April tourism blooms with growth

April was the second month of 2015 that experienced a year-over-year climb in visitor spending and arrivals, largely due to a gain in domestic travelers and visitors from Japan.

Total arrivals grew 2.3 percent year-over-year to 677,754 visitors, according to preliminary statistics released on Thursday by the Hawaii Tourism Authority. Total visitor spending also increased 5.4 percent to $1.2 billion.

Likewise, air capacity to Hawaii rose by 8.9 percent year-over-year to 978,585 seats. Arrivals by air grew 4.1 percent to 665,393 visitors, offsetting a 46.6 percent decline in arrivals by cruise ships.

Statewide results for the first four months of the year were strong relative to other destinations, said Barry Wallace, executive vice president of hospitality services for Outrigger Enterprises Group. But while Hawaii is likely to lead the pack of U.S. major market areas and competitive island destinations, Wallace said hoteliers across the isles are bracing for a less robust year.

"We may finish the year with slightly higher arrivals, but most hoteliers expect that our industry will end the year negatively," he said. "The demand is definitely softer than last year. Although more people came in April, the hotels had plenty of room like they did in January, March and May. Our industry continues to be concerned with the uptick in condominium, timeshare and transient rental accommodations stays."

Wallace said many Hawaii hotels have found it difficult to catch up from what to them was a relatively bad first quarter.

"The first quarter was disappointing overall. The second quarter, which is seasonally softer, came in around the same level as last year," Wallace said. "The third quarter is looking equal or better than last year, but it may not be enough to offset the first half of the year. Many in our business feel like you have to make the whole year in the first quarter or you lose it all."

Still, from an overall visitor industry perspective, tourism turned the corner in April.

April arrivals from the U.S. West rose 7.7 percent year-over-year to 295,683 visitors, contributing to a 6.7 percent increase in visitor spending, which grew to $424.2 million.

U.S. East arrivals in April grew 3.6 percent year-over-year to 133,509 visitors while visitor expenditures increased 2.6 percent to $248.5 million.

"While domestic arrivals are growing, there’s quite a bit of uncertainty in the U.S. market which has led to shorter booking windows and steeper valleys during the off-season," said Joseph Toy, president and CEO of hotel-consultancy Hospitality Advisors LLC.

After four previous months of declines, Japanese arrivals in April rose 1.9 percent year-over-year to 98,240 visitors. The gains were due in part to strong demand for Hawaii during Golden Week, which began April 29, as well as the Honolulu concert by popular Japanese band Dreams Come True. A nearly 73 percent increase in the number of Japanese visitors who came to Hawaii to get married also gave the market a boost.

However, spending from Japanese visitors, who have been battling an unfavorable exchange rate for some time, continued to decline, dropping 10.5 percent from the prior year to $136.2 million.

"We are seeing some weakness in the Japanese market from the weakening of the yen against the dollar," Toy said.

Eric Takahata, managing director for Hawaii Tourism Japan, said some of the decline also is due to the Japanese government and tour companies focusing on inbound and domestic travel as the country prepares for the Tokyo Olympics in 2020.

"During Golden Week, Universal Studio Japan was going gangbusters as people chose to stay home and go there," Takahata said.

Other international markets also have been affected by unfavorable currency exchange rates, said Wallace.

"Visitors from Canada, Australia and Japan were all significantly disadvantaged," Wallace said.

Canadian arrivals declined 8.3 percent year-over-year to 45,422 visitors, which resulted in a 7.1 percent year-over-year drop in visitor expenditures to $88.1 million.

April arrivals from "all other" markets, which includes Australia, New Zealand, Europe, Latin America and the generally fast-growing Asian countries outside of Japan, rose only 2.9 percent year-over-year to 92,538 visitors. The lowered growth rate was due in part to a 3.7 percent drop in visitors from Australia, a 1.8 percent drop in visitors from China and a 2.7 percent drop in visitors from Korea. However, combined expenditures from all-other visitors were $256.8 million, 26.5 percent higher than last April.

While incentive visitors rose 14.6 percent, as many as 5 percent fewer visitors came for conventions and nearly 9 percent fewer came to attend a corporate meeting.

"When group travel is down, it hurts all segments of the market since we have less of a base of business to build our rates on," Wallace said.

Overall performance in April wasn’t as strong as March; still, the results helped to bolster the year-to-date outcome. During the first four months of the year, total arrivals increased 2.9 percent year-over-year to nearly 2.8 million visitors, while total visitor spending remained flat at $5 billion.