By Allison Schaefers firstname.lastname@example.org
Feb. 17, 2020
Lots of factors can throw off tourism revenue, since spending patterns for tourists vary according to where they come from, how many times they’ve visited Hawaii, their length of stay in the islands and their lodging choices.
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Japanese visitors Azusa Fujii and Sayaka Endo took the bus from Waikiki to Kailua on Thursday to dine on fluffy pancakes at Boots & Kimo’s Homestyle Kitchen and visit the nearby aquamarine beaches.
“We were looking for something different, and we read about Kailua in the guidebooks,” said Fujii, a first-time visitor to Hawaii. “Everyone knows about Waikiki, not so much about Kailua.”
However, most locals would say that the secret is out. Kailua is 15 miles away from Waikiki, the epicenter of the state’s visitor economy. Once that was a formidable difference, but intrepid tourists and the corresponding spread of vacation rentals have bridged the gap. Now Kailua and many other small towns across the state aren’t as far removed from the hustle and bustle as they once were.
Boots & Kimo’s had a midweek waiting list to rival Waikiki. Scores of visitors congregated at public bus stops and contributed to the community’s bike and pedestrian traffic. Lines of rental cars, heavy on the jeeps and convertibles, made their way to the beach. Nearby side streets had a plethora of “No parking” signs written in English and Japanese.
Adventuresome tourists, especially those who are booking accommodations outside the main tourist centers, are contributing to tourism growth, which saw arrivals top 1o.4 million in 2019.
In 2013 some Hawaii tourism officials and economists warned that unless more hotels were built, arrivals wouldn’t make it much past 8.5 million. But they didn’t anticipate the growth of online travel hosting sites like Airbnb and VRBO, which have made it possible for local homeowners and investors to add daily lodging capacity to virtually any neighborhood in Hawaii.
On one hand, the trend has increased opportunities for local businesses in places like Kailua, which now has blocks of specialty boutiques, juice bars, coffee shops and eateries. But some say it’s also contributed to a key issue plaguing Hawaii’s economy: the drop in tourism spending receipts relative to arrivals.
In 1989 roughly 6.5 million visitors brought in $18.3 billion in today’s dollars, said Paul Brewbaker, principal of TZ Economics. Last year’s addition of nearly 4 million more tourists actually yielded half a billion less in spending. When adjusted for inflation, 2019’s $17.75 billion in visitor spending was actually 0.2% down from the prior year, Brewbaker said.
Lots of factors can throw off tourism receipts since spending patterns for tourists vary according to where they come from, how many times they’ve visited Hawaii, their length of stay in the islands and their lodging choice.
New Hawaii Tourism Authority data compiled for the Star-Advertiser shows lodging choice might play a bigger role than once thought. Last year vacation rental guests spent at least 20% less per day than those who stayed in Hawaii hotels. And, Hawaii visitors who stayed in alternate accommodations grew last year, albeit at a slower pace likely due to crackdowns in regulations on Oahu, Maui and the Big Island.
HTA data shows guests staying in hotels spent $232 per day, while those in condominiums spent $187 and those in bed-and- breakfast homes spent $186. Rental home guests spent $178, while guests staying in private rooms spent $147 and those in shared rooms spent $146. Timeshare guests spent the least at $141 daily.
Beyond lodging choice, another factor that likely contributed to the spending drop is that the percentage of first-time, higher-spending visitors declined as compared with repeat visitors, the been-there, done-that crowd. First-time visitors to Hawaii dropped to 32% in 2019 while repeat visitors grew to 68%.
The 2019 flattening of higher-spending international visitors didn’t help, either, since most of these markets spent more per person per day in 2019 and had a higher percentage of first-time visitors than their domestic counterparts.
For instance, visitors from China, who represented less than 1% of Hawaii’s arrivals in 2019, had the highest per-person per-day spending at nearly $325. Korea followed at $277, Australia at $265, Taiwan at $249, New Zealand at nearly $241 and Japan at about $240. U.S. East visitors spent nearly $214 per day; visitors from Latin America contributed $210; while per-person per-day spending from Hawaii’s core U.S. West market was about $175 and only $165 from Canada and $153 from Europe.
Hawaii is likely to find out just how important international arrivals are to the spending mix this year as the impact of the coronavirus unwinds.
Earlier this month state Economist Eugene Tian attempted to quantify the impact of the new coronavirus by adjusting 2019 arrivals to show how SARS, a 2003 health concern, would have played out.
Assuming a virus with the same impact as SARS developed early in 2019, Tian said 2019 Hawaii visitor arrivals would have grown only 0.5% to 10.28 million, versus their actual growth rate of more than 5% to 10.4 million. Increases from the U.S. West, U.S. East and Canada would have offset declines from China, Hong Kong, Japan, Australia, Korea and all other foreign visitors for a net gain of only 52,000 visitors, he added.
Brewbaker also estimated foregone international visitor expenditures in travel markets affected by SARS that came to Hawaii in 2003 at roughly $360 million in today’s dollars.
Brewbaker also estimated that the Honolulu City Council’s crackdown on short-term rentals last year represented approximately $100 million in foregone Oahu vacation rental receipts from August to December. He said Maryknoll High School student Sierra Brewer provided research assistance for this estimate.
While some would argue that vacation rental guests spend less that the average tourist, HTA statistics and anecdotes from various businesses show short-term renters are benefiting some members of Hawaii’s visitor industry more than others.
Debbie Hopkins, who co-owns Global Village in Kailua along with her sister Dawn Ravelo and their mother, Sharrie Ah Chick, said business has evolved with changing tourism trends.
“When we first opened 24 years ago, 95% of our business was local,” Hopkins said. “Now 35% of our business is tourists.”
But Ravelo said over the last few years they’ve noticed all of their shoppers have grown more budget- conscious, even the tourists.
“Hotel prices have gotten so high. Everyone needs to live, eat and have transportation. Shopping comes after that, so people are looking for good value,” Ravelo said.
Overall, average daily spending by tourists in 2019 saw a slight gain in the percentage of dollars going to lodging. While food and activities were stable, there was a slight dip in the percentage of dollars going to shopping, transportation and other costs.
The largest share of daily spending for guests from all accommodations went to lodging and then food. But other spending patterns varied by accommodation choices.
Hotel guests spent more per night on lodging, food, shopping and activities, but they spent less on transportation than guests staying at bed-and-breakfast homes, rental homes and private rooms.
The highest daily spenders for shopping were hotel, condominium and timeshare guests. Hotel guests spent an average of $29 per person per day on shopping as compared with just $17 for bed-and-breakfast home guests, $15 for rental home guests, $13 for private-room guests and $5 for shared-room guests. Condominium and timeshare guests spent $19 on shopping.
Hotel guests spent the most for food at $43 per person per day, followed by bed-and-breakfast home guests at $39, timeshare and private room guests at $37, rental home guests at $36, condominium guests at $35 and shared-room guests at $13.
The top daily transportation spenders were guests in bed-and-breakfast homes, who spent $32 per person per day. That was significantly more than rental home and private-room guests, who spent $23 per person per day, and hotel guests, who spent $22. Timeshare guests spent $21, condominium guests spent $20 and shared-room guests spent $4.
When it came to activities, hotel guests spent an average of $22 per person per day, which was the highest daily amount across the lodging categories. However, the next-highest spenders were bed-and-breakfast home guests, who spent $19, and rental home guests, who spent $18. Guests staying in traditional condominium and timeshare accommodations spent $16, as did those staying in private rooms, while shared-room guests spent only $6.
Part of the reason for the spending variation is that guests in different lodging have different priorities and different needs based on their geographical distance from transportation and resort centers.
“We’re used to the hustle and bustle of Boston, so we wanted a different experience,” said Josh Greenberg, who is spending a month in a Kailua VRBO listing with his wife, Lauri Cashman, who is doing an emergency room rotation at Castle. “We wanted to see what it would be like to live here. We’re most looking forward to hiking the pillbox, kayaking and visiting beaches.”
Cashman said they plan to visit the North Shore, Hanauma Bay and Waikiki. They’ll also go to a luau as well as visit the Polynesian Cultural Center and some botanical gardens. But they’ll do it in a $30-a-day Prius that they booked on Turo, an online site that rents privately owned cars.
“We don’t like group tours, and we’ll never do a tour bus,” Greenberg said. “We get a lot of our ideas by word of mouth from people that we know that have been here. We also like to talk to locals. It’s not about saving money. We planned to spend money while we are here. It’s more about authenticity — that’s very important to us.”