More tourists visit Hawaii but they spend less

May marked the seventh month in a row that more visitors came to Hawaii than in the previous year while creating less economic benefit.

Arrivals have been growing since February 2017, but tourism spending has been falling every month since November.

The Hawaii Tourism Authority released preliminary visitor statistics Thursday showing arrivals in May rose nearly 5% to 841,376 visitors. The number of visitors on any given day in May was 226,215, up more than 2% compared with a year ago.

However, spending decreased more than 2% to nearly $1.4 billion from a year ago.

The pattern is the opposite of the HTA’s long-established goal of attracting more high-spending visitors who contribute to economic growth with minimal costs to infrastructure, natural resources and communities. It also reflects a longer-term trend of arrivals outpacing inflation-adjusted spending.

The good news, said Jack Richards, president and CEO of Pleasant Holidays, is that Hawaii’s year-to-year tourism comparisons have started to pick up when measured against the devastating flood that hit Kauai in April 2018 and the Kilauea eruption that began the following month.

“I expect we’ll start to see some gains in June, July and August,” Richards said. “I’m also seeing strength in the forward booking pace through 2020. Next year’s first quarter is already up by double digits.”

Last year, Richards said, the Caribbean and other destinations benefited from myriad Hawaii issues.

“This year Hawaii is seeing an uptick related to people’s concerns with the Caribbean, especially the Dominican Republic, which is under siege,” he said. “We’re seeing cancellations and travel changes like we haven’t seen before. People are concerned about tourist deaths, food issues and crime. People are choosing Hawaii because it’s part of the U.S. and it’s considered safe.”

Keith Vieira, principal of KV &Associates Hospitality Consulting, said he too expects Hawaii tourism will improve as it gets further into summer. Still, he’s concerned about Hawaii attracting more visitors but not more visitor spending — a trend he said is mostly a function of lower demand.

“When we lose pace, hotels, airlines, golf courses and the like all have to lower rates to drive demand, and what you get is lower-spending visitors. We don’t need more visitors; we need higher-spending visitors and that takes aggressive marketing,” Vieira said. “I think we’re going to recover, but we’re going to recover slowly if it’s through specials rather than consumer demand.”

For instance, Vieira pointed out, in May both arrivals and spending were up from the U.S. West and Canada, markets that tend to spend less. However, arrivals and spending were down from higher-spending markets such as the U.S. East, Japan and the category of all other international markets, which includes foreign markets outside Japan and Canada.

“Our marketing needs to target higher-spending visitors,” Vieira said.

In some cases that means working with airline partners. Since Hawaii is a fly-to destination, the mix of air seats heavily influences which markets are more likely to come here. Trans-Pacific air seats to Hawaii in May rose more than 2% from May 2018 to more than 1.1 billion. Air seats rose from the U.S. West and Canada but declined from higher-spending markets like Oceania, Japan and other Asian nations. Air seats from the U.S. East were flat.

Performance across the islands in May was mixed, with Oahu reporting increases in arrivals and spending. Maui and Hawaii island experienced drops in spending with gains in arrivals. Spending and arrivals were up on Molokai and Lanai, while Kauai was down in both categories.

Visitor arrivals during the first five months of the year increased by nearly 4% to more than 4.2 million, while visitor spending dropped more than 3% to more than $7.2 billion.