Industry healing faster than other local sectors.
The visitor industry is outpacing the rest of Hawaii’s economy in the slow recovery from the crisis that began two years ago, the University of Hawaii Economic Research Organization reported today.
Although some sectors are still shedding jobs, UHERO found that employment is gradually improving in tourism businesses. In April, the total of nonfarm jobs topped 590,000 for the first time in nine months and has stayed up.
“Prospects for continued visitor growth are tempered by poor growth prospects in primary visitor markets,” UHERO’s state economic forecast update says.
Maui Visitors Bureau Executive Director Terryl Vencl said she also thinks the recovery is coming faster than she had expected. Speaking only about Maui County trends, she said, “I am optimistic, but it will not be a big, large growth. It’s about slow, steady, tempered growth in both arrivals and expenditures.”
The report found that the tourism recovery is concentrated in North America. Canadians have doubled their presence in Hawaii in the decade since the attacks on America of Sept. 11, 2001, from 40,500 in the last quarter of 2001 to 81,000 or more in each of the last 13 quarters. Canadians also spend much longer vacations in the islands, nearly 13 days on average, compared with fewer than 10 for Americans.
Vencl said increased lift is helping, “from Hawaiian, Alaskan, Westjet and Air Canada.” Also, “Canada’s economy has not been struggling as much, so Canadians are able to move more freely.”
She also said there seems to be some pent-up demand being satisfied, and as it is satisfied “there might be a bit of a leveling off.”
Predicting very far into the future is difficult, she said, “since we are still in a 90-day window” – vacationers don’t plan very far in advance.
Canadians still account for only a minor fraction of the million and a half people who come to the islands in any quarter. Most of the recent growth has come from Mainland states, with particular strength in Texas and Pacific states. The report says that “surprisingly, nearly half the growth in the large Pacific market came from . . . Oregon and Washington state.”
These gains are being measured against the very low totals of 2009, and arrivals still are running about 15 percent below the peaks of 2006 and 2007.
The report says the downbeat forecasts for the national and world economies will slow but not stop gains in visitor arrivals. UHERO forecasts a 6.7 percent gain in head count this year, with another 2.7 percent next year. But the total is not expected to regain 2006 levels until 2015.
“Few nontourist businesses have shown much job creation,” the report says, and the Neighbor Islands are lagging Oahu.
Through July, losses were still accumulating in the information; professional and business services; financial, insurance and real estate; wholesale trade; and especially construction segments.
Income from wages in the private sector actually fell, by a slight 0.2 percent, in the first quarter, although gains in federal paychecks put the state in positive territory for personal income, helped by transfer payments (Social Security and unemployment insurance).
“This demonstrates the important role that federal government spending has played in propping up the economy,” UHERO says.
State payrolls are down because of layoffs and furloughs.
“We expect the job and income picture to continue to improve at a moderate pace over the next two years,” says the report.
The rebound will have a positive effect on state tax collections, although not nearly enough to allow the Legislature to let up on budget cutting.
Quarterly collections were up to almost $630 million from general excise tax in January to March. The general excise tax take fluctuates considerably even in more normal times, but it used to reach $675 million regularly.
Smokers are helping. When the cigarette tax rates went up in July, they paid an additional $3.4 million in the first month.
In 2009, all main economic indicators in the islands were down: visitor arrivals, jobs, total employment, real personal income and real gross domestic product. In 2010, all except payroll jobs will be positive, and even jobs will be down only 0.2 percent, the economists predict.
UHERO has a mission “to inform public- and private-sector decision-making through rigorous, independent economic research on the people, environment and economies of Hawaii and the Asia-Pacific region.”