Outrigger Fairway VillasWith the peak summer season only weeks away, the initial arrivals and spending figures for March drew a sigh of relief from many in Hawaii's travel industry. Following the staggering earthquake and tsunami in Japan on March 11, the Aloha State was not only bracing for a substantial decline in business from the Japanese market but also scrambling to convince many U.S. travelers that fears about increased radiation levels affecting the Islands were unfounded.



According to preliminary statistics released by the Hawaii Tourism Authority in late April, the state welcomed 633,365 visitors in March, an increase of 4.2% from the same month in 2010. And while arrivals from Japan did sink, falling 17.9% for the month, spending from all markets jumped 11.8%, or $103.5 million, year over year to a total of $980.7 million in March.

"As with everybody, certainly in March and April we had an impact from the Japan market as well as slightly from the West Coast market," said Shari Chang, senior vice president of sales, marketing and revenue management for Aston Hotels & Resorts. "That had everybody quite concerned, but then we started to see a recovery, I think a little bit faster on the Japan side. The condominiums were quite popular with [Japanese visitors], and they were coming over with their families to get away from all of the issues over there."

Barry Wallace, executive vice president of hospitality services for Outrigger Enterprises Group, said the family-owned company is also beginning to see its Hawaii business stabilize.

"We started this year with a booking pace that was quite strong, quite a bit stronger than any of the previous three or four years, which led to a very good first quarter," he explained. "And it looked as though our second quarter was going to be surprisingly strong until March 11, when things sort of flattened out. But the good news is they didn't drop, they didn't die. The westbound business stayed strong. In fact, it grew a little bit in the course of the second quarter, and we will finish it with respectable levels of occupancy in my hotels."

Anticipating the difficulties emerging in the Japanese leisure and business travel sectors, the Hawaii Tourism Authority authorized $700,000 in spending for three additional media saturation campaigns in U.S. mainland cities in hopes of capitalizing on existing lift and seat capacity.

"In North America we are starting to get some preliminary indications, and they look good in terms of the market saturation programs that we have for Phoenix, Dallas and Denver," said Mike McCartney, president and CEO of the Hawaii Tourism Authority. "An increase in load of 2.9% was our target. That would yield about 26,000 arrivals, and those 26,000 arrivals would likely spend about $39 million."

Asked about the arrivals actually resulting from the additional North American blitzes, McCartney said "specific numbers" weren't yet available.

"But it's going well," he insisted. "The response has been good."

Airfare anxiety

The Hawaii tourism chief was also quick to point out his increasing worries regarding the spiking price of oil.

"I would say it's not just a concern regarding a trip as much as it is a concern of taking people's disposable income and shifting it," he said. "How much more are people spending on filling up their gas tanks? That might be money they set aside for vacation. I hope that's not the case, but those certainly are concerns."

WaikikiHoteliers across Hawaii are, of course, watching fuel prices closely, but both Wallace and Chang said higher airfares hadn't yet affected summer bookings substantially.

"Summer airfares are a little higher than we'd hoped, and I don't know if it's going to settle down soon," Chang said. "When you first look at the fare it doesn't look bad, but you add all of the fees and surcharges in and that's what ends up taking it up much higher than I think some people expect."

Just about everybody seems to agree that airfares to Hawaii are up from this time last year, but determining exactly how much can be tricky.

According to statistics provided by the HTA, the average cost of a roundtrip ticket from the U.S. West was about $60 more in March 2010 than the $538 average recorded during the same month this year. From the U.S. East, however, the March 2011 airfare average was $620, or nearly $25 more than the same period last year.

"It's a little bit hard to say in exact terms where they are, but certainly the industry has been doing systematic increases of fares across their systems in a number of stages across the last couple of months," said Avi Mannis, vice president of marketing for Hawaiian Airlines. "It's in the magnitude of $40 each way or $50 each way. That's the industry's increase on published fares to Hawaii. Lots of other factors affect that, but in general we have seen an upward trend as the cost of fuel has skyrocketed."

High hopes for summer

Despite concerns over increasing airfares, the outlook for this summer's peak travel period across Hawaii remains overwhelmingly positive.

"For us, this summer looks really good," said Ken Pomerantz, president and chief marketing officer at MLT Vacations. "Our core business is up, and the new business we have with United Vacations, which is a new brand for us this year, is very strong. In total, we have about 50% more room nights booked for this summer than we did this time last year, which we're excited about."

Bookings for the summer months at Aston's Hawaii properties also appear to be up significantly.

"It will definitely be ahead of last summer," Chang said. "It certainly won't be back to 2008 levels yet, but we are already pacing ahead of last year. The question is, will that pace continue or will that pace slow down somewhat? But it's definitely going to be ahead of last year. That's the good sign. We've seen enough of a recovery that people are feeling more comfortable in traveling again long distance."

Many in the Hawaii hotel industry are also optimistic that the reduced-rate specials used to attract travelers last summer won't be necessary this time around.

"We had a number of discounts in place last year that I'm hopeful we won't have to use this year," Wallace said. "And our booking pace to date has been steady enough that we're being cautious about the time for which we'll extend our discounts.

"I notice the competitors are doing the same thing," he said. "Right now their discounts are in place through about June 15, and everybody's kind of waiting to see whether they are going to have to extend them any further."
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