Aug. 10–The latest figures on tourism growth prospects from the University of Hawaii Economic Research Organization essentially confirm what visitor industry executives have known all along: A lasting recovery means finding a comfortable balance between keeping Hawaii price-competitive and selling the islands’ attraction too cheaply.
Tourism has been going gangbusters lately, with arrivals growing 5.5 percent in 2013. But the UHERO analysis released this week projects a more moderate expansion pace of 2.3 percent in 2014.
Because of a healthy occupancy rate, room rates are expected to rise, which is what industry leaders have said was needed after recession-driven bargain pricing. The room rates and other key elements on a tourist’s bill will need careful monitoring and adjustment as arrivals start to cool.
Clearly the data are showing the wisdom of the industry’s efforts to create new niches in tourism that should help the state manage the ebb and flow of visitor traffic. For example, the growth of Japan visitor arrivals, which boomed in 2012 by 17 percent, is going to slow rapidly over the next three years, with even a small decrease projected in 2016. The weakness of the yen against the dollar is a factor here.
However, state and federal policymakers must continue to build alternative tourism sectors, through efforts to make Hawaii more welcoming to its newer markets, and through visa-waiver programs targeting arrivals from Taiwan, Hong Kong and elsewhere. That would be a hedge against the inevitable fluctuations in any group’s capacity for travel.
The UHERO report points to several bright spots as well, including good prospects for “healthy and broad-based employment growth over the next two years, as we move beyond the adverse impacts of this year’s payroll tax increase and federal spending sequester.”
The unemployment rate is projected to fall below 4 percent by 2015.
This forecast comes in the wake of a report released Wednesday by the state Department of Labor and Industrial Relations, which said the overall market is expected to add 26,690 jobs between the third quarter of 2012 and the third quarter of 2014, an increase of 4 percent.
Both studies point to the rebound in the long-hobbled construction sector. The labor department indicates that the building industry will grow the fastest, by 13 percent, translating into an addition of 3,750 more jobs.
But some vestiges of the recession are expected to persist, with the number of long-term unemployed and the underemployed declining gradually over time.
Consumer prices, fueled by a rising housing market, are due to inflate by 3 percent in 2015 and even more in the two years beyond. That will put a dent in household budgets, too.
Further, consumers should heed a note of caution from the study, which points out the risk to Hawaii’s economy posed by conditions beyond our shores. Weak global demand has softened trade, and the UHERO report points to the risk of “excessive austerity,” which is what many in Congress are pursuing.
But rather than simply fall victim to external trends, the only sensible approach for Hawaii is to strengthen the underpinnings of its primary economic engine, tourism, in any way it can. Fortunately, this is a matter of staying the course we’ve been on for some time already.
