Hawai‘i’s tourism industry is in trouble.
Now, this is not breaking news. We have encounted over generations the apparent demise of our No. 1 economic engine. Time after time, we have emerged, at times even stronger, and business would continue, even flourish.
However, our dependence on one industry would also continue. The exposure would continue. And our vulnerabilities would become more pronounced promoting uncertainty, anxiety and, yes, economic failures.
I am not a tourism expert. I worked in the tourism industry when I was a younger and more adventurous man and I have been blessed to have hosted national and international tours with listenters 20-plus times over the years. But I do have eyes and I do have a degree of expectation and perspective when it comes to travelling and touring. I am sure you do to so instead of asking the “experts” I am asking you.
Why is Hawai‘i tourism in trouble?
We first have to understand that our tourism is a product in the open market. Tourism is one of the most competative industries anywhere. Our product is the unique experience of Hawaiian culture and beauty in the Pacific. When selling a product, one of the most important aspects to a customer is value.
When you’re considering a family vacation what is likely first on the list? You would think that it’s destination but leading the charge is price. Cost. Cash. Budget. Now, you may say it is destination first but I maintain that cost that is often the final deciding factor.
OK, yes, some tourists don’t care about the cost. I want to go to Paris and I’m going. I want to go to Australia and I’m going. I want to go to Boise and I’m going. Well, two out of three and you get the picture. This percentile of traveler is comparatively low.
From the purveyor's perspective you base your business on one of two premises.
One, you rely on volume. Your pricing and inventory determine profitability. I need to sell a thousand widgets a day at X amount of dollars, that covers my hard cost and what remains is profit. You don’t care who buys. As long as a thousand are sold, you’re good.
Two, you rely on premium pricing to attract a specific demographic. You market your product as essential, desirable, exclusive, and assure the customer they will receive a premium return on their increased investment. It's not quantity, it's quality.
There are some businesses that co-mingle these two different strategies.
One that comes to mind is Macy's.
Macy's, especially here at home, has a certain cache, a reputation for upscale brands in virtually all they sell. Clothing and jewelry come to mind. But they are also known for their deeply discounted sale items. When the kids were young, we shopped at Macy's at Kāhala Mall for their clothing from infant to pre-teen years. It's not that we were loaded but the discounts on Polo, for example, were 30% to 50% off and more on some items. Cha-ching!
Hawai‘i marketed our tourism product in a similar way.
We would have travel organizations and agencies in the past that would market a discounted or budget experience in Hawai‘i. The state would rely upon great numbers of visitors to generate more of a volume-based revenue model. And it worked. For example, in 2019, we hosted about 10.4 million tourists. That's about 10 times the number of residents statewide. This number generated over $17.75 billion. From a marketing and sales perspective, this would define success.
Then Covid hit.
Numbers plummeted, both in visitors and revenue.
The industry and, well, life took a hit.
I'm in a fairly decent mood so I'm not going to continue down the Covid path. We all know because we all lived it.
However, in the years to follow, recovery has been mixed.
The upside. Domestic travel increased dramatically. Many believe Hawai‘i is an exotic destination, albeit one safely within the United States.
The downside. International travel continues to produce flaccid numbers far below pre-pandemic times.
According to a recent Civil Beat report, "there was once a time when about 1 in 4 tourists on Oʻahu was from Japan. In 2019, almost 1.5 million people — 24% of the total tourism traffic that year and more than any country outside the U.S. — came from the island nation. But that’s not the case anymore, according to data from the Hawaiʻi Department of Business, Economic Development and Tourism. Over the last six years, the number of people traveling to Oʻahu from Japan dropped by roughly 50%. Last year, only about 1 in 8 tourists visiting the island was from Japan — a total of just over 715,000 people."
International tourists, especially Japanese, are the ideal customers. They spend more, they stay longer, and they'll come back. Unfortunately, that's not the case now.
"The number of foreign travelers coming to the Hawaiian islands crashed by 95%," Civil Beat reported, "falling from roughly 3 million in 2019 to just over 148,000 in 2021. The number of tourists from abroad remains about half of what it was before Covid-19. Visitors from countries including Korea, Canada and Australia still aren’t back to their pre-pandemic numbers."
A post-COVID reality was the impact to locals after the pandemic.
Without tourists, we could again enjoy our home!
Beaches were clear and open. Hiking trails were accessible. Locals reacquainted themselves with places like Waikīkī, the Ko'Olina lagoons, and tourist typical attractions. Once we got a taste of it, things changed. Overtourism was always a topic of discussion but this time it was more than just talk. Educational outreach to visitors on how to behave was implemented and the already-high rates for accommodations, car rentals and meals and restaurants went higher and higher. Interestingly, despite these changes, tourism numbers were holding steady for the first quarter of 2026.
That swiftly changed.
Hawai‘i tourism is now having its worst year in recent memory, with storms, shorter stays, and higher costs worrying the industry. Residents and businesses have faced one severe weather event after another, and the tourism sector has taken a huge hit.
As a series of storms, powered by a strong El Niño, continued to skirt around the Islands, the number of visitors on any given day dropped dramatically. In March, the average daily visitor census was down 5.1% compared with the year before. The decline widened to 11.2% in June and 13.1% in July as reported in SF Gate.
The state reported there was over $1 billion in damages suffered due to these storms. Coupled with the drop in tourism revenues the financial situation looks bleak.
I understand resiliency and that incredible quality which is found in our people, businesses and more.
Yes, through time and incalculable efforts, we will overcome.
But, at what price?
I admire and commend the positivity held by those who were the most negatively affected by storms and more. You should be elevated, celebrated and advocated by all.
Rick Hamada can be reached at rickhamada@aol.com.
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