State tourism in 'crisis mode'


POSTED: Thursday, April 02, 2009

Hawaii's visitor industry is in “;crisis mode”; and it will take cooperation from community, government and business leaders to keep the entire economy from floundering during the downturn, according to Hawaii economist Leroy Laney, who released a tourism report yesterday commissioned by First Hawaiian Bank.

;[Preview]    Hawaii’s Tourism Industry Faces Crisis

First Hawaiian Bank Economics Advisor and HPU Economics Professor, Dr. Leroy Laney, says that Hawaii Tourism industry may not see a boost until 2011.



State tourism, which has been reeling from the effects of the collapse of Aloha Airlines, the loss of ATA Airlines service from the mainland, the departure of two Norwegian Cruise Line vessels, the financial global meltdown in the U.S. and related job losses, is likely to continue to struggle through 2010, said Laney, an economic adviser to First Hawaiian Bank and a professor of economics and finance at Hawaii Pacific University.

“;While there may be some recovery in the Hawaii visitor industry in 2010, the increase in arrivals will likely remain almost flat, in the very low single digits at best, for 2010,”; he said. “;We can hope for better performance in 2011, but the increase in arrivals may still remain in the low single digits.”;

Tourism in Hawaii accounts for at least a quarter of the state's gross domestic product and about one-third of its jobs, and with economic multipliers, the impacts could be substantially higher, Laney said. Last year's 10.8 percent drop in visitor arrivals created a 2.5 percent decline, or about $113 million drop, in the state's general fund, he said. The drop is equivalent to over half of all the transient accommodation tax collected in 2008 and about 12 percent of all the government contracts award-ed last year, Laney said.

“;It is imperative that all possible actions be taken to remedy the situation,”; he said. “;If that does not happen, or until it does, the Hawaii economy will remain anemic. Employment in all sectors will be down, as will tax revenues, business profits, and overall economic well-being.”;

Mike McCartney, the newly named president and chief executive of the Hawaii Tourism Authority, said that the state's visitor industry is working to unite stakeholders from the community and business sector alike to reverse tourism's downward spiral.

“;We all know that we are in it together and that this economy depends on a mutual relationship between all of us,”; McCartney said. “;In the past, we have been segmented and everyone has focused on their particular piece of the pie, but we know now that we are all interrelated.”;

While visitor arrivals and spending are important measures of Hawaii's visitor industry, McCartney said job creation also needs to be considered.

“;It's not just about how wealthy or how well a company does, but more importantly if Hawaii's people have jobs and if they are working,”; he said.

McCartney, who officially starts work on Monday, said he's already met with members of the Hawaii Business Roundtable and the Chamber of Commerce of Hawaii. Don Horner, chairman and CEO of First Hawaiian Bank, is also among those tapped by McCartney to help the state better manage its critical tourism resource and learn to further leverage tourist dollars.

“;(Laney's) study clearly confirms that the solution, certainly in the short term, to our rapidly rising unemployment, weakened tax revenues and challenged nonprofit community is to work as a community to ensure our visitor industry is healthy while we seek economic diversification,”; Horner said.

Jim Tollefson, president and CEO of the Chamber of Commerce, said the state's business community and tourism sector have been working toward solutions for some time.

“;However, recent events have brought it into focus and raised the priority of working together,”; Tollefson said.


Highlights of a tourism report released yesterday by First Hawaiian Bank economic adviser Leroy Laney:

» The state's lead industry has been the hardest-hit sector by the serious recession in Hawaii.

» Tourism in Hawaii accounts for at least a quarter of the state's gross domestic product and about one-third of its jobs, and with economic multipliers, the impact could be substantially higher.

» Through 2010, Hawaii's visitor arrivals are likely to remain almost flat or, at best, increase in the low single digits.