Visitors to Hawaii exceeded the expectations of some tourism industry officials in the first quarter, but results were still weak and are worsening for the peak summer season and beyond.
Some 855,537 visitors came to Hawaii in March, a 5% drop from March 2023, according to preliminary statistics released Tuesday by the state Department of Business, Economic Development and Tourism. Total visitor spending measured in nominal dollars in March was $1.76 billion, a drop of 4.2% compared with March 2023.
The March results contributed to a first-quarter decrease of 2.2% in arrivals to 2,391,496 from the year-earlier period, and a 2.7% drop in spending to $5.22 billion.
Keith Vieira, principal of KV & Associates, Hospitality Consulting, said even with the decline in arrivals and spending, the first quarter came in better than expected for many hoteliers. Vieira said the timing of the Easter holiday contributed to more arrivals from the U.S. than anticipated. He added that strong group business travel put a base of business on the books that bolstered overall demand.
DBEDT Director James Kunane Tokioka said U.S. visitor arrivals in March were the highest since August and 3.3% higher than the arrivals of March 2019.
However, Vieira said hoteliers are seeing weaker results from April into the peak summer season.
“I wouldn’t want people to mistakenly believe that the first quarter fixed the market. It didn’t,” Vieira said. “We need momentum in the summer to carry us through the fall and into the holidays. A soft summer typically means that the last four months of the year are uh-oh.”
Indeed, the hotel booking pace for the state saw gains in January and February but was in the red by for every month except August up until December. The worst drops are in September, October and November, which are projected to be down year over year by 11.5%, 9.9% and 7.6%, respectively. There are pockets of red across all islands, with West Maui showing deep monthly drops ranging from nearly 30% to nearly 50%.
Jack Richards, president and CEO of Pleasant Holidays, told the Honolulu Star-Advertiser on Tuesday, “We are off 24% (in 2024) compared to (2023) for revenue and passengers to Hawaii. Maui is terrible.”
Tokioka said total visitor arrivals to Maui at 206,049 in March were the highest since the Maui wildfires, and Maui’s visitor industry has recovered to 75% of its pre-wildfire level.
But Richards said other destinations that Pleasant Holidays sells are thriving with a triple-digit increase during the same period for Japan and other Asia. He said Europe, Costa Rica and the U.S. are up by double digits. Richards said Mexico is flat but improving.
“Demand for travel is extremely strong. People are traveling. They just aren’t coming to Hawaii,” he said.
Richards said Hawaii’s tourism downturn is related to a variety of factors, especially pricing and messaging, which hasn’t made travelers feel welcomed enough in the wake of the pandemic and the Maui wildfires. He said he is heartened by the Hawaii Visitors and Convention Bureau’s soon-to-be-released campaign, “The People. The Place. The Hawaiian Islands.” The campaign highlights the local people and places that make the Hawaiian Islands an unforgettable destination.
“We are very happy that this new campaign is starting, but it needs to get out quick,” Richards said. “With all the turmoil that we had seen with Hawai‘i Tourism Authority over the last few years, there had not been a lot of marketing. Other destinations were aggressively marketing themselves.”
Richards said unfortunately, even if HVCB’s newest campaign is deployed soon, it is likely already too late to save summer as many travelers already have made their decisions. He said the “60 Minutes” episode on April 28 that interviewed military families that say they got sick after the Navy contaminated their Red Hill drinking water well with jet fuel also could give travelers pause.
“All they heard was tainted water supply. They won’t focus in on the part that says it’s limited to Red Hill and the military base,” he said. “People don’t understand the geography of Hawaii. Today the Maui wildfires are still impacting all of the islands.”
Richards said a new threat is emerging in California —Hawaii’s top market — where a new fee transparency law on July 1 will require upfront pricing of all mandatory fees.
“Before, everyone would disclose it, but it wouldn’t go into the advertised price,” he said. “Today a vacation might be advertised as $4,500, but you’ll have to pay $500 when you get to the hotel for resort fees. We’ll have to advertise $5,000. That might hurt demand. Most destinations don’t have resort fees to the extent that Hawaii does.”
Jerry Gibson, president of the Hawai‘i Hotel Alliance, believes California travelers will be confused by the new California law, as they are used to seeing the resort fees disclosed separately.
“It adds confusion to the market, and that’s concerning given that California is 42.6% of our business in Hawaii,” Gibson said. “The U.S. West market was down 9.2% in March. The only shining light was that their daily spending was up a little bit from last year.”
He added that he also is concerned about lingering softness from Japan, which once was Hawaii’s top international market.
Tokioka said the recovery from the Japanese market in March, compared with the same month in 2019, was 47%, which is the third-highest increase since the COVID-19 pandemic.
Gibson said every increase helps, but Hawaii is facing robust competition from Japan’s domestic destinations, other Asian nations, Guam and Europe.
“I just got back from Austria, and I was surprised by the number of people from Japan there,” he said. “I was in Japan about three weeks ago, and Tokyo was just busting.”
Richards said Pleasant Holidays also is concerned that continued weakness in Hawaii tourism could hurt airline capacity.
“We are starting to see airlines cut back on seat capacity. Southwest has done it. American has done it, ” he said. “I don’t know what will happen with the proposed Alaska Airlines and Hawaiian Airlines merger, but Hawaiian didn’t have a good first quarter. We are concerned that if the demand doesn’t pick up by the peak summer season that the airlines will transfer those assets to somewhere else.”
Weakness in Hawaii’s visitor industry emerged well before this year, and there was already some softening before the tragic Aug. 8 Maui wildfires. March was the ninth month in a row that the average daily census of visitors in the Hawaiian Islands dropped. On any given day in March, there were 234,306 visitors in the state, down 7.3% from 2023.
