April marked the sixth month in a row that more visitors came to Hawaii than the previous year, while creating less economic benefit.
Arrivals have been growing since February 2017, but tourism spending has been falling every month since November.
The Hawaii Tourism Authority released preliminary visitor statistics Wednesday showing that arrivals in April rose nearly 7% to 856,250 visitors while spending decreased more than 6% to just over
$1.3 billion from a year ago.
These results contributed to a nearly 4% gain
in arrivals during the first four months of the year, which rose to nearly
3.4 million visitors. Year-to-date visitor spending dropped more than 3% to more than $5.8 billion.
The six-month pattern is the opposite of the HTA’s long-established goal of attracting more high-spending visitors, who contribute to economic growth with minimal costs to infrastructure, natural resources and communities.
It also reflects a longer-
term trend of arrivals vastly outpacing inflation-adjusted spending. In 1990 some
6.7 million tourists came to Hawaii and spent the equivalent of $18 billion in today’s dollars, said Paul Brewbaker, principal of
TZ Economics. In 2018
more than 9.9 million visitors came to Hawaii, but their spending was essentially the same, $18 billion, as was spent in 1990, he said.
“This idea that tourism receipts have not grown — while the number of people and the number of days that they occupy the islands has — is problematic because of all of the social costs associated with their presence,” Brewbaker said. “Tourist preferences have shifted. No one plays golf or tennis at a resort. They are hiking up the Haiku stairs.”
More of them are also staying in vacation rentals, legal and otherwise, which HTA President and CEO Chris Tatum said is a key factor driving the recent softness in visitor spending.
Tatum stopped short of taking a position on managing vacation rentals but said that “you can’t have arrivals go up and hotel occupancy decline and not know where these numbers are coming from.”
During the first four months of the year, HTA reported a 1% rise in visitors who said that they planned to stay in a hotel during their Hawaii trip while stays in a vacation rental house were up 10%.
Tatum said a unlimited supply of vacation rentals causes softer visitor spending because “price is driven by supply and demand.” Also, vacation rental visitors, who are more inclined to eat in their rooms or homes, tend to spend less, he said.
Tatum said HTA’s nearly $86.8 million fiscal 2020 budget, which the HTA board passed Thursday, addresses the spending declines by putting more dollars into higher-value source markets like sports travelers, China and Japan.
“We’re excited about the demographics with the Rams-Cowboys game — the West Coast is a huge source market for us,” Tatum said. “The PGA market also is clearly very strong.”
The Los Angeles Rams will play a preseason game against the Dallas Cowboys at Aloha Stadium on Aug. 17.
HTA also will put an additional million toward marketing Japan, which Tatum said continues to be one of Hawaii’s higher-value markets. There also will be a slight increase in marketing dollars for China, which delivers high visitor spending despite its visa challenges and smaller footprint, he said. Extra marketing dollars are planned for Taiwan and Southeast Asia, too, Tatum said.
The HTA board approved increasing its fiscal year 2020 marketing budget to $51.6 million from the year-ago $51 million; however, the category once occupied 63% of HTA’s total budget and now comprises just over 59%.
HTA’s overall budget reflects a new, less marketing-driven vision of tourism management that emphasizes improving resident sentiment toward the visitor industry and visitor experiences, Tatum said. HTA will do that by focusing on marketing that attracts higher-value markets and expanding programs that invest in the the community, Hawaiian culture and natural resources, he said.
HTA Chief Administrative Officer Keith Regan said more emphasis has been put on Hawaiian culture, natural resources, community, sports and safety and security, which comprise nearly 32% of HTA’s fiscal 2020 budget. That’s up
from 28% of the fiscal 2019 total.
HTA is dropping its tourism research budget to almost $4 million from the nearly $4.3 million a year ago — however, the agency plans to order more research, including regular reports tracking vacation rentals, which it hopes to distribute monthly or at least quarterly. HTA Tourism Research Director Jennifer Chun said HTA also will, in the next few months, kick off a project to help gauge visitation levels at Hawaii parks, trails and other popular attractions.
HTA Chairman Rick Fried said with those statistics in hand, the state and county could explore charging visitors to enter attractions like parks and trails.
“Charging access is one way to keep visitor spending going up which has been flat in real dollars or down for a number of decades,” Fried said.