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.”