Hawaii island eruption-related tourism losses could exceed $200 million

The groundbreaking fissures from Kilauea Volcano that created a molten lava river three months ago have cast a chill over the Big Island’s tourism that could potentially cost $200 million in lost visitor spending.

That’s the opinion of Mark Kimura, an affiliate faculty member of the Department of Geography and Environmental Science at the University of Hawaii at Hilo, who released a new economic impact survey Friday on the latest Kilauea eruption.

Kimura said the economic impact of the event in May and June had already cost Hawaii island an estimated 38,000 in potential visitors and $50 million in potential tourism spending.

Based on predicted growth trends, Kimura estimated that the island should have welcomed 320,092 visitors in May and June but instead only drew 281,681 visitors. That’s actually a seasonally adjusted 12 percent loss, which is more significant than the results reported by the Hawaii Tourism Authority in May and June.

HTA reported that visitors to Hawaii island dropped nearly 2 percent in May from the previous year as Norwegian Cruise Lines canceled Pride of America’s port calls to Hilo and Kona during three voyages in May. While NCL had re-entered the Hawaii island market by June, HTA still reported a nearly 5 percent visitor decrease that month.

Kimura compared the current eruption to Hurricane Iniki, which he said is the closest natural disaster to the eruption for which isle data is available. Assuming that tourists’ reaction to the eruption would be similar to Hurricane Iniki, Kimura said it would take Hawaii island at least 4.8 months to recover. Losses would hit $200 million if the eruption would stop today, he said.

“We know there will be a significant cost — $200 million just gives us some rough idea,” Kimura said. “The total is still hard to tell since we only have two months of actual data from when it started.”

Kimura also estimated that the impact of the Kilauea eruption on the Pahoa area would be about $25 million annually if all the residents and businesses in the affected portion had to leave.

Kimura’s calculations might understate the loss.

Hawai‘i Volcanoes National Park estimated spending losses of more than $38 million since most of the park has been closed for 85 days.

And resorts as far away as the west side of Hawaii island are reporting significant losses.

Stephanie Donoho, administrative director of the Kohala Coast Resort Association said Kohala Coast properties lost more than $25 million in hotel room revenue in May and June alone. That’s the equivalent to a loss of $1.05 million in general excise tax and $2.56 million in the transient accommodations tax, Donoho said.

Paul Brewbaker, principal economist at TZ Economics, said, “The sad fact is that this year the Big Island was probably reaching its highest levels of occupancy ever before May (on a seasonally adjusted basis).”

Jack Richards, president and CEO of Hawaii’s largest travel wholesaler, Pleasant Holidays LLC, kicked off 2018 anticipating the state would break a benchmark 10 million arrivals by year’s end. But Richards has been less bullish since May when signs of dampening began to emerge in the Big Island tourism’s performance.

“We have seen no significant improvement in bookings for 2018 and 2019 travel since the May 3 volcano eruption. Island of Hawaii bookings are down year over year,” Richards said.

Occupancy at Big Isle hotels fell 6 percentage points to nearly 69 percent in June, according to data released by Tennessee-based STR, which tracks hotel performance across the state. It was the island’s largest monthly occupancy decline since November 2013, when occupancy fell 11 percent to just over 54 percent.

In June the island’s average daily rate fell 0.3 percent from June 2017 to just over $239, and the revenue per available room, or RevPAR, dropped more than 8 percent to almost $164. RevPAR is the amount each property gets nightly for each room regardless of the room’s occupancy status.

Jan Freitag, STR senior vice president, cautioned that “one month does not a trend make” and said historically, “the hotel industry is very, very resilient. Travel always bounces back. When things are dire, people are saying that they need to travel.”