Airlift, accommodations in the year ahead

Air capacity to Hawaii increased significantly in 2017 and that trend is expected to continue in 2018.
Air capacity to Hawaii increased significantly in 2017 and that trend is expected to continue in 2018. Photo Credit: HTA/Ron Garnet
Hawaii's tourism market is hot, and there are plenty of developments in transportation and accommodations to keep an eye on in 2018.

Upward trends in both total visitors and visitor spending are expected to continue into 2018, backed by ongoing growth in air capacity to the Islands. Hawaii's six largest carriers had nearly 2 million airline seats servicing the Aloha State during the first quarter of 2017, a figure expected to rise 16% to nearly 2.3 million during the first quarter of 2018.

"Air seat capacity is, arguably, the strongest statistical indicator of potential success for Hawaii tourism," Hawaii Tourism Authority president and CEO George D. Szigeti said in a statement touting the year-end numbers.

Roughly 9.3 million visitors spent $17 billion in Hawaii in 2017, according to HTA and Department of Business, Economic Development and Tourism projections, and the islands are expecting 9.6 million visitors and $17.6 million in spending in 2018.

As Hawaii's tourism industry prepares for another banner year, here are a few storylines to keep an eye on this year.

Will airfares drop?

Industry experts are predicting that Southwest's entry into the Hawaii market along with other airlines, such as United and Alaska Airlines, adding new routes and capacity, will drive ticket prices down.

There are questions on the scope of Southwest's impact on the market. Some analysts believe Southwest's lack of premium seating options and the overall growth in air capacity to the islands from a variety of carriers will limit the "Southwest effect" for Hawaii travelers.

While Southwest Airlines has grown into the third-busiest U.S. carrier, a recent study shows the airline can still significantly affect prices when it enters a market. A 2017 study from the University of Virginia examined 109 daily nonstop markets Southwest Airlines entered from 2012 to 2015. Average fares for all carriers fell a minimum of 15% in 56 of the markets and 74 markets saw fares decrease and average of 10%. Twelve of the markets experienced fare increases.

Southwest is still working on its plans and has released few details. Meanwhile, December was a boom month for Hawaii air seats. In the final month of 2017 Virgin America launched nonstop daily flights from San Francisco to Kona, Scoot began flights between Honolulu and Singapore with stopovers in Osaka, Japan; United Airlines boosted its capacity to the Aloha State 20%, adding nonstop flights to neighbor islands from Los Angeles, San Francisco, Chicago and Denver; and Delta Airlines launched nonstop daily service from Seattle to Lihue.

Revitalization of Royal Coconut Coast

Approximately $37 million worth of projects are underway on the Royal Coconut Coast, on Kauai's eastern shore.

Mokihana Resort, Pono Kai Resort, Kauai Shores Hotel, Courtyard Kauai at Coconut Beach and Hotel Coral Reef Resort are currently working on changes and enhancements that include pool renovations and refreshed guestrooms that will significantly revitalize the area. Multiple projects are expected to be completed by summer 2018, while some are expected to wrap up in 2019.

The oceanfront Mokihana Resort is halfway through a revitalization project for all of its rooms, public spaces and lobby that should be completed by February. Pono Kai Resort is reaching the end of phase two of a six-year renovation project that includes new floors, soundproofing and refreshed bathrooms that is expected to finish in June. Kauai Courtyard Coconut Beach is scheduled to start renovations in August 2018 and conclude the project in February 2019, and will also be reflagged as a Sheraton property next year.

Will Hilo attract more visitors and development?

Hawaii Island, with more direct routes from both the U.S. mainland and Japan, saw some of the state's biggest tourism gains in 2017.

More travelers are making their way to Hilo in addition to the traditional resort and tourism area around Kona. There appears to be demand for more Hilo accommodations but development restrictions could hinder the town's options for the main corridor on Banyan Drive. The street is home to a few hotels including the Grand Naniloa Hotel Hilo, a DoubleTree by Hilton property, and Hilo Hawaiian. The Pagoda Hilo Bay Hotel, formerly Uncle Billy's, closed in June 2017 due to health and safety concerns at the hotel built in 1966.

While the Grand Naniloa is undergoing a $30 million renovation, the pace of change in the area can be slow, according to Ross Birch, executive director of the Island of Hawaii Visitors Bureau, because Banyan Drive is owned by the state and managed by the Department of Land and Natural Resources.

"There is a demand for more hotels in Hilo, and hopefully the right product can come in and help increase the exposure for tourism in one of the best towns in Hawaii," Birch told Pacific Business News in December.
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