January 2025 Hotel Performance

The state had a 1.5 percentage point decrease in occupancy and a 1.8% increase in ADR resulting in flat RevPAR compared to last January. RevPAR was up 1% on Oahu, down 9% on Maui, up 12% on Hawaii Island and up 8% on Kauai. All islands experienced an increase in occupancy from last January.

Visitor Arrivals

Total visitor arrivals to Hawaii were up 4% for the month of January compared to last year with Hawaii Island up 11%, Kauai up 5% and Oahu up only 1%. Maui was up 16% over last year but this is 11% below the pre-fire arrivals.

Visitor Expenditures

Total expenditures were up 5% for the month of January compared to last year. Oahu was up 6%, Kauai was up 5% and Hawaii Island was up 2%. Maui was up over last year by 5% but still 15% below 2023 spending. This means Maui is bringing in about $100 million less per month than before the Lahaina wildfires.

Air Seats

The outlook for air seats for the February to April 2025 period is flat overall compared to the same period last year. Domestic seats are up 2% while international seats are down 7%. Japan is down 12%.

State of Hawaii – no change

Honolulu up 1%

Kahului down 1%

Kona down 3%

Lihue up 5%

Domestic up 2%

International down 7%

Japan down 12%

Canada down 13%

Oceania down 12%

Korea down 20%

The Return of Japanese Visitors Slows

Erik Kloninger reports that while Hawaii's US visitor market rebounded quickly from COVID-19, the Japan visitor market has not recovered, with 2024 arrivals and spending at about half of pre-pandemic levels. The chart below illustrates the anemic recovery of Japanese visitor spending. Using 2019’s $2.2 billion in spending as a benchmark, Hawaii has missed out on about $8.4 billion in Japanese visitor spending since 2020. The strong US dollar has contributed to the slow recovery of Japanese visitor arrivals, particularly in 2024 when the pace of the recovery of the Japanese market slowed considerably. The slow pace of recovery begs the question of whether what we are observing is temporary or a structural change in the market.

Transient Accommodations Tax Increase

Given the Hawaii hotel market's anemic performance and the poor prospects for a Japanese visitor recovery, it seems like a bad time to be increasing the transient accommodation tax. Already the highest in the world (https://www.travelandleisure.com/honolulu-hawaii-highest-tourism-tax-in-the-world-8763376), Governor Green and other politicians are hell bent on increasing the rate by 1.75 percentage points (actually a 17% increase) from the current 10.25% to 12%. According to the Grassroot Institute of Hawaii, our TAT started out in 1986 as a temporary tax at 5% to help fund the Hawaii Convention Center. Its original purpose has long disappeared, the convention center has a leaky roof but we still have the tax which just goes straight into the general fund. Don't believe the politicians who say it will support the visitor industry or help the islands survive global warming. Basic economic theory says if you tax it, you will get less of it. In this case, it will be visitor dollars we will get less of.

Data Source: Hawaii Tourism Authority