Hawaii Tourism Self-Correction Coming As Economy Whipsaws

Feast or Famine returns to the discussion table with the question of whether Hawaii will be facing too many or too few visitors. As all the talk turns from Covid to a possible recession, here’s how Hawaii travel may look due to an upcoming economic slowdown.

It’s a weird world these days. We’re either obessed with one thing, or with another thing. There seems to be very little time in between. Whew, does anyone else need a break from the intensity here or is it just us?

Visitors and residents sound-off on Hawaii tourism: not enough or too much.

Domestic visitor arrivals in Hawaii are still at record numbers as summer starts in earnest today. But will that trend continue, or are we about to see another huge change, at which point the entire conversation may turn on a dime.

The last albeit brief recession in Hawaii was 2020-2021, when the unemployment rate went to 8% and there were no visitors to speak of. In fact arrivals dropped to just 5% of what they are today during Covid.

Looking back further, the 2007–2009 recession caused a loss of at least $3 billion here in Hawaii, mostly due to the huge reduction in visitors. That was a time when we had the islands all to ourselves, much like with Covid. We won’t soon forget being on normally crowded beaches and seeing no one. The impact was so severe in our state, which relies predominantly on just one industry, tourism.

Signs that visit numbers and travel costs may be about to self-correct?

We said yesterday that car rental prices are dropping. No joke. And that’s really just the start. The hundreds of comments about the ridiculous prices of car rentals in Hawaii may soon come to an end. Hotel rates are slowly starting to decline as well, and we anticipate no less than a 25% reduction in Hawaii accommodation rates over the next sixty days.

If we learned anything from the recession of 2007–2009, visitors stopped coming, hotel occupancy sank and room rates dropped. Given how much Hawaii hotel prices have jumped, that’d be a welcome relief.

There are more signs that this kind of change may be on the horizon.

Hawaii tourism remains vulnerable to huge swings.

With our lack of economic diversification, Hawaii can experience rapid economic change. That’s because a significant decline in Hawaii tourism and visitor spending is possible, and perhaps even imminent. Looking back at 2007–2009, you’ll recall that was also when Aloha Airlines and ATA Airways went out of business, NCL ended two of its three weekly Hawaii cruises permanently, and some Hawaii hotels ran out of money to pay their mortgages.

What would an about-face regarding Hawaii overtourism look like?

Hawaii remains reliant on tourism exactly as was the case before the 2007–2009 recession. It took until 2012 for visitor numbers to return to pre-recession levels. Visitor spending dropped precipitously, too, from which is largely never recovered.

The state has estimated that if an upcoming recession were of the same severity as the 2007–2009 one, visitor arrivals would be close to 1.5 million per year less, with up to 11 million fewer total visitor days and close to $4 billion in less annual visitor money.

We welcome your comments.

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