Hawaii on Edge
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|Martin Barillas||April 18th 2011|
Cutting Edge Senior Correspondent
Emerging markets in Asia and elsewhere, as well as more Mainland U.S. visitors will be needed if Hawaii expects to recover from the tectonic drop in tourism from Japan. But befuddled tourism officials in Hawaii, unaccustomed to fast turnarounds and sharp rebounds, seem to be at a loss.
Following the devastating March 11 tremor, tsunami and nuclear power plant meltdown in Japan, Hawaii saw a drop of nearly 25 percent in the number of Japanese visitors, compared to a year ago. The drop followed a 28 percent increase in Japanese tourists from January 1 through late February from a year ago, says the state agency. With hotels reporting cancellations of future bookings as high as 45 percent, the Aloha State is braced for a significant economic impact. Hawaii’s state government predicts that the decline in Japanese visitors could reduce the state's projected 3.2 percent rise in gross domestic product by as much as a percentage point. The state estimates that Hawaii’s tsunami damage totaled $30.6 million.
The only other major market expected to see a decline in the number of available airline seats is the U.S. East Coast, which is expected to decline by 20.3 percent. The Sheraton Waikiki hotel reported that its occupancy rate dropped from about 90 percent to 52 percent as a result of the cancellation of a Japanese convention with a projected 1,400 attendees.
However, occupancies at the 1,636-room hotel have since returned to the mid 70s in percentage terms. In other bad news, Japan Airlines announced it would cancel seven of its 21 weekly flights to Honolulu from Tokyo's Narita International Airport for most of April following a drop in demand. Traditionally in Japanese culture, travel is curtailed following the death of family members or tragedies such as the devastating quake. Hawaii has been historically reliant on tourism from the Land of the Rising Sun, since Japanese tourists typically spend more per capita than their North American counterparts. A new air seat capacity forecast released by the Hawaii Tourism Authority shows a 0.4 percent drop in the second quarter compared to last year. Mike McCartney, CEO of the tourism authority, expressed confidence that despite the relative decline in Japanese travellers, the number of airline seats filled are at the same level as 2010. According to the HTA forecast, 2,299,593 airline seats to Hawaii will be available from April through June.
Ironically, tourism officials contacted by The Cutting Edge News appeared unprepared for the sudden fall-off in tourism and disorganized in their response. Several official and agencies contacted indicated they were relying on data from Internet guesswork sites. Twelve calls to Hawaiian Airlines corporate communications went unanswered. Nine attempts to call local tourism officials met with unanswered telephones.
The tourism business, before the quake, was flush. According to the Hawaiian Tourism Authority, total spending by all visitors to the Aloha State in the month of February 2011 rose 18.7 percent to $1.013 billion from the year earlier month. Total number of airline seats scheduled in February 2011 from Japan grew 2.4 percent, including new services from Haneda, Japan, to Honolulu. Additionally, total spending by Japanese visitors for the first two months of 2011 was $349.3 million, up 27.7 percent from the year-earlier months. The number of Japanese visitors who traveled on incentives doubled in February, marking the tenth consecutive month of strong growth, the Pacific Business News reported. Then the quake and tsunami hit.
While the number of airline seats originating in Japan is expected to drop 10.5 percent as airlines drop their flights to the Hawaiian archipelago in the aftermath of the seismic disaster, not included in the HTA report are 25 Japan Airlines charter flights to Hawaii for late April and early May. The special flights for the so-called Golden Week of traditional Japanese holidays have a total airlift capacity of about 5,000 seats.
Some hotels and other tourist businesses were damaged by the same tsunami that struck Japan in March. The big wave caused approximately $30 million in damages on the island of Hawaii, but no deaths or serious injuries were reported. Retail shops, rental units and private residences were damaged while the Four Seasons Resort Hualalai and Kona Village Resort was forced to close. One operator of dozens of hotels noted that Japanese cancellations were as high as 45 percent at some of its properties. Room rates are expected to remain flat as compared to the second quarter of 2010 when rates rose by double digits.
Hawaiian tourism officials are bullish about prospects for business since they expect to see a huge increase of capacity during the second quarter of 2011. Australia, Canada, China and South Korea are expected to feature prominently as originating markets for travel to Hawaii. Reportedly, Korea shows great potential because Korean visitors spend about $225 a day. Airline seats from Korea are expected to rise by 136.6 percent while Australia is forecasted to grow by 43.5 percent. Airlift from Canada will see growth of 13.9 percent according to the tourism authority while Hawaii’s overall international seat count for the period is forecasted to increase 3.5 percent. The challenge for the travel industry is to fill as many seats filled as possible, while jet fuel prices are expected to rise. The Hawaiian Tourism Authority has promised to spend $3 million in public money to tout Hawaii’s wares in Japan and elsewhere.
It is all about maintaining a cordial relationship with Japanese tourists, say tourism industry officials. In that vein, Hawaiian Airlines has started selling tickets for a new daily nonstop flight between Osaka and Honolulu. The airline said it will begin flying to Osaka's Kansai International Airport from Honolulu on July 12. The inaugural return flight to Hawaii will take off the following day. The Honolulu-based carrier began flying to Japan in November 2010 when it launched a route between Honolulu and Tokyo's Haneda International Airport. The airline will initially fly a 264-seat Boeing 767 plane to Osaka, and expects to switch to a 294-seat Airbus A330 aircraft on the route.
Cutting Edge Senior Correspondent Martin Barillas also edits Speroforum.com.