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Hawaii ended 2022 with less than 90% of the visitor arrivals it had before the 2019 pandemic, largely due to the decline in international visitors, particularly from Japan, Hawaii’s historically most important international market.
Nearly 9.25 million visitors came to Hawaii in 2022, down 11% from pre-pandemic levels in 2019, according to preliminary data released Monday by the state’s Department of Economy, Economic Development and Tourism.
US arrivals topped 7.76 million, up 12.9% from 2019, offsetting a drop in international visitors, particularly from Japan. Last spring, a delegation from the Japan Association of Travel Agents visited Hawaii and predicted that the recovery of Japanese visitors to Hawaii would begin with the 2022 Golden Week travel season and return to 40% of pre-pandemic 2019 levels by the end of the year.
Instead, only 199,760 visitors from Japan came to Hawaii in 2022, down 87.3% from 2019, when more than 1.5 million visitors came. Arrivals from other international markets are also still in recovery mode, but the smaller size of these markets means the overall health of Hawaii tourism is less dependent on their presence. Visitor arrivals from Canada totaled 399,869, down 26% from 2019. Arrivals from the All Others category, which included visitors outside of Japan and Canada, reached 792,676, down 36.8% from 2019. Visitor Arrivals by cruise ships reached 95,413, down 33.5% from 2019.
Compared to 2021, the recovery in 2022 looked significantly stronger. Hawaii only lifted its COVID-19 entry requirements for US travelers on March 26, 2021. Before that, domestic travelers had to self-quarantine unless they could show proof of vaccination or a negative COVID-19 test.
Hawaii also benefited for much of 2021 and early 2022 from pent-up demand from US travelers who had limited access to international destinations or wanted to stay closer to home due to COVID-19 restrictions.
Jerry Gibson, president of the Hawaii Hotel Alliance, said domestic travel to Hawaii was strong in the summer of 2022, but began to show some softening in the fall, culminating in one of the worst holidays Hawaii had experienced since the 2009 financial crisis.
December results showed an additional rebound in international arrivals, which helped improve the year-end totals. About 871,870 visitors came to Hawaii in December, 8.5% fewer than the same period in 2019, when 952,441 visitors came, and 15.8% more than December 2021. Arrivals from Japan totaled 36,988, 67.7% less than December 2019 and 51.3% less than December 2021.
However, the pace of US visitor arrivals slowed somewhat in December to 676,064, up 4.2% from December 2019 and down 0.1% from December 2021.
Gibson said the slowdown continued into 2023, adding, “We don’t see any bright lights on the horizon yet.”
Gibson said a key question now is whether domestic travel to Hawaii remains strong enough to offset continued weakness from Japan. A surge in domestic travelers for much of 2022 offset the drop in international visitors, but Gibson said there has been some pullback as the US grapples with economic uncertainty.
“In March we will see the opening of the 90-day booking window for the summer,” he said. “Boy, we really hope it’s more pleasant than what we’re seeing now.”
In September, the University of Hawaii Economic Research Organization released an overall economic forecast for Hawaii, which projected that Japanese visitors would return to 50% of their 2019 arrival volume in the first quarter. But the market has proven far more sluggish.
Japan lifted its COVID-19 travel requirements in October, but travel to Hawaii has been hampered by an unfavorable yen exchange rate and high fuel surcharges. Incentives from the Japanese government to boost domestic transport until the end of 2022 also weighed on the recovery.
Eric Takahata, executive director of Hawaii Tourism Japan, said the final remaining hurdle appears to be a general reluctance to travel internationally. Takahata said HTJ is working with Gov. Josh Green’s administration to create messages aimed at convincing Japan’s COVID-19-shy travelers that Hawaii is a safe travel destination.
Takahata said the Honolulu Marathon brought a small wave of travelers from Japan to Hawaii in December, and the next waves are likely to come for the Honolulu Festival in March and Golden Week in April.
Gibson said, “It’s looking a little anemic at this point.”
But Takahata said there are signs Japanese Prime Minister Fumio Kishida will downgrade the legal status of COVID-19 to the same category as the flu by spring, which would ease mask-wearing and improve mental health.
“This is going to be great for us,” Takahata said.
Still, Takahata said he doesn’t expect arrivals from Japan to return to 50% of 2019 levels by the end of this year.
“By the end of the first quarter, we expect arrivals from Japan to still be down 70% from 2019,” Takahata said, adding that Japanese arrivals to Hawaii in April, May and June are expected to be down about 60% going back in 2019. and will hopefully reach almost half by midsummer.
“We don’t expect any acceleration before the third quarter or the fourth quarter,” he said.
Takahata said Japan’s slower return could have less of an impact on Hawaii’s economy than previously expected, however, as economists keep postponing a potential US recession later in the cycle.
“Hopefully this recession that the US seems headed for would be pushed out as far as possible and the Japanese market for Hawaii would then recover and even out the delta,” he said.
Keith Vieira, director of KV & Associates, Hospitality Consulting, told the Honolulu Star-Advertiser on Monday that even if domestic visitors continue to offset the decline in international visitors, the pockets of the visitor industry will continue to suffer. Historically, about a third of Hawaii’s visitors have been international, with the highest concentrations in Waikiki, where the mix of international and domestic visitors is often divided, Vieira said.
He said the mix of visitors affects visitor spending. Nominal visitor spending in 2022, not adjusted for inflation, reached $19.29 billion – up 8.9% from 2019. Nominal US visitor spending was 38, at nearly $16.2 billion, 9% higher than in 2019. However, international spending dragged the total down as Japan’s nominal spending was $376.3 million, down 83.3% from 2019.
“If you look at the average daily price for hotels in Waikiki, it’s a lot lower than on the neighboring islands,” Vieira said. “We have attracted more US visitors to date, but relying on them entirely is not sustainable in the long term. We need to attract more international travelers.”