Record arrivals but flat spending expected this year

Published: May. 12, 2015 at 8:29 AM HST|Updated: May. 12, 2015 at 8:32 AM HST
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HONOLULU (HawaiiNewsNow) - With cheap oil pulling one way and a strong dollar pulling the other, Hawaii can expect another record year for visitor arrivals but a flat year for their spending.

University of Hawaii Economist Carl Bonham said so at a Chamber of Commerce luncheon Monday, and so did Daniel Naho'opi'i, director of marketing for the Hawaii Tourism Authority.

"We've sort of plateaued," said Bonham, who cofounded UHERO, the UH Economic Research Organization. "Tourism isn't going to be the real growth engine this year."

Bonham said sequestration has been "a real drag" on the Hawaii economy, there were additional drags from winter port congestion on the West Coast and poor U.S. trade, adding, "we all thought construction would be stronger."

But he said the Hawaii labor market was "still performing reasonably well," and he predicted overall economic growth of about 1.5% in Hawaii this year.

Crude oil prices, which through the first quarter were half of what they were last summer, brought down electric bills, Bonham said, noting that two-thirds of Hawaii electricity spending is commercial.

Tourism benefits from cheaper oil

Naho'opi'i, speaking at the same forum at the Plaza Club, said cheaper fuel prices have helped airlines make a good profit on Hawaii routes that might have been more marginal, and therefore more vulnerable to cancellation, had jet fuel been as high as it was last year.

"When they're not making a profit," Naho'opi'i said, "the airlines tend not to pull one or two flights a week, they pull the whole route."

Other airline industry analysts have also said that West Coast flights especially have been profitable because of lower fuel costs, a significant thing to do know given that West Coast visitor traffic has been the strongest single aspect of Hawaii tourism this year.

Naho'o'pi'i says air capacity from Seoul, which was reduced in the first quarter, will be "added back" in the second half of the year, and he also expected better traffic from Japan. "The Japanese carriers adjust prices twice a year, and Japanese consumers waited for the April adjustment."

Canadian arrivals have been up, Naho'opi'i said, but Canadian visitors have been spending more frugally with the Canadian dollar trading at $1.20 or worse. Last year the Canadian and Australian dollars were close to parity with the U.S. dollar; this year their buying power has been reduced. It has been the same with the yen and the won.

Chinese tourism, still a small piece of the Hawaii tourism picture, has been changing this year. Naho'opi'i says Chinese visitors formerly stopped in Hawaii at the back end of trips to the U.S. mainland for educaton or business, and did their major shopping here. Now some of them come here first, and are less interested in shopping than activities.

Hawaii timeshare business growing

A third speaker at Monday's event was Howard Nusbaum, president of the American Resort Development Association, the trade association for timeshares. The U.S. timeshare industry is a $10 billion a year business, twice as big if indirect spending is counted, and Hawaii alone has seen $1 billion a year in sales, supporting 4,000 jobs in Hawaii alone.

Nusbaum said Hawaii timeshare customers include 32% millennials, the people who stay in timeshares include a lot of multigenerational visitors, and because they come during slumps, having already paid for their stays, "they smooth out the ups and downs of tourism."

The major U.S. hotel brands have all embraced timeshares and find that their Hawaii properties help drive sales in other places.

Says Nusbaum, who lives in Washington D.C. but comes here at least once a year: "Timeshares have been good for Hawaii, and Hawaii has been good for timeshares."

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