HTA mulls $6.5M shot in arm

Funding could help the tourist industry, which appears to be in a downward spiral

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Hawaii's struggling visitor industry, which saw total June arrivals drop by 14.2 percent, soon could have an additional $6.5 million to bolster the industry.

The Hawaii Tourism Authority discussed appropriating up to $2.5 million in marketing funds and $4 million in access funds yesterday to help stem losses to the state's lead industry, said State Tourism Liaison Marsha Wienert. HTA staff will meet with marketing contractors and visitor industry stakeholders to determine how much to spend and which markets to shore up, and the board will vote on the move in August, Wienert said.

Although June is normally the start of Hawaii's peak tourism season, which runs through August, the convergence of negative pressures was evident as arrivals dipped to their worst level since June 2003.

Luxury-branded leisure destinations such as Hawaii have struggled as travelers' concerns about rising prices and diminishing wealth have caused them to cut back on spending and stay closer to home.

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The Hawaii Tourism Authority discussed appropriating up to $6.5 million in marketing and access funds yesterday to bolster the state's struggling visitor industry. Hawaii's June arrivals dropped 14.2 percent and spending from visitors who arrived by air fell 13.5 percent.

Visitor arrivals The number of visitors arriving in Hawaii by air in June 2008 with the percentage change from the same month last year: VISITORS PCT. TOTAL 580,862 -14.2% U.S. West 252,004 -16.5% U.S. East 162,483 -17.0% Japan 91,213 -10.0% Canada 13,370 18.6% All others 61,792 -0.7% BY ISLAND Oahu 362,010 -13.9% Kauai 95,333 -23.5% Lanai 6,633 -30.9% Maui 184,877 -22% Molokai 5,499 -15.7% Big Island 112,951 -23.9% Source: Department of Business, Economic Development and Tourism Jet fuel soars Jet fuel prices have increased 453.9 percent from 2000. Current cost of a barrel: $166.10 Current cost of a gallon: $3.95 Current cost of a metric ton: $1,308 Percentage change from one month ago: -0.2 percent Percentage change from one year ago: 81.7 percent Source: IATA, an airline trade organization

It was standing-room only as Hawaii's top economic, tourism and business leaders converged on the HTA to express concern about the downturn in the state's key industry, which saw June arrivals plummet to a five-year low.

HTA staff will meet with marketing contractors and visitor industry stakeholders to determine how much to spend and which markets to shore up, and the board will vote on the appropriation at a meeting in August, said State Tourism Liaison Marsha Wienert.

Hawaii's visitor industry saw improvement in July and August bookings after the Hawaii Visitors and Convention Bureau launched a $3 million emergency marketing campaign to help stimulate travel from the U.S. West to the islands, Wienert said. But it wasn't enough, industry leaders have said, with more money and marketing programs needed to stem the bleeding.

Luxury-branded leisure destinations like Hawaii have struggled with dropping consumer confidence, which has been reported to be at its lowest level since the 1980s.

Hawaii has been particularly hard hit by recent travel trends. Jet fuel prices, which are up 81.7 percent over the prior year, have caused some regional and discount carriers like Aloha Airlines and ATA Airlines to go out of business and even enticed larger carriers to trim routes, raise prices and skimp on service. The economic struggles of NCL America, Hawaii's home-ported cruise line, also have caused significant decline in the state's cruise market. Island cruise visitors dropped to 9,792 in June compared with 35,720 during the same month in 2007.

Although June is normally the start of Hawaii's peak tourism season, which runs through August, the convergence of negative pressures was evident in all measures of the visitor industry. Visitors who came to Hawaii spent less during their stay this June than they did the year prior. Daily spending fell by 2.1 percent to $177 per person causing total expenditures to fall to $982.4 million, a $153.2 million reduction.

While the weakened U.S. economy contributed to an 18.6 percent rise in air arrivals from Canada, it was also a large factor in the 16.5 percent decline of Hawaii's top U.S. West market. Contributing to the 17 percent decline in U.S. East arrivals to Hawaii were 12,693 fewer U.S. East cruisers than in June 2007. High fuel surcharges continued to plague the longer struggling Japan arrivals market, which dropped by 10 percent in June.

Mary Charles of Hotel Lanai, who spoke to the HTA on behalf of Hawaii's hotel industry, said state tourism is at an all-time low.

"We've been through airline strikes, the Gulf War, Sept. 11. ... this is as scary as it's ever been," she said. "Everyone is paying the price of what is happening in our industry."

Hawaii will likely experience continued hurdles, said David Uchiyama, HTA's vice president for tourism marketing. The visitor industry will face continued softening for leisure travel globally; further airline consolidation and route adjustments; shifts or realignments of wholesalers and tour operators with industry partners; and more hotel layoffs and actual closures, Uchiyama said.

The trickle-down impacts of a teetering visitor industry would be pervasive, said Mike Fitzgerald, president and chief executive officer of Enterprise Honolulu, a nonprofit agency dedicated to improving Honolulu's business climate and its global competitiveness.

"This business affects every person in this state," said Fitzgerald, whose organization supported emergency funding for the visitor industry and would join the HTA in lobbying the state if necessary.

Small business owner Susan Tongg O'Donnell, who operates Aloha Wedding Planners Inc., said she has already begun to experience the trickle-down impacts of a faltering visitor industry. Her wedding bookings have dropped by 25 percent, she said.

"For a long time, Hawaii has ridden on our aloha good will and as great as it is and as deeply rooted as it is that just isn't enough anymore," O'Donnell said.