After achieving the highest July on record for the state in visitor spending and arrivals, Hawaii’s visitor industry is trending ahead of last year’s record-breaking pace for tourism.
Visitor spending was up 2.6 percent to $1.35 billion, and arrivals were up 2.5 percent to 772,106 in July, according to preliminary statistics released by the Hawaii Tourism Authority on Wednesday.
All major markets except for the U.S. East and Canada posted monthly arrivals gains. Likewise, monthly spending growth was realized from all major markets except Canada and the category labeled "other markets," which includes Asian countries outside of Japan, Oceania, Latin America, Europe and any other groups that haven’t been counted.
"Overall, the visitor industry performance is really positive for the state," said Keith Vieira, principal of KV & Associates, Hospitality Consulting. "Pockets like Kona and Kauai may still have a tough time because they rely more on the group market and it’s not as strong as it needs to be. However, in general, we’ll see positive growth in 2014 — just not as strong as we saw in 2013 or 2012."
July results support Vieira’s observations. Arrivals from Hawaii’s core U.S. West market rose 5.1 percent to 327,325 visitors in July, which broke an 11-month streak of declines. Visitors from that market, which accounted for 39.1 percent of all visitor arrivals to Hawaii in 2013, also boosted their July spending by 7.4 percent to $483.9 million. Hawaii’s second-largest market, the U.S. East, saw July visitor arrivals decline by 1 percent to 175,739. However, monthly expenditures from these visitors grew by 4.2 percent to $380.1 million.
The Japan market saw July gains even though HTA recently went on record as saying that it didn’t think it could meet an earlier goal of growing Japanese visitors to 2 million by 2016. Visitors from Japan, who made up about 18.5 percent of Hawaii’s visitor market last year, grew 1.6 percent in July to 131,229. Spending from these visitors also rose 3.1 percent to $205.7 million.
The number of Canadian visitors dropped 7.4 percent to 24,790 in what is already a low season. Visitors from that market, which accounted for about 6.2 percent of Hawaii’s visitors in 2013, spent $44.6 million or 16 percent less than they did during the same time last year.
Air seats rose 3.7 percent to 1,032,625 from July 2013. While HTA initially projected a slight decline in air seats from North America, it has seen slight growth with Delta Air Lines adding additional flights and Hawaiian Airlines redeploying aircraft that were previously used for international routes, said HTA President and CEO Mike McCartney. If air seats in 2014 reach their 11 million forecast, lift could set another record, he said.
"Honolulu is ranked as the fourth busiest international port of entry for the U.S.," McCartney said. "We have 975 flights per week connecting 48 cities worldwide by 21 carriers. Our focus will be to ensure there is sufficient demand to sustain this increase in seats from our core U.S. market."
The industry also needs to heed airline pricing, Vieira said.
"It’s not just about what’s available … it’s about what’s available at what price," Vieira said. "Everyone understands that airlines have to make money, but people are so reactive to price changes. We need more seats available at more affordable prices."
Vieira said the limited capacity of Hawaii’s visitor accommodations also creates airline challenges.
"If we want other airlines like Southwest to come in here, we need more 3.5- and 4-star hotel rooms," he said. "That would help increase the length of stay among visitors and draw more first-timers and young travelers. We need to build momentum so that airlines can get better yield and set pricing that benefits everyone."
Kelly Sanders, area managing director of Waikiki for Starwood Hotels and Resorts, said building demand for the fall season is another concern.
"We started to see a slow recovery in April, which along with May and June had a decline. Summer has rebounded to be better than last year, but we are concerned about fall. As we move into October and November, pace numbers and advance bookings are softer this year than they have been in the past," he said. "On the Japan side, we think it’s mainly due to a less favorable exchange rate and a higher consumption tax. Also, the Korean market is down because we mainly depend on the honeymoon market and this year, due to the lunar cycle, is considered an unfavorable time to get married."
To get past these challenges and thrive in an ever-increasing environment of competition, McCartney said members of the visitor industry will have to lead together.
"If we only spend our time fighting for our piece of the pie, who will bake new pies? We need to bake new pies," he said.
McCartney said marketing is only as good as its product so government and tourism leaders need to invest in the destination.
"What we do in the next five years will affect the next 50," he said. "There is no time. We must grow. We must diversify. We must refresh our product."
