Visitors from Japan to Hawaii are only about 18% recovered from pre-pandemic times, sparking concern that what was once the islands’ largest international market will drag down the state’s tourism economy into 2023.
Japan arrivals in October were up dramatically from the 1,842 that came in October 2021, according to the latest tourism statistics released Monday by the state Department of Business, Economic Development and Tourism. However, visitors to Hawaii from Japan in October were down nearly 82% from October 2019 and about 88% for the first 10 months of 2022 compared with that pre-pandemic year.
There were 24,339 visitors to Hawaii from Japan in October, compared with 134,557 visitors in October 2019. Through the first 10 months of 2022, there were 134,873 visitors from Japan, compared with more than 1.3 million visitors during the first 10 months of 2019.
Japan’s tourism recovery has been disappointing even though Japan significantly eased COVID-19-related border controls in September and eliminated its arrivals cap Oct. 11.
Other markets are doing much better, especially visitors from the mainland to Hawaii, which were up double digits from the same month in 2019. DBEDT reported that 757,182 visitors arrived in the Hawaiian Islands in October, representing a 95.1% recovery from the same month in 2019.
Continued lackluster tourism performance from Japan presents some risk to Hawaii’s economy. University of Hawaii Economic Research Organization Executive Director Carl Bonham said the organization had anticipated that arrivals from Japan would return to 50% of their 2019 volume during the first quarter of 2023.
Bonham said UHERO now expects that by the end of this quarter, tourism from Japan will have recovered to about 25% of the same time period in 2019. By the end of the first quarter, he said, it’s anticipated to be back to 30% or 35% of 2019.
“It’s important that (the Japan) sector recover. But I think the way that we wrote the last report probably overstated the importance,” he said.
On the flip side, Bonham said UHERO’s last forecast underplayed the strength of U.S. tourism to Hawaii and improvements from other markets, including Canada. Other factors also have improved since UHERO’s last forecast, which could help offset the weakness from the lack of Japanese spending, he said.
“The jobs recovery, the declining unemployment rate, both point to a stronger Hawaii economy that makes us more resilient, and the U.S. economy is certainly stronger than we were expecting,” Bonham said.
Hawaii tourism Japan Managing Director Eric Takahata said high fuel surcharges, unfavorable exchange rates, inflation and increasing prices have caused Japanese visitors to fall short of Hawaii’s earlier tourism forecasts.
Takahata said the fuel surcharges are coming down from a peak of $700 or $800 per person, and the yen-to-dollar exchange rate has come down from a peak 152 about three weeks ago to 138 on Tuesday.
Paul Brewbaker, principal of TZ Economics, said the impact of unfavorable yen rates and higher prices, especially for Hawaii hotel rooms, cannot be ignored.
Brewbaker said the average daily room rate paid for a Hawaii hotel room in October went up to $338 from $255 in October 2019. However, he said the price for a Hawaii room rate in yen in October went up 80% from October 2019 when adjusted for the average October yen rate of 147.
Brewbaker said aviation fuel also is more expensive for travelers from Japan because they have to pay higher fuel surcharge costs.
“Just getting on the plane, not to mention getting into your room, is costing you a lot more,” he said.
Takahata said fourth-quarter travel subsidies from the Japanese government to stimulate domestic travel also have dampened demand for travel abroad.
Takahata said concerns about COVID-19 are still an issue for some travelers, especially since Japan just reopened.
In April there were high hopes for a Japan rebound after Japan Association of Travel Agents Chair Hiroyuki Takahashi said that he expected to see Japanese visitors return to Hawaii this year at 40% of the pre-pandemic 2019 level and that visitor arrivals would be back to normal by 2023. Now, Takahata said, even UHERO’s more moderated forecast will be hard to reach.
“By first quarter we expect to be 30% or more recovered with continued improvement. By the end of 2023 we should be at 50% or more recovered,” he said.
Tara Shimooka, spokesperson for Hawaiian Airlines, said the carrier has seen demand begin to recover, but the Japan market still has a long way to go.
“We have seen increased U.S. point-of-sale activity for our Japan flights since Japan’s reopening to international tourism in October and a more gradual pickup in bookings from Japan — still below historical levels,” Shimooka said.
She said Hawaiian is operating at about half of its seat capacity compared with November 2019. It currently offers 21 weekly flights between Honolulu and Tokyo’s Haneda and Narita airports and Osaka’s Kansai Airport.
“We intend to bring back our flights to Sapporo and Fukuoka in 2023,” she said.
Tina Yamaki, president of the Retail Merchants of Hawaii, said the slow return of visitors from Japan has hurt retailers.
“They are the ones who really shop,” Yamaki said. “The downturn impacts some Hawaii retailers quite a bit. Some retailers have closed. Others have reduced hours or the number of days that they are open.”
Yamaki said that in the past Hawaii retailers looked forward to the Honolulu Marathon because participants brought their families, who would shop while the participants were training or recovering.
“We’re hearing that there are not as many families coming this year as in the past,” she said.
Dr. Jim Barahal, chief executive officer of the Honolulu Marathon Association, said Japan is normally the marathon’s largest market with about 17,000 entries. However, he noted that there were only 5,200 entries from Japan this year.
Still, Tetsuya (Ted) Kubo, president and CEO of JTB Hawaii Inc., said he expects that the Honolulu Festival, which returns the weekend of March 10-12 for the first time since the pandemic, will serve as a catalyst to increase travel interest from Japan throughout the rest of 2023.
“The festival will include the spectacular Nagaoka Fireworks show over Waikiki Beach, the grand parade through Waikiki and many free cultural activities and performance for both residents and visitors to enjoy,” Kubo said. “What’s also encouraging is that we have seen an increase the past two weeks in future bookings beyond the first quarter of next year and are confident this trend will continue.”
