Hawaii’s visitor industry is on track to break records this year, and if the momentum continues, its performance likely will surpass published forecasts.
That was the opinion of a panel of economists and tourism industry leaders at a 2013 Outlook and Economic Forecast hosted Thursday by the Pacific Asia Travel Association and the Travel and Tourism Research Association.
"The published forecasts for 2013 seem likely to be too low," said Paul Brewbaker, principal at TZ Economics.
Although the Economic Research Organization at the University of Hawaii had a strong outlook in 2012, it predicted gains could ease this year due to a poorer outlook for global growth and the possibility that Hawaii’s visitor industry could run out of expansion room. According to their November forecast, UHERO anticipated that visitor arrivals this year will grow 3.6 percent and spending will expand by 11 percent. Likewise, the state Department of Business, Economic Development and Tourism said in November that it expected 2013 would end the year with a 3.9 percent gain in arrivals and a 5.2 percent rise in visitor spending.
Last year visitor arrivals were up 9.6 percent, or more than double the 4.1 percent increase UHERO predicted in February 2012.
While Brewbaker cautioned about the need to correct lodging constraints and pay attention to visitor industry volatility, he expects 2013, much like 2012, will far surpass expectations.
"We were already at their forecast for this year in the fourth quarter of last year," Brewbaker said.
Last year’s momentum appears to have carried into 2013. Joe Toy, president and CEO of Hospitality Advisors LLC, said he expects continued strengthening in Hawaii’s hotel industry this year. Better distribution of visitors across the islands, pent-up demand for travel from the U.S. market and more group bookings will benefit the hotel industry, Toy said. He expects statewide occupancy will grow 3 percentage points to 80 percent this year, and hoteliers will see a 6.9 percent increase in the average daily rate to $218 per night.
Airlift, a significant factor in visitor industry performance, also is expected to rise 6.8 percent for the year for a total of 10.75 million seats into Hawaii, said Chris Kam, senior director of market insights for the Hawaii Visitors and Convention Bureau.
"We have the potential for a very strong year," Kam said. "We need to make sure that demand is strong enough to fill the seats in a way that is economically viable for the airlines."
State Economist Eugene Tian said the passenger count for the first four weeks of January already was up 5.2 percent.
Based on Hawaii Tourism Authority projections that airlift could rise 6.8 percent for the year, Tian said that visitor arrivals could come in about 7.8 percent above the prior year. Last year, arrivals grew by about 1 percentage point more than the airlift, he said.
"The visitor industry will set another record in 2013," Tian said.
He also discussed the possibility that Hawaii’s visitor industry, which traditionally has seen growth seesawing between markets, could be entering another era in which both international and domestic arrivals rise at the same time.
"Is this a short-term phenomenon or a trend? If we have a good policy in place, it may continue," Tian said.
Daniel Nahoopii, Hawaii Tourism Authority’s director of tourism research, said despite gains, Hawaii’s visitor industry has more room to grow.
"The new peak for this year was not the peak for the U.S. market. We had more visitors from there in 2006 and 2007," Nahoopii said. "The peak for international arrivals goes even farther back."
The key to getting around capacity constraints is bringing more visitors to Hawaii during the off-peak season and encouraging more of them to make neighbor island trips, he said.
Mark Dunkerley, president and CEO of Hawaiian Airlines, said signs in his industry corroborate the observations of fellow speakers.
"I think demand at the moment from all our markets is certainly good," Dunkerley said. "It’s encouraging for everyone and certainly makes now the right time to take a broader long-term look at the market."
Good times provide the ideal opportunity for Hawaii’s visitor industry to shore up its next generation, he said. Hawaiian’s current $11 billion fleet expansion was planned during the prior tourism peak; however, Dunkerley said, the fact that it’s going forward represents the carrier’s continued strong commitment to Hawaii.
"There is only one airline whose business future is tied inseparably to Hawaii as a visitor destination," Dunkerley said.
To put Hawaiian’s 2010-to-2020 expansion into perspective, Dunkerley compared it with the $5.5 billion Honolulu rail plan.
"We are exactly twice (the cost), and there is not a penny of government money in it," he said.
The role that Hawaiian Airlines plays in Hawaii’s visitor industry cannot be discounted, Kam said.
"They account for 39 percent of all the new seats or basically 4 out of 10 new seats," he said.
The one drawback to the tourism industry’s plan to have more direct flights to neighbor islands is that it could lead to higher interisland airfares, Dunkerley said. Tourists flying from Oahu to the neighbor islands subsidize the cost of interisland travel for Hawaii residents. If there are fewer interisland fliers, the cost will rise, Dunkerley said.
