Report: U.S. visits to increase in second half of 2014

By Shane Nelson
InsightThe Aloha State can expect a boost in tourism business from the U.S. mainland throughout the rest of 2014, according to a recently released annual forecast by the University of Hawaii Economic Research Organization (UHERO).

Carl Bonham, the organization’s executive director and an economics professor at the university, said an increase in airlift to Hawaii — particularly to the neighbor islands — combined with a generally improving U.S. economy will likely lead to more domestic visitor arrivals across the state over the next six months, a pattern of growth he expects will continue in 2015.

“For the first half of this year, U.S. visitor arrivals to the state are down about 2%, and we expect that to be completely reversed in the second half of 2014,” Bonham said.

Bonham said “capacity constraints,” such us high occupancy on Oahu hotels and reduced seat capacity on fewer nonstop flights to the neighbor islands, have hampered arrivals from the U.S. in recent months, following what he described as a domestic tourism business high point at the end of 2012 and in the first quarter of 2013.

However, airlines are now boosting lift to Maui, Kauai and the Big Island of Hawaii. ShaneNelson

“If you look at the projected airline seats going into each of those islands, the growth is expected to be double digits for August, September and October,” Bonham said.

“Airlines are responding to demand; they’re not just throwing airplanes at the routes,” he added. “So what’s happening is U.S. demand is improving. It has been for the last couple of quarters, and we think that’s going to continue as the U.S. economy continues to strengthen.”

Bonham said consumer confidence is on the rise across the U.S. thanks to better job growth and improved income figures.

More nonstop flights to the neighbor islands means travelers can take advantage of lower occupancies there and average daily room rates that haven’t risen as sharply as soaring rates on Oahu.

“Hotel room prices on the neighbor islands won’t necessarily be lower than on Oahu,” Bonham explained. “They just haven’t gone up as much, so relative to where things were three or four years ago, [the neighbor island prices] haven’t seen as much of an increase. So the consumer who is thinking about a trip to Maui might not be suffering quite the same kind of sticker shock as the consumer who was used to going to Oahu.”

More airlift to the state also likely means less expensive airfare.

“When you expand lift, you tend to see more aggressive pricing,” Bonham said.

The expected boost in domestic arrivals will be a timely improvement as visits from Japan, Hawaii’s largest international market, are expected to decline year over year in 2014 due to continued weakness of the yen, according to UHERO researchers.

“Basically, 2014 is likely to end somewhere near a record high for total arrivals and U.S. arrivals — although we might not quite break the record for U.S. arrivals,” Bonham said.

Hawaii welcomed more than 8 million visitors in 2013, an all-time record for the destination, but the domestic high point dates back to 2006, when more than 5.17 million U.S. visitors traveled to the Hawaiian Islands.

UHERO is forecasting a 2% year-over-year increase in U.S. visitor arrivals in 2015.
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