2004 arrivals
near record

Domestic visitor arrivals hit a
record last year, but an overall
increase in tourism spending
has not kept up with inflation

While Hawaii's tourism industry posted record numbers in 2004 in domestic visitor arrivals and overall spending, increased revenues in the industry haven't kept up with the cost of doing business.

Record domestic visitor arrivals and recovering growth from the international markets propelled the state's total air arrivals for 2004 to 6,908,173, a 8.3 percent increase over last year. Visitor expenditures reached an all-time high of $10.3 billion, up from $9.9 billion in 2000, the visitor industry's record year, according to preliminary statistics released yesterday by the state Department of Business, Economic Development and Tourism.

The visitor industry is touting 2004 as the year that visitors who arrived by air spent the most, but the 3.5 increase from 2000 is well below the rate of inflation: Prices have increased 6.6 percent since 2000.

While 2004's near-record arrivals were surpassed only by the 6,948,595 visitors who came to the state in 2000, arrivals weren't high enough to boost visitor spending significantly beyond the level attained five years ago.

"We're back where we were from 2000 and we've recovered, but this doesn't represent real growth in spending," said Carl Bonham, a University of Hawaii economist.

"If you run a tour operation and are paying today's gas prices and collecting the same dollars as you did in the year 2000, then you are in worse shape," Bonham said. "On the other hand, the visitor industry has made significant improvements compared to where it was post-9/11 and following SARS and the war on Iraq. It's recovered and that's a good thing."

After experiencing several lean and turbulent years, there aren't many members of Hawaii's tourism industry who could find cause to complain about 2004's finish, said David Carey, president and chief executive of Outrigger Hotels & Resorts.

Still caution is advised, Carey said.

"We're having a good period right now, but it's a very short memory back to where we were begging for funds," Carey said, adding that costs have increased along with visitor spending.

The industry is facing rising insurance, medical, energy and labor costs, he said.

"In five years, not much has gotten cheaper," Carey said. "Everyone gets all giddy when the industry is profitable, but there is tremendous need to reinvest; without reinvestment the future gets bleak very quickly."

Hawaii's tourism industry recovered in 2004, but it's expected to continue growing in 2005, said state Tourism Liaison Marsha Wienert.

"We are predicting the trend will continue into 2005 and hopefully put us over that hurdle so that we start seeing the kind of increases that we need to show nice profits," Wienert said.

Increased capacity in airline seats for Hawaii's domestic and international markets during February, March and April are expected to further strengthen the visitor industry, she said.

"Our hope is that this increase in capacity will further stimulate and strengthen our visitor industry and help Hawaii's businesses plan," Wienert said.