming up including with the governor and with the hotel industry and will ask. Thanks.
Aloha.
Just returned from the Big Island. We hadn’t been since before covid. Gouged is how we felt. The flight was reasonable but everything else was outrageous. Accommodations, car rental, food, attractions, everything felt like it was doubled in price. Parking in Kona for 3 hours was $40.
Well, less visitors. Hawaii is getting what it wants. People, like myself, have found other warm beach locations to go to. Less time in a plane as well! And bonus… the locals appreciate and like to have visitors.
We just abandoned our Hawaii plans for Thanksgiving. This would have been our 7th trip to Hawaii. The cheapest airfare we could find was $1800 a person from Denver. Between that and skyrocketing hotel costs, we were forced to go somewhere cheaper (FL). I hate that this is happening. We love Hawaii so much but just couldn’t be squeezed anymore.
Hawaii has been working on killing the golden goose of tourism for many years. If they’re not very careful, they may just succeed.
Its done in the name of managing impacts, but they seem to forget that one of those impacts is that tourism fuels 40% of the economy.
On travel sites this same conversation is going on about all popular destinations.
End of August we’re going to Las Vegas all travel sites talk is how expensive it is to stay in Vegas verses the past. Disneyland is another example. Tahoe, San Diego, Monterrey and San Francisco all the same. Except San Francisco which is a crap show nobody wants to go there.
For several years the plan has been put into place to push out budget travel to Hawaii it looks as if the plan is working.
Hi Richard.
Thanks.Yes to a greater or lesser degree that’s true in many if not most tourism destinations. And we encountered that on the mainland in the past couple of weeks.
Beat of Hawaii’s editors have a number trips planed through the summer here in Hawaii and will report on that aspect among other things.
I am recommending to all my friends to pick a different vacation place then HI. It is pricing itself out of the market. The homeless situation is also out of hand with the Japanese visitors taking pictures of the tent cities to send back home. Hilo needs to wake up.
The reason a lot of Canadians are not visiting Hawaii right now is the exchange rate with the US dollar was a regular visitor from 2002-2020 hope the dollar goes down and will visit again Love the island
I love the islands, and won’t stop visiting, but the skyrocketing airfare hurts. It decreases what I can afford to spend to support small local business while on vacation (I am more likely to get food at Costco and perp it in my condo).
That, unfortunately for the hotels, is the story right now. Vacation rentals are still half the price of hotels for usually twice the space. On Maui, anyway.
No brainer, high prices , high taxes and homeless , on every corner, beach and street . Crime has risen, drugs and you blame tourists for not wanting to come in this fake paradise?
My husband and I are on Oahu right now, and won’t be returning. Everywhere we go, there’s spray paint, and trash. On top of that, for $240 a night, we ended up in a bug infested, filthy rental, and the owners basically told us to “deal with it,” even though we have gone out of our way to be kind to ever person we encounter. I have heard about the aloha spirit, but I can’t find it here.
Hawaii is pricing itself out of the tourism market. I have been a frequent visitor but have selected cheaper alternatives in the last couple of years which as a bonus are also not as challenging as getting to Hawaii.
When I understood that Hawaii is targeting wealthier tourists, I opted not to return.
That is a “transactional” relationship – with people who have implicitly or explicitly accepted that mindset. That isn’t a place I want to go – I’m not an economic transaction.
I would prefer to see relationships more like Patagonia’s clothing – where customers are able to self-select as the type of people wanting be customers. Both sides are happy.
I prefer the approach in: munin.uit.no/bitstream/handle/10037/23469/thesis.pdf?sequence=2 — where tourists are analyzed, their mental image of the destination is shaped, focused promotions used, and activities are “shaped”. This is far better than the simplistic greed of “charge more”.
I bet the downturn in west coast visitors has also been greatly affected by economic conditions in the west. The bay area tech sector crowd has been getting laid off, and SF businesses are dropping like flies. That means west-coasters as a whole have less to spend, especially on jaunts to Hawaii.
I’m sure you are aware that everything is more expensive everywhere,but they are very more expensive in Hawaii Hotel rooms are outrageous and the price of food is the same as where I live in Canada.and you taxes are way to high.This will continue to slow down visitors to Hawaii
We stayed in a beautiful private home in Princeville in March that we booked in March of 2022. We looked into booking again for April of 2024 and were shocked to see the rates had increased 60% (and that was booking directly through the management company; if we booked through VRBO, it would have been a 75% increase)! We’re going to Italy instead. Even though the airfares are higher than expected, we rented a beautiful 2/2 apartment for $2000 for the entire week; Princeville would have been $15,000. This is a no-brainer.
This seems to be what some Hawaiians were wanting. I have been fortunate to travel to Oahu, Maui and Kauai many times before. Resorts and rentals have priced themselves out of the market. There are other locations in the world that have beaches and restaurants comparable to Hawaii at a lower cost. People are going to go to where they are welcomed and get more for their money. I was in Kauai in October 2022 and probably the least enjoyable stay. I will probably not return any time in the future.
Ahhh, so much truth in each paragraph. Tourism is not down enough to effect a price change. And anyone who gambles to get a room at last minutem will have to beflexible My favorite condo, that (I waited) for better pricing was open and then gone in one month for a 10 month in advance stay. If I was going by myself, I wouldnt mind, would get off thebeach place and gamble for last minute rates…Gouging the tourists now is so greedy. Yes, people are paying it so you will charge it. Then there is me, who will pay it …just once, just one last time. Id like to think that a person who loves nature and cares about the land, and its people would get a break versus those coming to eat and swim at the resorts withlittle knowledge of Hawaii.
We had our annual May trip and instead of booking a Rental Car for the entire time, we decided to get 2 one way rentals (to and from airport) and 1 RT rental for a day trip.
Each of the cars cost No More Than $50/DAY … so that was $150 Without the taxes and insurance vs 2021 and 2022 where we paid well over $1000 for a car. Eating out was still outrageously expensive.
Yep – I read a quote by someone at the State Legislature who said “Hawaii doesn’t need to be marketed anymore. It has had enough marketing over the years. Everybody knows Hawaii now.” They are much more concentrating on “managing” tourists while they are here, with things like forbidding access to beaches during certain times, raising parking fees, raising the amount of taxes that visitors pay for accommodations, and videos tourists are made to watch on what to do and what not to do while in Hawaii. Hence “Destination Management” instead of “Destination Marketing”.
I believe that Hawaii Has, not will, but Has priced it self out of a vacation destination. Higher prices for a lack of business doesn’t make a lot of sense. Lower prices (and some deals thrown in) do! But apparently that’s not how you think. And “Bad-Mouthing” tourism and tourist doesn’t help. There will still people who go but certainly not as much. Get it together Hawaii!.
I’m here, and they don’t want to “Get it together”. They are jumping up and down with glee that this is happening, and congratulating themselves on their successful strategy.