On these editorial pages, the question was raised: “At what point does the number of tourists arriving here each year become too many?” Answering the question involves many different perspectives.
In June 2011, Richard Lim, the previous director of the state Department of Business, Economic Development & Tourism (DBEDT), raised the question about the future of tourism in Hawaii. He noted then that tourism here was a mature industry and had experienced no growth for 20 years.
Even though the number of visitors has increased from 7.1 million to over 8 million currently, focus on the volume of visitors can obscure underlying trends that raise important issues about the industry.
Subsequent DBEDT reports have shown that real visitor expenditures (adjusted for inflation) as a percent of state gross domestic product have been on a declining trend since 1988, from 30.3 percent to 18 percent in 2012.
Similarly, Paul Brewbaker of TZ Economics has shown in several presentations that tourism receipts in real terms have been on a declining trend since 1989, which suggests that increasing the number of visitors is not necessarily producing higher returns.
Other underlying trends also reveal potential problems. Hawaii is dependent upon two major visitor markets: the United States, which accounts for 61 percent of total visitors; and Japan, which accounts for 19 percent.
Visitors from Japan have been on a declining trend since 1997 from 2.2 million to 1.5 million in 2013. U.S. visitors have not reached the peak of 5.2 million visitors experienced in 2006.
In addition, growth in the number of visitors primarily has been in terms of repeat visitors to Hawaii. There has been no growth in the number of first-time visitors since 1999.
Due to different expenditure patterns, the various types of visitors have different impacts upon the sectors of Hawaii’s economy and generate different net benefits to the state.
Although the declining trends are of concern, the net benefits to the state are of equal importance.
From a public finance viewpoint, the net benefits relate to the rationale and justification for promoting tourism and how public funds, such as the transient accommodation tax, should be used.
There are other changes in the industry, such as the decline in hotel employment here due to the shift toward visitor accommodations with limited services; and ownership changes in the hotel industry, which have resulted in different corporate objectives.
There is a need to open the discussion on the future of tourism in Hawaii from a broader perspective than increasing the number of visitors to Hawaii.
During the 1970s when state government was planning-oriented, studies assessed the net benefits of tourism to Hawaii and its future directions.
This may be an opportune time to reassess the benefits of tourism in order to determine its directions for the future of Hawaii.
