Slight growth is enough for third straight record year

Hawaii’s visitor industry anticipates a strong 2015 after setting its third consecutive year of spending and arrivals records in 2014.

Preliminary results released Thursday by the Hawai‘i Tourism Authority show that nearly 8.3 million visitors came to Hawaii in 2014, beating last year’s record 8.17 million visitors by 1.3 percent.

Visitor spending grew 2.3 percent to $14.7 billion, up from $14.4 billion in 2013. On average, 205,044 visitors were in the state on any given day in 2014, an increase of 1.1 percent from 2013.

"The last time I remember Hawaii putting strings of records together was 1981, 1982 and 1983," said Jerry Gibson, area vice president of Hilton Hawaii. "We were very pleased with 2014. I would be glad to sit here at the same time next year and have this discussion again."

Whether that can happen is the big question for Hawaii’s visitor industry. In August HTA approved targets of 8.4 million arrivals and $15.1 billion in visitor spending for 2015, which if achieved would mean four years of performance records.

While 2014 spending and arrivals only grew marginally from 2013, they came in better than expected — surpassing an 8.25 million visitor arrivals target and a $14.69 billion spending target set in August.

It helped that visitor arrivals from Hawaii’s core North America market picked up during the second half of the year, supported by more airline capacity, which resulted in lower airfares due to increased competition in the market, said HTA CEO Ron Williams.

For the year, U.S. West arrivals grew 1.4 percent to about 3.25 million visitors. Spending from these visitors rose 3.2 percent to nearly $5 billion. Arrivals from Hawaii’s second-largest market, the U.S. East, increased 1.1 percent to about 1.72 million in 2014, while visitor spending rose 4.1 percent to $3.7 billion.

Total 2014 air seat capacity to Hawaii, a major factor in industry performance, also grew 3.4 percent to a record 11.26 million seats. Strong growth in air seats is expected to continue during the first two quarters of 2015, said Daniel Na­hoo­pii, HTA director of tourism research.

According to Williams, "As oil prices remain low, airlines continue to improve their operational costs, which we anticipate will lead to continued growth in air seats and arrivals from North America through the first half of this year."

Great fares prompted 25-year-old Teresa Hart of Melbourne, Australia, to book a three-week holiday stay on Oahu.

"It’s really popular to come here now. The flights are 300 Australian dollars, which is about 400 U.S. dollars," Hart said as she floated in the infinity pool at the Sheraton Wai­kiki.

David Carey, president and CEO of Outrigger Enterprises Group, said it’s unusual for a mature resort like Hawaii to have so many years of robust growth. However, Carey said if circumstances remain right, the industry could see more banner results.

"I still think there’s some (room) rate yield opportunity. We’re a bargain compared to Los Angeles and New York," he said. "Also, with corporate America doing well and flight availability strong, groups should do better. That helps everyone because it allows for compression, which lets you attract higher-rate (independent travelers) closer to their trip."

But having a strong U.S. dollar relative to some foreign currencies could cause head winds as it did in 2014, he said. Japan, Hawaii’s largest international market, saw a 0.5 percent drop in arrivals, which came in at 1.5 million for all of 2014. The decrease contributed to a 2.9 percent drop in visitor spending, which fell to $2.4 billion.

While spending from Canada, a mature international market for Hawaii, declined 0.5 percent to nearly $1.1 billion in 2014, arrivals rose 1.3 percent to 523,534. Latin American arrivals stayed flat at 30,303 in 2014, but there was growth in arrivals from other smaller international markets, including Oceania, which grew 5.9 percent to 376,704 visitors; Asian countries other than Japan, which rose 8.5 percent to 363,528 arrivals; and Europe, which saw arrivals increase 4.6 percent to 143,132.

Combined spending by visitors from these smaller international markets rose 5.3 percent to $2.56 billion.

China and Korea should strengthen in 2015 due to additional air seats and direct flights from those countries, said Dave Erdman, president and CEO of PacRim Marketing Group Inc. and PRTech LLC. Erdman said additional ANA air seats slated for summer also are an encouraging sign for the Japa­nese market, which is showing strong demand despite the weak yen.

Another major market driver in 2015 will be the ability to capitalize on 2014 investments. Carey said Outrigger completed a major soft-goods renovation at the Embassy Suites Wai­kiki Beach Walk and still managed to attain the highest revenue per available room (revPAR) in the Embassy Suites system for North America.

"We’re very proud of that and the fact that we were also their No. 2 in the world," he said.

Gibson said Hilton Hawaiian Village completed renovations on its Diamond Head, Lagoon and Grand Wai­ki­kian towers and has the Grand Islander, a new 38-story building, coming up.

"You can’t drive down the street without seeing a crane in the sky. … This is a very good sign of a healthy Hawaii economy," Gibson said. "The destination is in really good shape. The general public and travel agents know that, and it’s being looked at by various hotel flags. So we’ve got a lot of ingredients to make the recipe for a good 2015."