A record number of visitors traveled to the Hawaiian Islands in September; however, overall visitor spending dropped for the first time since February.
The Hawai‘i Tourism Authority reported Wednesday that September visitor arrivals grew to 652,616, a 4.7 percent increase over September 2014. But even with the influx, visitors spent 1.2 percent less, bringing total expenditures to just under $1. 1 billion.
Visitors spent about $196 a day, or 3.2 percent less than they did during the same month last year. The average price that each person paid for a trip also fell 5.6 percent to $1,644.
Visitor industry leaders say the spending contraction was partially due to the mix of visitors, the amount of time they spent in Hawaii and their choice of accommodations.
September growth was led by visitors from the U.S. West and Canada, markets that typically spend less than the U.S. East, Japan and other foreign-origination spots.
According to the HTA, U.S. West arrivals grew 6.3 percent to 248,646 visitors in September and arrivals from Canada grew 4.2 percent to 20,504 visitors. Arrivals from the category called all other markets, including Asian nations outside of Japan, Oceania, Europe and Latin America, rose 4.3 percent to 112,332 visitors. These gains offset scant declines from the U.S. East and Japan markets, which fell to 109,813 and 137,156 visitors respectively.
Visitors from Hawaii’s core market, the U.S. West, increased their daily spending by 4.6 percent to $166 per person. U.S. East visitors reported a 2.2 percent drop in daily spending and the Japan market’s daily spending fell a dramatic 14.2 percent.
“This mix of visitors has been harder on Waikiki retailers than on hotels, which have replaced some of the Japan business with other customers,” said David Carey, president and CEO of Outrigger Enterprises Group. “Japan customers spend more on retail than other customers with the exception of China. Many of our retail stores are off in terms of velocity, but our food and beverage are doing well. It’s a different market.”
The importance of visitor mix becomes clear when noting that even with their spending declines, visitors from higher-spending markets still spent significantly more on a daily basis than their North American counterparts. In comparison, visitors from the U.S. East spent $203 per person per day, while visitors from Japan spent $244 per day, and those from the category called all others spent $240.
Tourism leaders said another reason for the overall spending drop was that visitors spent 2.5 percent less time in Hawaii in September than they did during the same month last year. On average, these visitors limited their trips to just over eight days.
“Length of stay makes a difference since typically the more time that a visitor stays in Hawaii, the more they will spend,” said Jack Richards, president and CEO of Pleasant Holidays, Hawaii’s largest wholesale travel seller.
Visitor industry leaders also noted that a drop in hotel stays combined with a growing preference by visitors to book alternative accommodations may have dampened spending or at least made it hard to track. Some 408,924 travelers told the HTA that they planned to stay in a hotel in September, a decrease of 1.9 percent from September 2014. In contrast, the number of visitors who said that they planned to stay in a condominium this September increased 11.6 percent to 100,076. Stays in bed-and-breakfast homes grew 4.2 percent to 6,327 and stays in other vacation rentals rose 3 percent to 8,421.
“We are seeing an inordinate amount of people staying in alternative accommodations. These guests just aren’t as big of spenders,” Richards said. “I’m concerned because I’m not sure how these rentals pass on their transient accommodations taxes or how they are regulated. They also take air seats that we could have used in our packages.”
Still, Richards and other tourism leaders say they expect the upward trajectory of the industry’s performance to continue at least through the beginning of next year. Through the first nine months of 2015, total arrivals rose 4.1 percent and visitor spending increased 2.6 percent to $11.3 billion.
George D. Szigeti, HTA president and CEO, said September results are pacing slightly above projections and the market is anticipated to gain additional strength through the fourth quarter.
“With lower domestic fuel prices, we anticipate seeing continued growth from our core U.S. markets,” Szigeti said, adding that overall air seats are expected to hit a record 11.8 million this year.
Szigeti said Virgin America will begin flying from San Francisco to Honolulu in November and to Kahului in December, and Jin Air, a low-cost carrier from South Korea, will begin service from Seoul to Honolulu in December.
“We’re expecting a very solid October, November and December and we’re already seeing some hotels seeking rate increases for next year, a sign that they expect a robust start to the year,” Richards said.
Carey said Outrigger’s forecast is solid for the next few months with the momentum expected to continue.
“I’m not sure it’s a screamer, but the air situation is stable and when there’s lift we always have a chance,” he said. “Waikiki runs pretty full, so the real opportunity for the state is to get some more of the business to go to the neighbor islands.”