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Hawaii visitor arrivals drop 14.2% in scary situation for tourism

Jul 30, 2008

Nearly 100 Hawai'i tourism leaders met yesterday in an urgent search for a strategy to reverse the decline in visitor arrivals, which has reached levels not seen since the months after the 9/11 attacks.

Visitor arrivals fell 14.2 percent in June, according to state data released yesterday. The June decline in arrivals by air was the largest since January 2002, when air arrivals fell 16.2 percent.

"This is as scary as it's ever been, and and it's going to get scarier," said 38-year Hawai'i tourism veteran Mary Charles, founder of MC&A Inc., a destination management company.

Charles told the monthly meeting of the Hawai'i Tourism Authority that hotel bookings for the fall are coming in at 10 percent to 30 percent less than last fall. The decline, she added, affects the whole community. "Everybody is paying the price of what's happening," she said.

Spending by visitors arriving by air fell 13.5 percent to $982.4 million in June.

"June's visitor statistics reflect the loss of two Norwegian Cruise Line ships, increased fuel costs and a continued soft travel market, especially from the U.S. Mainland," said Marsha Wienert, the state's tourism liaison.

Among the top three visitor markets, visitors from the U.S. West dropped 16.5 percent, U.S. East went down 17 percent and Japan was down 10 percent from the same month last year. Air arrivals from Canada ‚ÄĒ a much smaller but rapidly growing market for Hawai'i ‚ÄĒ remained the only bright spot. The number of Canadian visitors rose 18.6 percent compared with June 2007.

"There's no magic pill" that will turn the industry around, said Mark Simon, director of marketing for the Four Seasons Resort at Wailea, Maui.

David Carey, Outrigger Enterprises Group, said he'd like to see a focus on research on the best approach to bring tourists back, and not just a move to act quickly.

Rex Johnson, HTA's president and CEO, said Carey's point is important. "We just don't want to throw money out there," he said.

Slump hits HTA as well

The HTA's total projected budget for the fiscal year just ended was $83 million, but the decline in the industry dropped revenue to $78.3 million, officials said. The HTA receives 34.2 percent of the state's 7.25 percent hotel tax.

The decision by HTA in May to quickly shift money to a big marketing push helped slow the drop in tourism, said Jay Talwar, of the Hawai'i Visitors and Convention Bureau.

Talwar, senior vice president of marketing, said the effort focused most on California, with everything from special deals with industry partners, dedicated Web pages to Aloha Friday celebrations in San Francisco featuring Island chefs and music. California was targeted as likely to be able to get visitors who would book quickly, within the same month they traveled.

Efforts credited

There seems to be agreement that the push helped bring visitors to Hawai'i who might have been wavering because of increased airfares, high fuel prices and the economy, Talwar said.

David Uchiyama, HTA's director of tourism marketing, said officials also are looking at other ways to keep airlines flying to the Islands. He noted that the cost of jet fuel has risen 81.7 percent in a year.

Some of the less-conventional proposals being discussed include: tax credits, waiving landing fees, reducing prices for transportation and for hotel rooms for air crews, and even fuel hedging by the state to offer special fuel pricing, Uchiyama said.

"As an island, air accessibility needs to be our primary focus," Uchiyama said.

He also warned that a continued decline in the number of arrivals could result in closing of some hotels "and potential layoffs." So far, the only layoffs have come on Maui, related to Maui Land & Pineapple's announcement of companywide layoffs of 274 this month and Ka'anapali Beach Club's layoff of 34 restaurant workers.

Murray Towill, president of the Hawai'i Hotel and Lodging Association, said so far the industry has been responding with increased marketing, targeted discounts and general belt-tightening.

He said cutting hours and layoffs would be considered over the long term, but he's heard no specific plans from hotels.

"I've heard people express concerns about the fall and what the impacts are going to be," he said, including worries that fall bookings in hotels are down 5 to 30 percent.

Johnson said the tourism board will meet again in the next 30 days after discussing more ideas with industry officials.

Hawaii visitor arrivals drop 14.2% in scary situation for tourism

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