Domestic arrivals expected to near all-time high across Hawaii next year

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InsightAlthough Hawaii set a new overall visitor arrivals record last year, and certainly appears to be on pace to break through that annual peak again in 2013, it’s been nearly seven years since the destination set the all-time high for visitor arrivals from the U.S. mainland market.


More than 5.17 million U.S. visitors traveled to the Hawaiian Islands in 2006, the domestic peak for the destination, which was followed by 5.14 million mainland arrivals in 2007. But the Aloha State hasn’t broken the 5 million U.S. visitors mark since.

According to a recent report from the Economic Research Organization at the University of Hawaii (UHero), however, the Islands may inch closer to that domestic arrivals record next year.

Although UHero has seen Hawaii’s length of stay figures decline from the U.S. in recent months, as average daily rates (ADR) across the destination continue to rise, the organization does expect year-over-year domestic arrivals growth in 2014, forecasting a 3% gain from the mainland in 2014 for a total of more than 5 million U.S. arrivals during the year.

In 2012, the Hawaiian Islands did enjoy record-breaking total visitor arrivals and expenditures figures, but those new highs were bolstered substantially by international travelers and impressive growth from emerging Asian markets and Oceania.

According to Peter Fuleky, a UHero economist and assistant professor at the University of Hawaii at Manoa, Honolulu provides a good example of how market shares have shifted in Hawaii.

“Over time, the share of U.S. visitors in Honolulu has declined drastically,” he said. “In the '90s, the share of U.S. [mainland] visitors in Honolulu was close to 66%, so about two-thirds of those traveling to our major tourism island at the time were U.S. visitors. Now Honolulu is down to about 50% [arriving] from the U.S.”

Fuleky added that more U.S. travelers are visiting the Neighbor Islands today, spreading domestic dollars more evenly throughout the state, while international visitors are flocking to Oahu in record numbers.

But he noted that consumer confidence on the U.S. mainland has continued to suffer since the 2008 recession, due in part to uncertainty stemming from last year’s fiscal cliff standoff, the resulting sequestration and, more recently, the government shutdown and debt limit showdown.

“When you are uncertain, you are not in the mood to spend a lot,” he said. “And travel is generally perceived to be a luxury good. It’s not a necessity like food or shelter; it’s something you do when you feel good, and when your confidence declines, you may decide to stay home.”

Still, Fuleky says UHero’s forecast of more than 5 million U.S. mainland arrivals in 2014 reflects the organization’s belief that the American economy will continue to recover next year, albeit slowly. He also thinks hotel managers across the destination may begin to weigh continued ADR increases more carefully in coming months.

“We expect to see a little bit of slowing of room rates going forward,” he said.
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