Key tourism market, spending shrink

Arrivals from Hawaii’s largest visitor market contracted in August after 20 straight months of increases — and spending declined as well — but state tourism officials stopped short of saying the drop-off in the U.S. West signified a trend.

There were 1.3 percent fewer travelers from that core area who visited Hawaii last month, and the 301,323 visitors spent only $412.7 million, a 1.7 percent drop from August 2012, according to statistics released Thursday by the Hawaii Tourism Authority.

"At this time the drop in U.S. West visitors may be more of an adjustment to the growth," said Daniel Nahoo­pii, HTA director of tourism research. "It’s not really a trend yet. We need to look at other data points to show where we are going."

The good news for Hawaii was that the monthly drop in Hawaii’s top market was partially offset by increases in arrivals and spending from the U.S. East, Canada and emerging international markets.

Still, total visitor arrivals in August rose only 2.5 percent to 748,775, and total spending was flat at $1.2 billion.

"While the growth in August was not as robust as in previous months, it is important to note that due to continued efforts to increase distribution statewide, we have been successful in increasing total expenditures on the neighbor islands," said Mike McCartney, HTA president and CEO.

While the U.S. West was lagging, arrivals from the U.S. East rose 2.4 percent to 146,528, and spending from that region increased 8.9 percent to $308 million. Gains from historically less active international markets also helped bolster August’s results.

Arrivals from all other categories, which included emerging markets like China, Taiwan, South Korea, Oceania, Europe and Latin America, rose 16.1 percent. But the resulting 109,471 visitor count wasn’t large enough to sustain the earlier momentum seen in the market during the fourth quarter of 2012 and the first quarter of 2013. Similarly, combined total spending from these visitors only grew a lackluster 2.2 percent to $221.3 million.

Canada also came in stronger, but the 2.2 percent growth rate for arrivals produced only 27,824 visitors, and the 5.8 percent rise in spending brought only $49.2 million in total spending to the state.

Arrivals from Japan, Hawaii’s largest international market, couldn’t stop the flattening either, because they increased only 1.8 percent to 161,731, and total expenditures from this normally strong spending market dropped 5.7 percent to $255.6 million.

"As we come out of the peak summer travel season, visitor arrivals and spending for the year continue to surpass 2012," McCartney said. "We anticipate seeing a slowing in arrivals and expenditures as we enter the fall shoulder season. We will continue to monitor the fluctuating fuel costs, strengthening of the dollar against international currencies and other economic conditions, which have been impacting visitor length of stay."

Still, the seasonal moderation hasn’t kicked the visitor industry off goal. Year to date, total visitor arrivals and spending both rose 5.1 percent to nearly 5.7 million travelers and nearly $9.96 billion in overall spending.

"We are right on point in terms of arrivals," Nahoo­pii said. "We had expected about 5.2 percent growth, and we’ve got 5.1 percent although visitor spending was slightly slower than expected for the first eight months, mainly due to weaker-than-expected Japan performance."

Not every sector of the industry is feeling the contraction in spending. Year to date through August, the portion of daily visitor spending allocated to retail had dropped 21 percent, but it was up 11.2 percent for hotels.

"The HTA report doesn’t match our experiences in Waikiki," said Barry Wallace, executive vice president of hospitality services for Outrigger Enterprises Group. "We looked a August as a very strong month, and we are hopeful that will continue."

Wallace said he expects the hotel sector in Waikiki will finish the year with a nearly 20 percent increase in revenue per available room (revPAR), which is considered the best measure of hotel performance. He said that even with a drag from some of the neighbor islands, statewide revPAR should be up about 10 percent.

"I think this year is going to go into the record books as one of the good ones, and we have every reason to suspect that 2014 will be just as strong," Wallace said. "In other markets if you had occupancy at these levels, you would build new hotels. Inventory is tight in Waikiki, and it’s only going to get tighter when several hotels close for renovations. That may finally bring needed occupancy improvements to some neighbor island markets."