Economists at the University of Hawaii are forecasting more than 8.4 million visitor arrivals to the Aloha State in 2015, an increase of 3% year over year and a new all-time high.

The University of Hawaii Economic Research Organization (UHERO) released its latest quarterly forecast earlier this month, saying the state’s tourism industry continues to exceed expectations.

“Through the first seven months of the year, visitor arrivals, days, and real spending are all up 3% to 4%, and visitor numbers will almost certainly end the year in record territory,” said Carl Bonham, an economics professor at the University of Hawaii and the UHERO executive director. “This reflects a surge in activity on the Neighbor Islands, which has pushed hotel occupancy above 70%.”

Bonham added that visitors from the U.S. mainland have contributed the most to the continuing growth.

“Arrivals from the U.S. mainland are up 6% year to date, while visitor days and real spending are up more than 4% and 3% respectively,” he explained.

The Neighbor Islands have seen business improve because of increases in nonstop flights from the U.S. mainland, according to Bonham, who said the airports in Kahului, Maui and Kona on the Big Island of Hawaii have benefitted the most.

“While reliable data is hard to come by, another likely support is the availability of alternative vacation accommodations,” he continued, “which have seen a surge in popularity nationally thanks to online booking services like Airbnb and VRBO.”

UHERO officials had previously expected compression at hotels and resorts on Oahu to limit gains there, but the state’s most populated island has kept pace with the growth on neighbor isles — although weakness in the Japanese market has hampered overall visitor spending totals on Oahu.

Looking ahead, more improvement is expected for the Hawaii tourism industry in 2016, but with statewide hotel occupancies pushing toward 80%, UHERO officials expect arrivals growth to slow, inching upward only around 1% year over year.

“Spending will slow as well, rising at a rate below local inflation in 2016,” Bonham said. “This is a picture of continuing health for the industry, but we are past the point where significant additional expansion will be seen.”

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