Visitors to Hawaii plunged 12.7 percent in February as the state continued to see a decline from all its core markets. However, more worrisome was the deeper drop in visitor spending during what is typically the state’s best-performing month.
Visitor expenditures in February fell 15.9 percent, the only measurable drop in monthly expenditures for this month since the state began tracking them in 2004, said Daniel K. Nahoopii, chief of the state’s tourism research branch. Likewise, it was the worst performance for arrivals in February since 1991, when arrivals plummeted 22.4 percent as a result of the first Gulf War, Nahoopii said.
The monthly anomaly does not bode well for Hawaii tourism through the rest of the year since members of the state’s visitor industry typically use February as a high-water mark, said Joseph Toy, president of Hospitality Advisors LLC.
“If we don’t see strong average daily room rates in our busy season, obviously we won’t see them in the off-season,” Toy said. “Summer is our second-busiest season and it tends to be less intense than February. These results show that 2009 will finish well behind the prior expansion years of the mid-2000s.”
While winter is typically when the state’s higher-spending visitors come, this year the patterns have changed. In an effort to get tourists to visit Hawaii in the midst of the global economic crisis, members of Hawaii’s visitor industry have put the destination on sale. All the free room nights, complimentary meals, credits and coupons are taking a toll on hotels and tourist-related businesses throughout the state.
“We are putting out all kinds of offers trying to get the phone to ring,” said Barry Wallace, executive vice president of hospitality services for Outrigger Enterprises. “We’re offering kamaaina rooms for $125 per night at Outrigger Reef. That’s the lowest price that we’ve had at the Reef in my memory.”
Prices at most Hawaii hotels have fallen to 2004 levels, mainly as a result of price deflection due to free room nights, Wallace said.
“At this rate, we won’t see prices back to the 2007 level for years,” he said.
Overall, Hawaii is a very price-driven market, said Beth Churchill, vice president of marketing and guest services for Aqua Hotels and Resorts.
“People are looking for lowest rate first and potentially buying up if they see some value,” Churchill said.
The type of people attracted by Hawaii’s added-value offers tend to spend less, said Keith Vieira, senior vice president of operations for Starwood Hotels & Resorts-Hawaii & French Polynesia.
“There are the people who pick up fast food rather than eating in resort restaurants and shop at ABC Stores rather than boutiques,” Vieira said. “Given these changes, it’s understandable that our spending is going to be off.”
Not only did the state’s overall visitor spending fall to $852.5 million, but per-person, per-day spending also declined by 2.7 percent to $174.70 per day.
“The reduced per-person, per-day spending and the overall decrease in visitor expenditures can be partially attributed to the great value packages being offered,” said state Tourism Liaison Marsha Wienert.
While Japanese visitors spent an average of $9.27 more per day on shopping, domestic spending fell, said the state Department of Business, Economic Development and Tourism.
“Hawaii’s visitor industry continued to be impacted by unstable economic conditions worldwide,” Wienert said. “February’s results were not unexpected and included a leap-year effect of one less day in the month this year compared to February 2008.”
And, guests in every spending category are watching their dollars, said Bonnie Kiyabu, executive assistant manager for the Hyatt Regency Waikiki Beach Resort & Spa.
“There weren’t too many hotels on the Strip that can say that they got 80 percent occupancy last month like we did,” Kiyabu said. “But we are getting a much lower rate and we are working harder for the same amount of business.”
Part of that is due to the makeup of visitors, she said. The Japan market has continued to decline and there has been an increase in the number of repeat visitors that are visiting Hawaii, Kiyabu said. According to DBEDT, 83.7 percent of February’s visitors from the U.S. West and 62.6 percent of U.S. East visitors had been to Hawaii before.
“I hear a lot of our guests, especially the repeaters, talking about going to the swap meet to shop,” she said. “They are looking for bargains and they are thrilled by the hunt.”