Hawaii economists Wednesday forecast slower growth in the tourism market over the next few years, but cautioned that the outlook doesn’t factor in the impact of the coronavirus — even if no one here gets it.
Hawaii’s visitor arrivals grew more than 5% to 10.4 million in 2019, state economist Eugene Tian said. However, visitor arrivals by air this year will only grow 2.5%, followed by 2.1% in 2021 and 1.5% in 2022. Tian said Hawaii’s gross domestic product is expected to grow 1.2% in 2020, 1.3% in 2021, and 1.3% in 2022.
The forecast for a slower pace of growth in tourism over the nex few years — made Wednesday during a 2020 Annual Outlook & Economic Forecast Forum from the Hawaii chapters of the Pacific Asia Travel Association and the Travel and Tourism Research Association — doesn’t account for coronavirus.
The World Health Organization reported Wednesday that 24, 554 coronavirus cases had been confirmed across 24 countries, including the U.S. However, the impact remained the greatest in China where 24,363 cases have been confirmed. So far, WHO reports that there have been 491 coronavirus-related deaths in China and one in the Philippines.
Paul Brewbaker, principal of TZ Economics, said historically Hawaii visitors, especially international ones, have responded negatively to biological events like the coronavirus, the H1N1 bird flu in 2009 and SARS in 2003. Geopolitical volatility like the Gulf War and 9/11 don’t cause the kind of concern among visitors as they once did, but biological events still create panic, he said.
“Ten thousand people die of the flu every year in America, and, like, five guys are going to get coronavirus and we are freaking out about it ” he said. “(Coronavirus) could bring economic impacts to Hawaii even if nobody in Hawaii gets sick. We have to adopt risk mitigation measures to minimize the impact of these shocks.”
“The good news is that the expectations of recession have pushed out into 2021 … while, this was before the virus — so all bets are off,” Brewbaker said.
Hawaii visitor industry officials are partnering with the state Department of Health and other organizations to address risk. Still, they’ve been quick to point out that so far no cases of the coronavirus have been confirmed in Hawaii, where China’s tourism footprint is really small anyway. Last year, arrivals from China comprised less than 1% of Hawaii’s annual visitor arrivals.
Still, Tian said the coronavirus already has caused Hawaii’s international passenger counts for Jan. 1 through Tuesday to drop from the same period last year.
“The total has some impact already. The impact really has come from international. Domestic is still doing good,” Tian said. “The Japan visitors, that is the one that we really worry about because it’s 15% of our market.”
Tian said officials are hoping the impact of the coronavirus on Hawaii tourism will take a similar path to SARS, which caused a .1% drop in arrivals here.
In comparison, 9/11 caused visitor arrivals to Hawaii to fall more than 9%, while visitor arrivals fell .4% during the 2007 Asian economic crisis. The recession in 2008 caused a more than 10% decline, followed by a more than 4% drop in 2009.
Assuming the same impact as SARS on its major markets, Tian said Hawaii’s 2019 visitor arrivals would have only grown .5 % to 10.28 million, versus their actual growth rate of more than 5% to 10.4 million. Increases from the U.S. West, U.S. East and Canada would have offset declines from China, Hong Kong, Japan, Australia, Korea and all other foreign visitors for a net gain of only 52,000 visitors, he added.
Amelia Lim, managing director of CBRE Hotels Advisory/ Capital Markets, said since December the U.S. hotel market has “been on an upward roar but for coronavirus. “
Lim said in 2019 China alone was responsible for about 17 million hotel room nights in the U.S. According to the most recent data, Lim said the impact of coronavirus to the U.S. is probably about a 28% decrease, or about 4.5 million room nights, for a $5.5 billion economic impact.
“So it’s a little sobering,” she said.
It’s still not known how the coronavirus ultimately will impact hotel and lodging in Hawaii, where so far results have been mixed.
Danny Ojiri, vice president of market development for Outrigger Hospitality Group, said there are opportunities for Hawaii to pick up businesses from groups looking to reschedule plans in Asia to reduce the likelihood of coronavirus exposure.
Some Hawaii hotels also have reported that requests from guests from Asia to extend their Hawaii stays have offset cancellations, said Dave Mark, PATA executive committee member.