While pleased that more people are vacationing here and spending is up, hotel operators fret over lower rates
POSTED: 1:30 a.m. HST, Dec 1, 2010
LAST UPDATED: 10:41 a.m. HST, Dec 1, 2010
Alisha and Michael Bier of Washington state had no worries yesterday as they soaked up the Hawaii sun at the pool deck of the Hyatt Regency Waikiki Beach & Spa.
"There's an ice storm back home," Michael Bier said. "We can't complain."
The couple said they took advantage of low prices to book a two-week "babymoon" -- their baby is due April 30 -- through Costco. The entire trip including direct round-trip airfare as well as hotel rooms with views and rental cars on Oahu and Maui and upgrades such as resort credits and spa discounts cost them $4,100 or less than $300 a day.
"We had our heart set on Hawaii so we didn't really look at other destinations, but I think that we got a really good deal," said Alisha Bier.
Value-conscious tourists like the Biers helped push October visitor arrivals up by double digits, according to data released yesterday by the Hawaii Tourism Authority. Arrivals rose 13.6 percent, matching June for the largest percentage increase this year, to 574,425. All major markets contributed to the strong growth, with the U.S West leading with a 21.4 percent increase. Arrivals from Canada rose 17.2 percent, while the U.S. East rose 6.1 percent and Japan edged up 1.6 percent. Arrivals have risen every month this year, and through October are up 7.8 percent to just under 5.9 million. Spending also increased, surging 24.7 percent ahead of last year's bleak fall period to $961.5 million. Expenditures in the first 10 months of this year rose 14.7 percent to $9.3 billion.
OPENING THEIR WALLETSThe monthly visitor expenditures of visitors to Hawaii and the percentage change from the year-ago period.
VISITOR ARRIVALSThe number of visitors arriving in Hawaii by air in October with the percentage change from the same month last year:
GAINING STRENGTHThe monthly total arrivals and percentage change in visitors to Hawaii.
"I love numbers like this; however, it's mainly a volume recovery," said David Carey, president and chief executive officer of Outrigger Enterprises Group. "Even with the increases, spending is still well below peak levels."
To put it in perspective, three years ago when arrivals peaked at 7.4 million and spending hit a record $12.8 billion, tourists like the Biers could not have booked a Maui hotel room for just $300, Carey said. Value marketing drives sales now, he said.
"It's a good-news, bad-news proposition," Carey said.
When tourists respond to Hawaii's value, greater traffic means that hospitality workers have more job stability and hours, he said.
"Arrivals fill hotel rooms, shops and restaurants," Carey said.
Shopping was high on the list for Mariko Ishioka and Yuko Nakayama of Hiroshima, Japan, who kept UGG Australia retailer Mario Caceres busy pulling $150 boots yesterday.
"Prices here are much cheaper than in Japan," Ishioka said. "They are about half price."
While lower prices may have improved satisfaction levels for tourists, diners and shoppers, hoteliers have less cause for celebration, Carey said. More arrivals does not necessarily translate into better average daily room rates or revenue, he said.
"We've got more people and that's good, but we've also got more expenses," Carey said. "Our margins are still being squeezed."
Rates are not likely to rise much until 2012, said David Lewin, general manger of the Hyatt Regency Waikiki.
With destinations like Mexico offering airfare and a week in a hotel for $300, it's hard to push Hawaii visitors to spend more, Lewin said.
"(Mexico) is giving away their product," he said.
The fact that tourists are still choosing Hawaii shows the strength of the brand, said Keith Vieira, senior vice president and director of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia.
"Other destinations are significantly worse," Vieira said.
While Hawaii hotels pushed rates up during the higher-occupancy months of summer and during conventions, the rises have not been sustainable, he said.
Still, October's results were cause for "cautious optimism," said Mike McCartney, tourism authority president and chief executive officer.
"There is no doubt that we are in a solid position, especially compared to other markets that are not rebounding at the same pace as Hawaii," McCartney said. "Nevertheless, strengthening Hawaii's tourism economy remains our top priority because, as we all know, tourism can be the main driver of economic recovery for the entire state."
McCartney's sentiments were echoed in the twice-yearly Business Outlook and Sentiment Survey (BOSS) released yesterday by Qmark Research and Hawaii Business Magazine.
The 400 Hawaii business leaders polled from Oct. 12 to 20 were the most optimistic they've been about the state's economy since 2007. As many as 103 of those surveyed worked in tourism.
The BOSS Optimism Index, which measures how positively business leaders view next year's state economy, jumped 9 points from April of 2010.
Survey results indicated that tourism companies are expected to lead Hawaii's recovery, said Barbara Ankersmit, Qmark's president. About half the businesses anticipate visitor spending at their company will go up next year, she said.
"Things are getting better but we aren't there yet," Ankersmit said. "It's not the time to cheer."