Tourism officials fret over downturn
Industry leaders are rushing to address a worrisome drop in the top-spending markets
The state's top tourism official said yesterday that she is "very concerned" about a 5.7 percent decline in January visitor arrivals and that the boom portion of the visitor industry's cycle might be over.
The new numbers are a sign that the visitor industry's once frenetic pace, characterized last year by difficulties for tourists getting flights or hotel rooms, has slowed, said State Tourism Liaison Marsha Wienert.
January visitor numbers released yesterday by the state Department of Business, Economic Development and Tourism were dismal enough to prompt some members of the visitor industry to call them a harbinger of challenging times to come.
While DBEDT statistics showed that arrivals from Hawaii's top visitor market, the Western states, rose 1.4 percent in January, arrivals from the more sought-after U.S. East market fell 9 percent, and arrivals from Japan, Hawaii's highest-spending market, fell 12.3 percent.
"There's no question that the drop in the U.S. East and Japan markets is concerning," Wienert said, adding that the Hawaii Tourism Authority has sent staff to Japan to take stock of the continued decline in that market.
The authority is also trying to build the number of first-time visitors to Hawaii from eastbound and westbound markets, as well as new source markets such as China and Korea, she said.
"As Hawaii adds more hotel inventory in the next several years, we'll need to increase demand and growth from these markets to continue to remain stable," Wienert said.
Advance bookings by groups and first-time visitors have been declining since last year, prompting many of Hawaii's hoteliers to roll out campaigns designed for soft-market periods.
"It's going to be a flat to very minimal growth year," said Keith Vieira, a senior vice president with Starwood Hotels & Resorts Worldwide. "I think we were already in a down cycle last year, if you take away the cruise ships."
Coming on the heels of record-setting 2005 and 2006 visitor arrivals and spending increases, a January decline was not entirely unexpected by the visitor industry or economists. Indeed, the forecast for both 2007 and 2008 tourism levels in Hawaii is a gain of 1 percent -- a much more modest rate of increase than the past couple of years.
"We experienced two years of exceptional growth -- unlike any years that we have ever seen in terms of arrivals and visitor spending -- which have resulted in a wonderfully robust visitor economy," Wienert said. She added that officials expect the Japanese, U.S. and Canadian markets to stabilize in the coming months.
While some are just starting to take notice of declines in the visitor industry, the boom actually ended sometime during the summer of 2005, said Paul Brewbaker, chief economist for the Bank of Hawaii.
"No one actually listens to us; they just think they do," Brewbaker said.
He said he had told tourism officials last year that their industry was capacity-constrained and that energy costs could have a long-term negative impact on airfares and travel demand.
"It turns out it was worse than that," Brewbaker said. "Fixed supply disallows meaningful tourism growth to begin with, but travel demand also declined."
While the dramatic drop in arrivals from Japan reflects well-documented problems such as increased fuel surcharges on airline tickets, higher room rates and poor yen-to-dollar ratios, January's fall in traffic from the U.S. East was more of a marketplace anomaly due in part to warmer weather patterns, Wienert said.
"The very mild weather in the U.S. East last month likely impacted the normally high winter travel to the islands," she said.
While Hawaii's visitor industry is down, it is still registering periodic gains in spending, Wienert said. Last month's 4.8 percent increase in daily visitor spending is in keeping with the state's goal to grow its key visitor industry through increased spending rather than arrivals, she said.
The 561,691 visitors who came to Hawaii in January spent an average of $177 per day, a 4.8 percent climb. Overall, these visitors spent approximately 4.6 percent more per trip.
Still, the visitor industry has rallied to address January's drop in arrivals from coveted, higher-spending markets such as the U.S. East and Japan, Vieira said. "We're all running call-to-action advertising and promotions designed to offer guests more value and drive guest bookings," he said.
While increases in visitor spending are good for the state's visitor industry, growth in arrivals is also needed to make Hawaii's tourism profitable, Vieira said.
"We need to grow both occupancy and rate to build our revenue per available room," he said.
ISLE VISITOR ARRIVALS
The number of visitors arriving in Hawaii in January with the percentage change from the same month last year:
Source: Department of Business, Economic Development and Tourism