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Tourists could begin to return to Hawaii by late summer, economic report says

The latest economic projections from the University of Hawaii Economic Research Organization suggest it will take at least two years for the mainland economy to recover from the coronavirus pandemic, with tourists beginning to return to Hawaii in late July of this year.

The number of arrivals for the year will average nearly 60% lower than last year, according to the report. The economic malaise will be greater on the neighbor islands than on Oahu, with unemployment rates averaging more than 20% this year in each of the neighbor island counties.

The “baseline” scenario of the new report predicts a gradual local recovery, so that by 2022 there will be about 8 million visitors to Hawaii, compared with more than 10 million in 2019. The report predicts statewide hotel occupancy rate will average just 63% in 2022, compared with 81% in 2019.

“Absent substantial additional federal funding, Hawaii’s state and local governments will face both near-term shortfalls and medium-term financing costs, adding uncertainty to the ability of state and local governments to provide needed services,” according to the report.

Gov. David Ige has said the state is faced with a $1.5 billion budget shortfall over the next 15 months.

UHERO’s optimistic scenario envisions good control of the coronavirus nationally and abroad within the next two months, which would allow a moderate return of visitors the Hawaii by late summer. By this fall, businesses catering primarily to the local market would recover about 80% to 85% of the recent decline.

“Two-thirds of job losses would be recovered by next year,” according to the report. “Even so, persisting social-distancing measures would continue to impose significant ongoing costs for tourism. Even with a relatively steep path of initial gains, visitor numbers would fall short 2019 levels for the next five years.”

UHERO also offered a more pessimistic economic scenario in which there would be no significant reopening of tourism until this autumn. Under that scenario, the statewide unemployment rate would remain at 9%.

“Hawaii’s heavy reliance on tourism means that the local economy will lag behind the national pace of recovery progress. But how recovery proceeds will depend crucially on government policy responses,” according to the report. “More direct federal support to states and counties is desperately needed, and hopefully some will be forthcoming.

“Regardless, the state needs to spend its available resources now to preserve companies, worker skills, and consumer and business finances. This will ensure that Hawaii can make as rapid and complete a recovery as possible,” the report states.

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