As tourism tanks, leaders must adapt


POSTED: Tuesday, July 07, 2009

The latest tourism figures don't bode well for the summer, traditionally Hawaii's bread-and-butter travel season.

The fact that statewide hotel occupancy fell 6.5 percentage points to 61.9 percent for May from the year-earlier period is especially troubling given that May 2008 also was a bad month, and industry officials had hoped for a narrower decline.

Instead, the May 2009 figures—with nearly 40 percent of Hawaii's hotel rooms unoccupied—set a record low for the month since the survey began in 1987, according to Joseph Toy, president of Hospitality Advisors LLC, which issues the report.

Star-Bulletin business reporter Nina Wu wrote that Toy does not expect signs of recovery in Hawaii's hotel market until at least next summer, sticking with a prediction he made in 2007 and which has been confirmed so far.

While the month-to-month declines are not a surprise as the state struggles through the deep recession that has gripped the United States and the rest of the world, the continuing slump does raise serious questions about the future of this state and the critical travel industry. This includes airlines, hotels, restaurants, rental car companies and the myriad of associated businesses that cater to tourists—and thus power Hawaii's economy, help fund its government coffers and shape the islands' global image.

As Hawaii's political and union leaders struggle to reconcile the state government's budget shortfall, arguing over a mix of tax increases, employee furloughs and layoffs, a common refrain is that things will be better “;once the economy recovers,”; as if a miraculous turnaround is right around the corner and the hard decisions—requiring the government to spend less money—can somehow be postponed or otherwise avoided.

But the troubling tourism report also showed that those people who did come spent less money than in the past, bunking with friends or family, for example, even though the average price of a hotel room is down sharply.

And that long-term budget-mindedness is perfectly in sync with another report out yesterday, which found that the U.S. services economy—which includes everything from retailers to restaurants to real estate brokers—contracted in June for the ninth-straight month.

While the good news is that the sector shrank less than expected, it still shrank. Analysts therefore predict that a sustained economic recovery likely is years—not months—away, as rising unemployment and tight credit continue to force American consumers to spend less and save more. Perhaps permanently.

For a state whose economy is built around discretionary consumer spending, it's well past time for our political, union and industry leaders to recognize that the fundamentals have changed. Easy credit and home-equity wealth won't be bringing tourists to Hawaii, even after the economy recovers, and everyone who lives here must cope with the sea change.

Just as the tourists who come to Hawaii are seeking value, resident taxpayers also deserve a deal: Leaders who recognize and adapt to the changing times.