February was a month to love for Hawaii’s visitor industry with arrivals recovering to 96.5% of pre-pandemic times — but the momentum might not continue into what looks to be a much softer summer than expected.
Visitor arrivals in February continued a six-month trend of the recovery rate topping 90%. However, the result was just shy of the previous month when the recovery rate was the highest since the pandemic. There were 753,750 visitors who came to Hawaii in February, down 3.5% from February 2019, the benchmark year prior to the COVID-19 pandemic, according to preliminary data released Thursday by the state Department of Business, Economic Development and Tourism. Arrivals were up 19.5% from February 2022.
The visitors who came to Hawaii in February spent more on a nominal basis than visitors who came in 2022 and in 2019. Visitor spending in February reached $1.64 billion, a nominal increase of 25% from February 2022 and 18% from February 2019.
During the first two months of 2023, more than 1.5 million visitors arrived, which was a 28.3% increase from the more than 1.2 million visitors who came during the same period in 2022. Total arrivals were down 3.3% when compared with the first two months of 2019. Year to date through February, visitor spending hit $3.53 billion, up 30.5% from the first two months of 2022 and up 17.6% from the same period in 2019.
The February and January results were better than many in Hawaii’s visitor industry had anticipated based on the softness that emerged during the fall and lingered into the festive season. A reason is that changes in the market since COVID-19 — mainly, more U.S. visitors with a preference for making their travel bookings less than 90 days out — have made comparisons harder to read and the future more challenging to predict. Members of Hawaii’s visitor industry say they hope that’s part of the reason summer seems off and that by May they will have seen a greater pickup.
Jack Richards, president and CEO of Pleasant Holidays, said, “Unless there is a material change in the booking patterns, we are looking at one of the slowest summers that I’ve seen in many, many years.”
Richards added, “There will be a sugar high coming out of the first quarter because it was so bad last year with the omicron variant and the state being pretty much closed for tourism through about March 26. Beginning in April, reality comes back, and you are comparing bookings to more valid comps.”
Richards said Pleasant Holidays was up for the first quarter, but so far May is running flat, June is down 7%, July is off by 30% and August is down by 9%.
While economic uncertainty in the U.S. is often listed as a reason tourism bookings to Hawaii have declined, Richards said that’s likely not the main issue given that U.S. travelers are booking plenty of other faraway destinations.
For instance, Richards said bookings are up triple digits for Europe, Japan, Asia and Oceania — destinations that are competing fiercely with Hawaii since they reopened.
Richards said the main case of Hawaii’s summer struggles is soaring prices. Richards said the average price per person for a Pleasant Holidays booking to Hawaii is $3,142. That’s higher than the average booking to Europe, which is $3,090, he said.
“In 2019 and even in 2022, Europe was more expensive than Hawaii,” Richards said, adding that the per-person price for a Hawaii trip is double what travelers are paying to visit Mexico.
He said any business that Mexico is losing is now going to the Caribbean.
TO BE sure, the six-month outlook from ARC ForwardKeys Destination Gateway Trends shows bookings from all origins are lower in April, May, June, July and August than they were at at the same time before the pandemic. Bookings were down in all months for the U.S., Japan and Australia, though the gap was narrower toward the later part of summer for Canada and South Korea.
Jeffrey Eslinger, senior director of market insights for Hawaii Tourism United States, who was in Chicago last week for a meeting called Routes Americas 2023, presented data showing that scheduled nonstop seats from the U.S. to Hawaii for this year are expected to be up 11.5% over 2019. However, from January to June the seats were down 2.4% from the same period in 2022, and from July to November seats were down 1.2%.
Seats from Japan, which historically has been Hawaii’s top international destination, are projected to be down 42.4% for this year relative to 2019, while the projection for Australia is off by 34.6% and New Zealand is down by 24.8%. Seats from Canada for 2023 relative to 2019 are projected to be up only 0.2%.
Eslinger said part of the issue is that airlines also are grappling with consumer behavior changes since COVID-19. He said prior to COVID-19, a customer would book the flight, then the hotel, then the car, then the attractions. He said now customers from Hawaii’s top U.S. West market tend to book the car, then the hotel, then the flight, or maybe even the attractions before the flight.
“Air is one of the last components of the purchase decision, and right now because of that the airlines are not seeing that demand even though that demand is already existing on the books to various companies in Hawaii,” he said, adding that the new sequence has created a “chicken-or-the-egg situation.”
KEITH VIEIRA, principal of KV & Associates, Hospitality Consulting, said he is concerned that Hawaii has not been marketing vigorously enough, especially in the wake of the Hawaii Tourism Authority’s challenges in awarding its top piece of business, the U.S tourism contract. Thursday was the deadline for contractors to put in an offer for HTA’s third procurement for the contract.
Jerry Gibson, president of the Hawaii Hotel Alliance, said all of the stops and starts with the procurement process and funding have made it difficult for HTA and its current U.S. marketing contractor, the Hawaii Visitors & Convention Bureau, to hold its own against competitors like Florida, the Caribbean and Mexico that have put a lot more money into their destinations.
“It’s extremely important for us to have a good summer for all of us on every island,” Gibson said. “Maybe we are getting a little worried early because the booking window is a little shorter, but it’s not shaping up like we were hoping for. We know that the Japanese business isn’t going to be there, and we’ve already factored that in. But we were hoping that North American travel would be robust, and that’s not what we are seeing at this point.”
On the positive side, Vieira said he hears that the pace is better on the neighbor islands than in Waikiki, which is more dependent on the return of international travelers, especially from Japan. It’s common that performance will vary across Hawaii’s islands.
To be sure, Mike White, general manager of the Kaanapali Beach Hotel on Maui, said the property “is comfortably above 2019 for occupancy and rate.”
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By the numbers
753,750
Number of visitors who came to Hawaii in February
3.5%
Percentage down from February 2019, before the pandemic
19.5%
Percentage up from February 2022
$1.64 billion
Total amount tourists spent in February
$3.53 billion
Visitor spending year to date through February
