July tourism numbers are islands’ biggest ever

Hawaii’s visitor industry knocked it out of the park in July, which was the biggest month ever in Hawaii tourism.

July was the 14th straight month with visitor arrival and spending gains, keeping Hawaii on track for a record year. Arrivals climbed by 7 percent to 891,878 visitors. Spending grew by nearly 10 percent to $1.6 billion, according to preliminary statistics released Thursday by the Hawaii Tourism Authority.

Year-to-date visitor arrivals have grown nearly 5 percent to roughly 5.5 million. Visitor spending through July rose nearly 9 percent to just under $10 billion. In the first seven months of this year, Hawaii visitors have spent as much as they did in all of 2009.

“The numbers have just been getting larger and larger,” said Jennifer Chun, HTA tourism research manager. “Spending is up about $812 million more than the same seven-month period in 2016.”

Visitor industry proponents are quick to call the steep gains a home run — after all, what’s not to like about more visitor industry jobs, spending and tax dollars, they say.

“The success feels good,” said Keith Vieira, principal of KV & Associates, Hospitality Consulting LLC.

But the results have left others, who are concerned about the carrying capacity of the islands, crying foul. They don’t like the additional traffic, the wear and tear on infrastructure or the spread of tourists into their neighborhoods. In this group is North Shore resident Kathleen Pahinui, who just wants to know, “When is the growth going to end?”

Not for a while, according to an upwardly revised forecast from the state’s top economists. The Department of Business, Economic Development and Tourism’s Aug. 11 forecast anticipates visitor spending will reach $16.8 billion this year when 290,000 more visitors arrive than last year, bringing the total to 9.2 million.

“DBEDT is saying we are on track to do better than 2016, which was a very strong year,” Chun said.

One thing that has visitor industry executives worried is the impact an increase in the hotel room tax might have on arrivals. The state Legislature is likely to vote today to increase the hotel tax by 1 percentage point to 10.25 percent for 13 years to raise $1.32 billion for Oahu’s troubled commuter rail project.

HTA president and CEO George Szigeti said legislators need to understand that by increasing the hotel room tax, they have “inserted risk” into the system because the “No. 1 issue that we have is price​.”

Whether a tax hike could stop the tourism juggernaut remains to be seen.

If Hawaii breaks the 2016 records, it would mark the sixth year in a row that state tourism has achieved visitor and spending growth. That run-up is remarkable considering as recently as 2013 some theorized Hawaii’s tourism expansion would slow unless accommodations were added.

More hotel rooms were built and more are on the way. Also, few could have predicted the rapid growth of Hawaii’s alternative accommodations industry, which can respond to immediate demand without going through the permitting and development process.

Through the first seven months of the year, some 3.2 million visitors told HTA they planned to stay in a hotel during their stay; that’s 3.7 percent more than last year. However, alternative accommodations growth is seriously outpacing hotels.

“Individual vacation units have really played an important role in absorbing some of the excess capacity,” said Joseph Toy, president and CEO of Hospitality Advisors LLC. “I think you’ll continue to see that growth in individual vacation units barring any regulatory constraints.”

Szigeti said an increase in the hotel tax might have the unintended consequence of “causing people who are sitting on the fence to maybe look at alternative accommodations.”

Through the first seven months of the year, about 464,000 visitors, or 11 percent more than the same period in 2016, said they planned to stay in a rental house. During the same period, visitors who booked private rooms in private homes grew more than 217 percent, to 73,412. Those who booked shared rooms in private homes grew nearly 298 percent, to 21,040. Also, as many as 60,379 visitors said they booked bed-and-breakfasts during the first seven months of the year; that’s a gain of just over 4 percent from the prior year.

Vieira said the spread of alternative accommodations has allowed a wider variety of travelers to visit Hawaii.

“Younger first-timers can’t afford hotels, parking and resort fees. The only bad thing is that sometimes they aren’t paying their fair share of taxes, and we’ve got to have regulations,” Vieira said.

Pahinui said rampant tourism, supported by the spread of alternative vacation rentals, has changed the fabric of her neighborhood and is straining infrastructure across the isles.

“Yeah, people are making money, but at what expense?” Pahinui said. “I live in Waialua, but the roads are so jammed I have to shop in Mililani instead of Haleiwa. Our state parks, beaches and bathrooms are overrun.”

State Sen. Laura Thielen (D, Hawaii Kai-Kailua-Waimanalo) said capacity and priorities must be addressed.

“A lot of people dismiss capacity arguments because we don’t control our borders, but we can take steps to limit overnight stays in residential areas and redirect them to hotels where we end up getting higher-spending tourists so we can return to the days where we were getting a better return,” Thielen said.

Last year, Thielen said, she and Sen. Gil Riviere (D, Heeia-Laie-Waialua) introduced a bill to redirect some of HTA’s marketing budget into fixing up infrastructure. HTA gets $82 million for marketing.

“With more than 9 million visitors, we certainly don’t need to invest $82 million in HTA marketing. They have to recognize that the quality of our facilities and trails is so bad that it’s embarrassing,” Theilen said.

Szigeti said HTA recognizes the importance of sustainable tourism.

“We recognize some residents have expressed concerns about the growth of tourism on our islands’ way of life. Sustainable tourism is a balance that our tourism industry is striving to achieve for the good of everyone,” he said.