If Hawaii discounts the destination, visitors will come. But they won't necessarily spend lots of money or stay in hotels.

That has been the hard lesson learned by Hawaii's troubled visitor industry in the aftermath of the global economic crisis. After 16 months of declining visitor counts, Hawaii finally saw arrivals increase 1.5 percent last month.

Deep discounting on everything from rooms to food and activities, as well as freebies ranging from room nights to complimentary breakfasts, parking and Wi-Fi, brought 624,140 visitors to the islands in July and encouraged them to stay longer. However, it's clear from the 12.4 percent drop in visitor spending and the 17.3 percent increase in the number of travelers that bunked with family and friends that visitors are looking for another bottom.

  Hawaii Visitor Arrivals See Increase For July

 

Visitor arrivals for July saw the first increase in 15 months.

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“;Visitors almost can't afford not to come,”; said state Tourism Liaison Marsha Wienert. “;We are offering very competitive pricing in the marketplace, and that is driving business.”;

However, while the offers have brought more visitors, many are less willing to spend. On average, visitors to Hawaii in July spent $26 less per person than they did in July 2008. Most of them, 45 percent, came from the nearby West Coast, from where the cost of travel to Hawaii is lowest. And, even still, some 22.6 percent more of them saved further by seeking hospitality from friends and relatives. Through July, 413,679 of the nearly 3.8 million visitors who came to Hawaii stayed with family or friends.

In this market, frugality is the new world order, said David Carey, president and chief executive officer of Outrigger Enterprises.

“;If you look at the summer volume, Waikiki is doing pretty well, but hotel and retail spending are way down and restaurant spending is off,”; Carey said. “;We're having a fire sale.”;

While Hawaii's visitor industry needs to put heads on beds to keep its hotels, restaurants, stores and activities and attractions operating, occupancy alone will not sustain the market, he said. The decline in spending has hampered profitability and could result in more worker furloughs and layoffs, business bankruptcies and foreclosures, Carey said.

“;With arrivals up slightly, occupancy is relatively constant, but the significant discounting means that the margins are getting squeezed,”; Carey said.

Indeed, hoteliers saw revenue-per-available-room (RevPAR), considered by many the hotel industry's best measure, drop by 29.1 percent in June, said Joseph Toy, president and chief executive officer of Hospitality Advisors LLC.

“;With such weak performance, we still do not expect to see any foundation for recovery until mid-2010,”; Toy said.

Cost and distance have created unique challenges for Hawaii's visitor industry, but it's lean all over. While Hawaii slipped to fifth place in nationwide hotel occupancy, Toy said its average-daily-room-rate (ADR) and RevPar were second only to New York City.

“;To put things in perspective, leisure travel is down everywhere in the world right now and Hawaii is actually doing better than a lot of our competition,”; said Mike McCartney, president and chief executive officer for the Hawaii Tourism Authority.

HTA has planned price-driven fall marketing campaigns in the U.S. West and Japan, where visitors have been willing to book with shorter lead time.

Last month, the HTA also moved more marketing dollars into Japan, Asia and Oceania, Wienert said.

And, there will be more fall flights between Hawaii and Japan and Canada, McCartney said.