A recovery in Hawaii's visitor industry, the state's top economic engine, is at least two years out despite improved performance in December and a respectable year-end finish.

The state Department of Business, Economic Development and Tourism has forecast that visitor arrivals, which fell 4.5 percent to 6.5 million last year, will rise to 6.6 million in 2010 and 6.9 million in 2011. Spending, which fell 11.7 percent to $9.9 billion in 2009, is expected to remain static in 2010 and rise to $10.8 billion in 2011.

During the last up cycle from 2005 to 2008, 7 million visitor arrivals and $11 billion in visitor spending became the state's tourism benchmarks, but DBEDT does not expect Hawaii tourism to meet them again until 2012. And even that projection is aggressive, especially for hoteliers, said Keith Vieira, senior vice president of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia.

“;In reality I think it could take closer to five years to see recovery,”; Vieira said.

While more arrivals are expected as the global economy continues to improve, the forecasts are still below the previous peak of 7.5 million visitors in 2006. They also lag 2007's record $12.8 billion in visitor spending.

“;We should be cautious about how much recovery that we'll see in the market,”; said Ben Rafter, president and chief executive officer of Aqua Hotels & Resorts. “;On the one hand, leisure travel is starting to go up, and we are excited about the new airlift from the U.S. West and Canada. But there is very little corporate and incentive travel on the books for 2010, and we don't have the Pro Bowl, either.”;

The discounting and special offers that bolstered arrivals last year will continue into 2010, Vieira said.

“;No one is going to drop their value-added specials or try to gain their rates back tomorrow,”; Vieira said, adding that Hawaii faces fierce competition from mainland destinations that need to fill large room blocks left vacant by group travel declines.

Destinations like these will have to recover before their special offers quit tempting visitors away from Hawaii, Vieira said. Even then, room nights will lag arrivals, said Joe Toy, president and CEO of Hospitality Advisors LLC.

“;We've seen a growing gap between visitor arrivals and hotel stays,”; Toy said, adding that more visitors are staying at time shares, homes and condominiums, or with family and friends.

Hawaii hotels, which realized a peak occupancy rate of 79.5 percent in 2006, have to gain 13.2 percentage points to reach the high-water mark again, he said.

“;We lost roughly 22 percent of our revenues from the high point,”; Toy said. “;From April of 2008 to the end of 2009, Hawaii hoteliers lost more than $1 billion in revenues.”;

By 2012 hotel occupancy will recover to 73.3 percent; however, room rates will remain challenging, he said.

Average daily room rates, which peaked at $201 in 2008, fell to $176 last year and are not expected to rise above inflation for the next few years, Toy said.

“;We'll probably see an average daily room rate of $187 by 2012, which means that in today's dollars we are still really far behind,”; Toy said.

Still, Hawaii emerged from the shadow of the H1N1 flu and recession less battle-worn than many other destinations, said state Tourism Liaison Marsha Wienert.

Total visitor arrivals in December rose 2.4 percent to 577,657, contributing to a $5 million rise in visitor spending, according to preliminary statistics released yesterday by the Hawaii Tourism Authority.

“;We are very pleased with the increase in visitor arrivals in December, which resulted in increased visitor spending for the first month since March 2008,”; Wienert said.

Despite the overall decline for the year, there were improvements in visitor arrivals by air in the later part of 2009, said Mike McCartney, HTA president and CEO.

The U.S. West visitor arrivals improved from double-digit decreases in the first quarter of 2009 to positive growth in arrivals for seven out of the last nine months of the year, McCartney said. Also, the Japanese market, which lost arrivals due to the H1N1 flu scare, grew from September to November, he said.

TREADING WATER

The monthly total arrivals and percentage change in visitors to Hawaii:

2009

2008