Report: Hawaii’s tourism industry in ‘crisis mode’

Hawaii's tourism industry is now in a "crisis mode," and the isle economy won't improve until tourism recovers, according to a new report.

Report: Hawaii’s tourism industry in ‘crisis mode’

Hawaii’s tourism industry is now in a “crisis mode,” and the isle economy won’t improve until tourism recovers, according to a new report.

The 16-page Economic Report, commissioned by First Hawaiian Bank and released Wednesday, said the state’s economy is now in a “serious recession, one that is broader, deeper, and will likely last longer than average.”

“Hawaii tourism is now threatened like never before,” the report said.

Economist Leroy Laney interviewed 15 industry and community leaders in compiling the report that outlines the importance of the tourism industry to Hawaii.

“Foremost, the tourism industry has an overwhelming economic importance for Hawaii,” he wrote. “It is imperative that all possible actions be taken to remedy the situation. If that does not happen, or until it does, the Hawaii economy will remain anemic.”

“Employment in all sectors will be down, as will tax revenues, business profits, and overall economic well being,” he said.

The report urges the tourism industry should receive the highest priority in receiving stimulus funding.

“Until tourism gets well, the rest of the economy cannot,” Laney said. “And the Hawaii tourism industry is in a crisis mode now.”

Laney said while there may be some recovery in the visitor industry in 2010, the increase in arrivals will likely remain almost flat, in the very low single digits at best.

Don Horner, First Hawaiian Bank’s chairman and chief executive, said Laney’s analysis reflects the reality that Hawaii’s economy and overall employment base remains critically dependent on tourism.

“The study clearly confirms that the solution, certainly in the short term, to our rapidly rising unemployment, weakened tax revenues and challenged nonprofit community is to work as a community to ensure our visitor industry is healthy while we seek economic diversification,” Horner said.

Among the developments that have hit Hawaii’s tourism industry hard are:

_ Last year’s collapse of Aloha and ATA airlines.

_ Norwegian Cruise Line removing two ships from the interisland market.

_ Job losses at Molokai Ranch, Maui Land & Pineapple Co. and Gay & Robinson on Kauai.

_ Financial global meltdown, resulting in significant declines in lifetime savings, making long distance leisure travel more difficult.

Laney said three-quarters of the total isle jobs in 2007 were directly or indirectly linked to tourism.

“For every direct tourism job in Hawaii, there are likely to be about 1.6 other jobs that are created indirectly,” he said.

The Economic Report also touched on “attitudes about tourism” of visitors and residents. For visitors, heavy discounting “is making this an unprecedented time to visit, and this can be an advantage that counters the negative income effects of a serious global economic downturn.”

Laney said there is a strong unfounded perception of competition versus partnership between visitors and residents over limited resources.

“Often local residents view visitors as competing with them over resources, and identify tourists with negative effects such as Hawaii’s high cost of living and congestion,” he wrote. “But all regional economies must make a living, and it would be hard to invent a better export driver than tourism.”

He said tourism is clean and enhances local tradition, history and culture.

Laney said lawmakers and government officials are the most important people in determining the future of Hawaii tourism.

Even when the national economy recovers, it still could take awhile before things get better in Hawaii.

“We should bear in mind that long-distance travel to places like Hawaii will not likely be among the first things to recover when the economy starts to grow again,” he said.

Laney, a professor of economics and finance at Hawaii Pacific University, is an economic adviser to First Hawaiian Bank, where he had previously served as chief economist and senior vice president.

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