Growth in mainland visitors has overcompensated for a loss of Japanese tourists. Above, sun worshippers walk along Kuhio Beach.

Record visitor spending
in ’03 forecast by state

The latest quarterly report
estimates that expenditures
will jump 5.6% to $10.6 billion

The state pegs total visitor spending for 2003 at nearly $10.6 billion, shattering the record $10.4 billion spent in 2000, with value packages enticing tourists to linger in the islands longer.

Visitors from Hawaii's top tourism industry market, the mainland, have been spending a little more time here, and the overall length of stay has increased 7.2 percent, as of July.

The state expects total travel time, the total days that visitors spend in Hawaii, to increase 4.4 percent this year and to be higher than 2000, the banner year for island travel. The new data comes from the state's latest "Quarterly Statistical and Economic Report," released yesterday.

In the report, the state estimates visitor spending will jump 5.6 percent this year from $9.99 billion last year, an upgrade from the state's previous growth estimate of 3.1 percent.

Hawaii visitors are increasingly coming from the U.S. mainland, and those visitors stay longer than Japanese visitors. Japanese spend the most here per day, but growth in mainland visitor spending has overcompensated for a loss of Japanese visitors.

Also, isle hotels and travel wholesalers have been selling value packages to customers, encouraging extra room nights, which leads to longer trips and more spending, said Joseph Toy, head of consulting firm Hospitality Advisors LLC.

Hawaii saw the same pattern in the doldrums of the 1990s. The strategy has enabled the hotels to weather a weak travel period, keeping the flow of customers steady. The downside is that hotel revenues and rates are below the levels of 2000, and the recovery is still fragile.

"Occupancy's been up, but it's been at the expense of rates," said Perry Sorenson, chief operating officer of Outrigger Hotels & Resorts.

Travel patterns must become more stable and consistent to allow for the hotels to push the rates up and hold onto their volume of customers, Toy said. "We are still not quite at that point," he said.

Hawaii's visitor arrivals in August were up 3.6 percent from last year, turning the corner from months of year-over-year declines, according to preliminary state data. Hawaii appears to be bucking a negative travel trend, to some degree. In August, industrywide demand for air travel was down, with total miles flown by paying passengers off 1.9 percent, according to data from the Air Transport Association.

The state plans to release its official August visitor arrival statistics shortly.

In its quarterly economic report, the state forecasts little improvement in visitor counts this year, and expects 6.47 million total visitors in 2003, off 6.9 percent from the record 6.95 visitors in 2000. The University of Hawaii Economic Research Organization recently released a similar projection for this year's visitor arrivals in an otherwise bright report on the local economy.

The state's report projects a 2.7 percent rise in real personal income this year, a 2.1 percent increase in jobs and a 2.6 percent rise in real gross state product.

A real estate boom has helped. The value of home resales on Oahu totaled $2.21 billion in the first eight months of 2003, up 35 percent from $1.64 billion in the same time period last year, according to the Honolulu Board of Realtors.

In August, Hawaii's unemployment rate was 4.4 percent, compared with 6 percent nationally. Hawaii had a total of 563,550 nonfarm jobs, up 2 percent from 552,400 in the year before.

The improved economic outlook prompted Gov. Linda Lingle last week to relax state budget restrictions she imposed earlier this year.

The state's predictions for 2004 also are rosy, baring any major world incidents, with an expected 6.87 million visitors, spending a record $11.39 billion, or about $1,658 per trip to the islands.

Job growth is expected to cool off, with 1.3 percent increases in 2004 and 2005, the state said.

"Generally speaking, Hawaii's future growth is expected to be primarily related to the rate of expansion in the mainland U.S. and Japan economies, the sources of Hawaii's tourism demand and the main export markets for Hawaii's goods and services," the state report said.


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