Fewer airline seats from Hawaii’s core U.S. West market and fewer weekends in the month caused visitor arrivals to drop in September, the first decline in two years.
The state welcomed 216,958 visitors from its core U.S. West region in September, down 5.9 percent from a year earlier, according to statistics released Thursday by the Hawaii Tourism Authority. Those who came spent only $323 million, which represented a 5.5 percent drop from September 2012. Visitors from the U.S. East also dropped 0.2 percent to 109,794, and spending remained flat at $240 million.
The drop in Hawaii’s domestic markets was partially offset by increases in international arrivals, which rose 2 percent from Japan, 0.2 percent from Canada, 3.2 percent from cruise ships and 4.8 percent from emerging markets, which include China, Korea, Taiwan and Latin America.
Total September visitor arrivals fell 1 percent to 594,181. Overall visitor spending also dropped in September to $1.04 billion, a 4.8 percent decline from September 2012. Spending declines from the U.S. West, Japan and cruise ships were partially offset by gains from all other markets.
"We will continue to monitor the effects of the federal government shutdown and delicate global economy to ensure the sustainability and success of our tourism industry," said HTA President and CEO Mike McCartney.
The monthly results represented a pulling back from the momentum of 2012 and first quarter of 2013, but McCartney said that the plateauing was somewhat expected given a seasonal contraction in airline seats. While international seats rose 10.6 percent to 294,122, domestic seats fell 5.6 percent to 523,792.
"We are tracking a decline in scheduled seats from the U.S. West of about 5 percent year over year, which explains why visitor volume would decline," said Jack Richards, president and CEO of Pleasant Holidays LLC, Hawaii’s largest wholesale travel seller. "The airlines are changing from the 767s and 757s (planes) that they were using at the peak to 737-800s. They are going from planes that seat about 225 to 250 passengers to planes that seat about 160. Once demand rises again, they will bring back the bigger planes.’"
Keith Vieira, senior vice president of operations for Starwood Hotels and Resorts in Hawaii and French Polynesia, said limited hotel inventory, especially on Oahu, also has had a dampening effect on tourism because capacity constraints limit growth.
"This year more than 8 million visitors are expected to come to Hawaii. How many more can come? In some cases we’ve reached the level where we can’t go much higher. There is still room on the neighbor islands, but compression in Waikiki has begun to outprice that young, first-time visitor," Vieira said. "If we lose them they won’t come back, and we’ll lose the life cycle of the repeat visitor, which is about nine times."
McCartney also speculates that some potential travelers to Hawaii may have been dissuaded from coming in September due to rising airfares and average daily hotel rates, which have pushed up the overall cost of a Hawaii vacation anywhere from 15 to 20 percent.
"Expensive" was one of the adjectives that New Zealand visitor Rachael Fletcher, who competed in the Xterra World Championship, used to describe her 12-day stay on Oahu and Maui. Luckily, she decided it was worth it.
"We brought the children and it was just brilliant," Fletcher said. "The beaches were really safe. The Hilton’s fireworks were the best that we’ve ever seen. I’m hoping that I qualify for the Xterra next year so that we can come back."
Seasonal dampening and price pressure aside, the future still looks pretty bright for Hawaii tourism. For the first three quarters of the year, Hawaii has continued to pace ahead of 2012, McCartney said. Year-to-date total visitor arrivals increased 4.5 percent to 6 million.
"I think we’ve had seasonal bumps in September, October and November," Richards said. "We are showing much stronger bookings for December, and we are seeing higher bookings all the way through August of 2014."
He and McCartney say that they are not overly concerned with what looks to be a seasonal performance drop. Richards said he is even seeing signs that consumers are becoming more tolerant of rising vacation costs.
"We believe that the customers are staying fewer days, but our average per-person vacation price has gone up 6.4 percent year over year," he said. "We aren’t that concerned about price sensitivity anymore."
Competitive destinations like Mexico and the Caribbean are charging more, and travelers, in general, have gotten used to the higher prices, Richards said.
"We think that they are starting to say, ‘Perhaps we should buy now rather than waiting because the prices could go higher,’" he said.