Insight Hawaii Insight Economists foresee tourism growth for neighbor islands By Shane Nelson / June 29, 2015 Share 1 -- Tourism business is poised for growth across Hawaii’s neighbor islands through the rest of this year, thanks in part to a substantial boost in nonstop airlift from the U.S. mainland and a continuing trend of capacity constraints on Oahu, according to economists at the University of Hawaii. Earlier this month, the Economic Research Organization at the University of Hawaii said the neighbor island counties of Maui, Kauai and the Big Island of Hawaii should see a 3% to 5% year-over-year gain in visitors through the rest of 2015. Although statewide tourism indicators are pointing to marginal average gains for Hawaii as a whole, “there is a clear divide between industry conditions on Oahu and the state’s three neighbor island counties,” said economist Carl Bonham, the organization’s executive director. “A major driver of this divergence has been a shift in U.S. visitors from Oahu to the neighbor islands,” Bonham explained. “Since 2012, U.S. visitor volume has seen only limited growth statewide, but the average U.S. visitor is spending fewer days on Oahu and more days on the neighbor islands.” While Oahu has seen visitor days decrease, available room totals have also dropped across the island — thanks in part to a number of major resort renovation projects —allowing hotel occupancies there to remain high. “Oahu hotels have managed to fill roughly 84% of their rooms for each of the past three years, the highest sustained level of occupancy in recent history,” Bonham said. “High occupancy has driven significant increases in the cost of accommodations. While the rate of increase has slowed recently, room rates are now more than 10% higher in real terms than they were before the recession.” Meanwhile, there are available rooms on the neighbor islands of Maui, Kauai and the Big Island, where occupancy remains 5% to 10% below the peak averages of the mid-2000s. Room rate growth at these destinations has been more moderate, and in inflation-adjusted terms, those figures haven’t returned to the pre-recession levels, according to the report. “Of course, the average price of neighbor island accommodations is higher than on Oahu,” Bonham explained. “But that reflects a different mix and quality of units rather than a tighter market.”Substantial increases in nonstop domestic airlift headed directly to the Neighbor Islands from U.S. mainland gateways is also helping boost tourism business on Kauai, Maui and the Big Island. In the second quarter of this year, UHERO expects air seat increases “ranging from 20%-30% on Maui and the Big Island [and] mid-single digits on Kauai.” Bonham added that lower fuel costs played an important role in the increased airlift to the neighbor islands and have helped to bolster domestic visitor arrivals across Hawaii. “Visitors who face lower fuel costs at home are likely to spend some of those savings on vacations,” he said.