As tourism revenue rises, so does industry’s appetite

An exuberance fills the tourism industry as a record number of visitors spent a record amount of money in Hawaii last year, making 2012 the best since 2006.

Because the state’s economy relies so heavily on tourism, excitement has spread through downstream businesses and to government leaders who can breathe easier, anticipating higher revenue collections after years of budget shortages and cuts in services.

The outlook for this year is flooded with optimism. Economists and tourism chiefs at a forum last week almost seemed to be dancing in the ballroom of the Hawaii Prince Hotel where experts estimated that gains in 2013 would exceed earlier forecasts of growth.

The only clouds over their bright, sunshiny day were what was called in tourism-speak “lodging constraints” and a need for “better distribution” of visitors. And though not wanting to spoil the upbeat mood, a few tourism executives — having gone through many down years in a vulnerable industry — brought up the unpredictable menace of an unstable global economy.

To redistribute tourists, airlines need to expand direct flights to Maui, Kauai and Hawaii island, which haven’t reaped returns as robust as Oahu’s. Hawaiian Airlines, which captures the bulk of neighbor island travelers, could put more direct flights on its schedules. But because tourists flying from Oahu to other islands apparently subsidize flights for residents, direct flights would bump up the already high fares that keep locals off the planes. Nonetheless, what’s good for the goose that lays the golden egg is good for the flock, or so the thinking goes.

As for lodging constraints, sending tourists to the neighbor islands would spread the wealth to hotels and businesses there. Still, with Waikiki being the main draw and occupancy in Hawaii’s tourist mecca at close to capacity, adding new spaces is the aim. With land in limited supply, building higher seems to be the way to go and a City Council committee agrees, clearing the way for one hotel to exceed the district’s height limit by 50 feet. That sets the stage for other height exceptions.

The Council and the city administration are also establishing their own plan to ease lodging constraints, moving ahead a bill to permit “limited service” hotels in low-density areas zoned for mixed uses.

City planning officials contend there is a “pent-up demand” for smaller, non-resort hotels in Oahu’s urban center, the Ewa area and in Central Oahu. Such hotels would offer business travelers and visitors who are not tourists accommodations outside established resort districts at possibly lower prices.

Conditional use permits would be needed for hotels with more than 180 units, but not for hotels with fewer units. The difference between 179 and 181 units is negligible. The consideration should be the disruption a hotel, even one without a water slide, would bring to a community.

The leap in tourism revenues has Gov. Neil Abercrombie thinking about raising the hotel room tax, even though he says an increase isn’t needed to balance his budget proposal. The plan to raise the 9.25 percent tax to 11.25 percent in July is merely to start a conversation, he says, about long-term revenue needs — government-speak for grooming the grounds for a raise.

The hotel industry, of course, is not too keen on the idea.

Neither are county leaders on Oahu, and on the neighbor islands where tourists are to be redistributed. As state revenue has increased with tourism numbers, counties have not received their fair share from the tax because state lawmakers put a cap on the amount they receive.

The funds were supposed to help counties deal with burdens that come with millions of tourists on their islands, such as police and emergency operations, trash collections, road work and park maintenance.

In this case, the goose of state government is holding on to the golden eggs, leaving counties with empty nests.