July brings
736,820 visitors

Arrivals increased 7.7 percent to a
record during the month, pumping
$1.2 billion into the economy

Hawaii's visitor industry enjoyed another record-breaking month in July partly because of the growing strength of the state's domestic and cruise ship markets.

The state welcomed 736,820 visitors last month -- a year-on-year increase of 7.7 percent -- who pumped $1.2 billion into the state's economy, the state's Department of Business, Economic Development and Tourism said yesterday.

Visitor arrivals from the U.S. West grew 12.8 percent and those from the U.S. East rose 3 percent in July from a year earlier. During the first seven months of the year, more than 4.3 million visitors came to Hawaii, a 7.1 percent rise from the same period in 2004.

Norwegian Cruise Line's new home-ported Pride of America and its Pride of Aloha contributed to the increased arrivals. Cruise visitors who arrived by air increased 57 percent year-over-year to 22,725 passengers, said State Tourism Liaison Marsha Wienert.

U.S. East arrivals jump

"We are very pleased with July's extraordinary performance, especially from the domestic market" Wienert said. "All indicators continue to show that our visitor industry is poised to have the best year ever."

Strong demand for Hawaii helped push the number of domestic visitors to 556,053 -- higher than in any previous July, Wienert said.

Growth in West Coast visitor numbers was strong in July, with 320,332 tourists jetting to Hawaii. The state hosted 202,380 visitors from the eastern U.S. last month

Increased demand from the U.S. East market helped contribute to an 11.2 percent rise in visitor spending in July. Visitors from the eastern U.S. typically try to get more out of their Hawaii trips because they must fly longer to get here than West Coasters.

Some of the growth from the U.S. East is likely the result of Hawaii's expanding cruise industry, said Robert Kritzman, senior vice president of NCL America.

"We have a strong brand and distribution in the U.S. East," Kritzman said. Some 75 percent of NCL America's cruise passengers elect to spend vacations on shore, staying an average of 2.5 days.

Summer business has been strong for both the Pride of Aloha and Pride of America, Kritzman said. "We're sailing this week with almost every berth filled," he said.

Rates to go higher

Nearly all of the Starwood Hotels & Resorts Worldwide Inc.'s Hawaii hotels ran at 90 percent occupancy or better in July, except the newly opened Sheraton Keauhou Bay Resort & Spa on the Big Island.

"We had a good July like the rest of the state," said Keith Vieira, Starwood's senior vice president and director of operations for Hawaii and French Polynesia. "We had strong occupancy growth."

But while July's visitor arrivals and room nights were up, room rates were still not as strong as they should be, Vieira said.

"We're still about four years behind," he said. "We need a better growth rate to become sustainable. Our energy and labor costs are up substantially. "

If strong demand for Hawaii holds, visitor industry experts, including Vieira, have said room rates may start increasingly more substantially.

"We expect to be able to charge much higher rates next year," Vieira said.

ResortQuest Hawaii had strong growth in average daily room rates and occupancy last month, said Kelvin Bloom, president of the company, which was formerly known as Aston Hotels & Resorts. Bloom also said he expects to see a stronger performance than usual in the coming fall season.

Japan arrivals flat

Pleasant Holidays, Hawaii's largest wholesaler, had flat growth in room nights for July, but revenues increased 2 percent, said Ken Phillips, staff vice president for Pleasant Holidays LLC.

"What we have seen is that there continues to be a shifting to higher-end vacations," Phillips said. More than half of Pleasant Holidays' Hawaii-bound customers chose to stay in deluxe and luxury hotels in July, he said.

Hawaii's international market, led by visitors from Japan, was relatively flat in July. International arrivals grew just 1.4 percent overall to 180,767 from the year-ago 178,316. Likewise, Japanese arrivals were flat in July.

"We're not gaining much, but we're not losing much either," said Gilbert Kimura, spokesman for Japan Airlines, which brought about 82,000 Japanese tourists to Hawaii in July.

Competition from other destinations like China, Southeast Asia and Korea has made it more difficult for Hawaii to keep its share of the Japan visitor market, Kimura said.

"However, Hawaii remains the No. 1 destination for Japan outbound tourists," he said.