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Hawaii tourists down 12.5%, spending drops by $149.7 million  Feb 27, 2009

Hawai'i visitor arrivals fell in January for the 11th consecutive month and spending was down nearly $150 million as the nation's deepening economic slump caused anxious consumers to postpone or cancel their vacation plans.

The number of visitors arriving by air fell to 512,139 in January, down 12.4 percent from the same month a year earlier, the state Department of Business, Economic Development and Tourism reported yesterday.

Visitor spending also took another hit in January, falling 13.6 percent, or $149.7 million, to $949.8 million. It was the 10th consecutive drop in spending.

The tourism decline comes against a backdrop of falling U.S. consumer confidence. The Conference Board, a New-York based research organization, said its index of confidence, which stood at about 37 last month, plummeted to 25 in February, the worst since the index began in 1967. Just a year ago, it stood at 76.

Economists say people's increasing worries about job cuts and their dwindling net worth could lead to even further cutbacks in spending.

"This a very challenging time for everyone, because tourism is the backbone of our economy and when tourism falters it affects everyone in our state," said state tourism liaison Marsha Wienert.

The last time visitor arrivals fell for more than 11 consecutive months was following the terrorist attacks of Sept. 11, 2001. Arrivals then fell for 12 straight months from September through August 2002.

All major visitor markets showed a drop in January — even Canada, which had been showing small increases in recent months.

Although the string of declines in arrivals is growing, the size of the decreases is shrinking, said Paul Brewbaker, the former Bank of Hawaii chief economist who now heads TZ Economics.

"The positive impact of lower airfares and lower hotel room rates seems to be having an effect," he said. "There has been a pattern of smaller declines since sometime in the third quarter."

The 12.4 percent decline in January arrivals is not as severe as September, when visitor arrivals fell by more than 19 percent. The January drop was the smallest since May 2008, when arrivals fell by 6.4 percent.

Brewbaker is projecting visitor arrivals will edge down just 0.2 percent this year after a 10.1 percent decline in 2008. DBEDT is forecasting arrivals will fall 1.9 percent this year. The University of Hawai'i Economic Research Organization is calling for a 5.7 percent decline.

"The big difference is that I seem to have more faith than my colleagues regarding the lower airfares and room rates," Brewbaker said. "I'm thinking the pricing will have more of an impact. They're concerned that the adverse wealth effects of lower incomes and job uncertainty will weigh more heavily."

Total visitor days for air and cruise visitors in January 2009 fell 10.4 percent from the same month last year. Total arrivals for air and cruise visitors declined 12.5 percent from January 2008. However, the average length of stay by these visitors was slightly longer at 10.79 days, compared with 10.54 days last January.

Among the top four visitor markets, air arrivals from the U.S. West decreased 14.3 percent while U.S. East arrivals were 14.9 percent less compared with January 2008. Japanese arrivals declined 12.7 percent while arrivals by air from Canada were 4.7 percent lower than last January.

Wienert said there was one positive statistic among the otherwise gloomy numbers: a 49 percent growth in Japanese honeymooners to the Islands.

She said increased marketing continues to help.

"As we move forward, our marketing message about the value of a Hawai'i vacation is resonating across the Mainland, resulting in bookings which have helped to offset the declines," she said.

Hawaii tourists down 12.5%, spending drops by $149.7 million
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