Hawaii’s tourism industry is on track to reach another record number of visitors and spending in 2014, for the third year in a row.
The visitor industry continues to pace slightly ahead of last year, with arrivals through November up 0.9 percent at 7.5 million, according to preliminary statistics released Tuesday by the Hawaii Tourism Authority. Total expenditures grew 2.3 percent to $13.3 billion in the first 11 months of 2014, boosted by 2 percent higher daily spending to $195 from $192.
The growth in spending this year has added $293 million to the state’s economy compared to last year at this time.
"The exposure with the president here, the Sony Open (golf tournament) and things that bring attention to Hawaii has … helped tourism," said Ken Ikeda, director of operations for Honolulu-based Panda Travel, which has seen a slight increase in business from a year ago. "And of course the terrible weather storms they’ve been having on the mainland in the Midwest through the East Coast, that has generated a lot of interest in the warmer destinations with Hawaii being one of the top choices."
Last year there were 8.1 million visitors who spent $14.4 billion in the islands. In 2012, the first year arrivals reached 8 million, expenditures totaled $14.3 billion.
For the month of November, there were 637,664 visitors to the islands, up 2.2 percent, while average daily spending rose to $194 from $192 per person in the year-earlier period.
Total expenditures last month increased 3.4 percent to $1.1 billion compared to November 2013, HTA said.
Despite the positive numbers, hotels are just getting in line with pricing to match increased operating costs, said David Carey, president and chief executive officer of Outrigger Enterprises Group.
"We always forget that inflation is a factor. Costs have certainly increased rapidly over the past three years — labor costs, medical costs and up until very recently, energy costs," he said. "At the end of the day it’s been three years in a row of positive increase in business and that’s good. The industry is getting better at getting pricing that’s more in line with the quality of products here in Hawaii."
November arrivals by air for the state’s core U.S. West market rose 4.3 percent to 267,696, while spending grew 7.4 percent to $398.9 million. Visitors from the eastern U.S., Hawaii’s second largest visitor market, fell 0.2 percent to 108,872, though spending jumped 16.8 percent to $237 million.
Visitors from Japan, the state’s largest international market, increased 1.8 percent to 122,191, but expenditures dropped 4.7 percent to $187.1 million. Japanese visitors have been hurt by the falling value of the yen, which makes all dollar purchases more expensive.
Likewise, there were 0.2 percent more visitors from Canada to 45,604, but spending from this market plunged 12.3 percent to $92 million. All other markets, which include emerging Asian nations, recorded 8.8 percent more visitors to 84,686 and a 0.5 percent drop in spending to $183.6 million.
"Arrivals and spending from our developing international markets also continue to grow as we work toward diversifying our tourism profile and increasing first-time arrivals to the Hawaiian islands," Ronald Williams, HTA’s chief executive officer, said in a statement. "This has helped to balance our core markets like Japan, where economic uncertainty has led to slight declines in visitor arrivals and decreases in length of stay, which are affecting total expenditures and may hinder us from reaching year-end targets for this market."
Outrigger’s Carey is expecting the positive trend to continue in 2015, though growth in the industry can be easily deterred by natural disasters, international conflicts or acts of terrorism.
"The problem with the leisure business is we’re always dependent upon (world) events," Carey added. "You really want to make money when you can because we’re vulnerable in the events we don’t control. It always spooks people about flying when planes go missing or if there’s any unplanned disease outbreak in our core markets."
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For Hawaii business, 2014 was a banner year. The state’s largest industry, tourism,
is on track to set another record in visitor arrivals and spending; Oahu home prices set a record in November; the state’s largest company, Hawaiian Electric Industries, is being bought by a Florida power company for $4.3 billion; and the long-planned transformation of Kakaako into a forest of condominium towers began to take shape.
HEI to be sold
On Dec. 3, Juno Beach, Fla.-based NextEra Energy Inc. offered to buy Hawaiian Electric Industries Inc. for $4.3 billion.
If the deal wins regulatory and shareholder approval, NextEra will move control of Hawaii’s main electric utility to the mainland for the first time since King David Kalakaua lit up Iolani Palace with electric lights in 1886.
NextEra, the nation’s largest generator of wind and solar power, says it can help reduce Hawaii’s $5 billion-a-year imported-oil habit and bring down the nation’s highest electric rates.
American Savings Bank will be spun off as part of the purchase and become a stand-alone company.
Kakaako towers
Kakaako has been envisioned to become Honolulu’s core of urban high-rise living for almost 40 years. This year, however, marked a kickoff to an unprecedented stage of transformation with construction starting on towers in two master plans promising to dramatically redefine the area.
Howard Hughes Corp. broke ground on two condominium towers — Waiea and Anaha — and obtained permits for three more in its Ward Village master plan calling for up to 22 towers on 60 acres at Ward Centers.
Developers also broke ground on The Collection high-rise and obtained permits for three other midrise and high-rise projects on pieces of the Our Kakaako master plan devised by Kamehameha Schools with up to seven towers on 29 acres Ewa of Ward Centers.
Meanwhile, three other towers — Symphony Honolulu and a pair dubbed 801 South St. — are being built in other parts of Kakaako.
Home prices
You can call 2014 a breakout year for Oahu home prices.
Twice the record median price for sales of previously owned single-family houses in any month was broken — $700,000 in June and $719,500 in November.
Those numbers were eye-popping to some observers. Yet for the whole year, the median rose a rather modest 4.7 percent to $675,000 through last month. That price is higher than any previous year and represents a third consecutive year with an increase.
Still, 2014 was by no means a boom year compared with a decade ago when annual median price increases from 2002 to 2005 soared between 12 percent and 28 percent.@Subhead1:Record tourism
Hawaii’s No. 1 industry is on pace to set records for a third year in a row. Visitor arrivals and spending will top 2013 levels, continuing to be the engine pushing Hawaii’s economy forward.
Through the first 11 months of 2014 arrivals were up 0.9 percent to 7.5 million visitors. Total expenditures rose 2.3 percent to $13.3 billion year to date, boosted by higher daily spending, up 2 percent to $195 from $192.
Once December is in the books, the number of arrivals should top last year’s record of 8,174,460 visitors. As recently as 2010, the number was below 7 million.
The rate of growth, as can be expected, is slowing down. In 2012 there was a 9.7 percent increase in arrivals.
Last year it slowed to a 1.7 percent increase, and so far this year it is just under 1 percent.
Health Connector
It has been a rough inaugural year for the Hawaii Health Connector, the state’s version of Obamacare.
The nonprofit has never fully recovered from a slow start, marked by the poor performance of its website.
The Connector, which began providing health coverage on Jan.1, has already had three executive directors. The most recent, Jeff Kissel, formerly of Hawaii Gas, hopes to put an end to the string of bad news.
Kissel said on Dec. 15 the Connector had enrolled 3,500 residents in medical insurance in the first month of this year’s open enrollment, that was up from fewer than 300 sign-ups in the first month a year ago.
To date, an estimated 13,500 residents have signed up for health insurance through the online marketplace.
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