HAWAII: A Look Ahead

After years of steady growth, Hawaii's visitor industry may be sitting pretty, but it's taking nothing for granted. In moves that are good news for travel agents and their clients, both the government and the visitor industry continue to spend serious money on improving the destination, and on marketing it to potential travelers.

The consensus among industry members with whom Travel Agent spoke is that Hawaii is in the position of cementing its strong tallies and is able to focus on its strategic goal of attracting travelers inclined to spend what is needed for a vacation that encompasses a number of optional activities and other diversions.

Upgrades are in the works for Kauai's Princeville Resort

"We're entering uncharted waters—record upon record," says John Monahan, president and CEO of the Hawaii Visitors and Convention Bureau, which markets Hawaii to the rest of the United States.

"We've been very fortunate over the last two years to see our visitor industry excel," notes Marsha Wienert, the state's tourism liaison. "We're looking for continued growth from both visitors coming for land-based as well as cruise vacations."

The Hawaii Tourism Authority, which oversees Hawaii's global marketing, is anticipating that 2007 will bring a modest uptick in overall arrivals, ranging from flat to 2 percent, says Frank Haas, director of tourism marketing.

Among domestic travelers, the outlook is similar, though the authority is targeting modest growth among travelers from east of the Rockies. It continues to see this source market as providing a relatively higher percentage of first-time visitors who tend to stay longer.

Monahan notes that airlift plays a role in the rate of arrivals. "We continue to get strong increases from the U.S. West but we've had some decreases from the U.S. East," he says, referring to air capacity. "But that's coming off record lift in 2005, and there had to be some correction," Monahan adds.

Also a factor, observes Wienert, is the state's finite capacity of rooms, a point also made by several wholesalers.

For its part, the state is forecasting a slight increase of 2 percent in domestic arrivals in 2007, says state economist Pearl Imada Iboshi. The state also is expecting to see visitors' spending increase at a faster rate than arrivals, with spending pegged to grow by 6 percent this year and 5.5 percent in 2008.

This of course means that each arriving traveler's stay will prove more lucrative, a situation that will be beneficial both to the destination and the travel professionals who book their stays.

"The destination as a whole is covered very well by our partners, so we continue to focus more on key segments including romance, active visitors, golfers, people who will get out and engage in the destination," Monahan says.

"We have to not only attract the more experiential customer, but we also need to attract more first-timers who haven't taken the plunge to come to Hawaii," Monahan adds. He notes that Hawaii's repeat market is very loyal, with travelers who live west of the Rockies having made the trip to Hawaii an average of seven times.

The key with these travelers, according to Monahan and others in various industry segments, is ensuring that they're up to speed on the expanding variety of things to see and do on the islands.

Hawaii's message of providing lots of activities, more to come back for, and a unique culture and history complements the state's long-term reputation as a beach destination with beautiful scenery, Haas says.

"What we're ending up with is travelers with a more robust understanding of what the destination has to offer," he explains. "It's easier for the travel agent to counter arguments that Hawaii is just like another place. What agents need to do in order to sell effectively is to tell their clients that if they want a Hawaii experience, they have to come here to get it."

Haas says that this uniqueness is the foundation of Hawaii's competitive advantage—and its allure is being reinforced by travelers who have become more adventuresome and are seeking out singular elements and experiences.

"Part of it comes from the customer," Haas explains. "They're more sophisticated and adventurous, finding little arts communities like Holualoa on the BigIsland, adventures like the zip lines, unique water activities like irrigation rafting on Kauai and vanilla and goat farms on Maui. Lots of these things have been here all along and travelers are just becoming more adventuresome and seeking them out."

Wienert suggests that retailers looking to grow the Hawaii segment of their business thoroughly understand the niche products Hawaii has and look to clients whose interests match them.

Dottie Bellanca of Richmond, VA-based Travel Agents International has noticed an increase in interest among new and repeat clients in Hawaii cruises. She says she's hoping for an uptick in Hawaii bookings this year following a bit of softness in 2006 compared with 2005.

The longtime Hawaii specialist knows for herself the breadth and depth of things to see and do in Hawaii and says spreading the word in the marketplace can only benefit both Hawaii and the retail community. "People need to constantly be aware there are new things," she says. "More and more," she says of travelers from the East Coast, "they're finding out what they're missing if they don't go west."

Upgrades Continue

Waikiki has been grabbing its share of headlines with the multimillion-dollar upgrades to lodging, shopping and dining taking place at Waikiki Beach Walk and the neighboring RoyalHawaiianShopping Center and Waikiki Parc, among others. Significant upgrading continues at the Outrigger Reef. And details are expected this year about plans for the Starwood properties in Waikiki.

The living room of the Four Seasons Manele Bay's Hulopoe Suite, located on Lanai

However, changes and improvements have been taking place throughout the state, including significant upgrades on Lanai, where the Four Seasons flag now flies at ManeleBay and the Lodge at Koele. On Kauai, investors are breathing new life into a mixed-use project at Kauai Lagoons and plans are in the works for improvements at Princeville.

Quiet Molokai also is grabbing its share of headlines because of plans to upgrade and reopen the Kaluakoi hotel, which has been closed for several years. The list of hotels on Maui wrapping up renovations and upgrades includes the Four Seasons Resort Maui at Wailea and the Hyatt Regency Maui; significant work is also on tap at the Royal Lahaina. Farther north, owner MauiLand and Pine has been elevating its already upscale Kapalua Resort. In the meantime, on the BigIsland, Prince Resorts Hawaii has plans for the renovation and reopening of the Mauna Kea Beach Hotel, and other projects are in the works.

Business Is Good

Hawaii has been experiencing relatively shorter booking windows since 9/11, says Joseph Toy, president and CEO of Hospitality Advisors. This increases the difficulty of predicting where the market is headed, he notes. "Although the three-month horizon has [sometimes] looked soft," he adds, "we have been able to manage inventory such that we fill rooms a month out. With these sellouts, we begin to see a lengthening of the booking window.

"All things being equal, everything that I've read points to a softening and a soft landing," Toy says. "Given the compression of supply, we still should maintain fairly strong rates, but we may not see the phenomenal double-digit rate [increases] we've seen in the past."

Operator Creative Leisure International expects to see its Hawaii business grow in 2007 and 2008 the way it did in 2006, says Dean Johnson, senior vice president of product development. He adds that the company has had big increases in bookings from the Midwest and East Coast markets.

Waikiki's revamped Royal Hawaiian Shopping Center

"The average spending per traveler has continued to increase for Creative Leisure in 2006 and is continuing to increase for 2007, outpacing rate inflation," Johnson says. "My concern is that Hawaii is approaching a point where price is beginning to cause some travelers to choose other destinations. This fall, when the pace of growth in the market began to slow, Hawaii fell behind other destinations such as Mexico and the Caribbean in responding with value-added promotions."

Rick Garrett, president of wholesaler Happy Vacations, says that with Hawaii's finite room supply and high occupancy levels, he expects 2007 to be pretty much a carbon copy of 2006. "Hawaii is already among the most expensive destinations, and the majority of our clients are staying in four-star-plus accommodations," Garrett says. "Those places are raising their rates commensurate to demand, and so the spending per traveler necessarily goes up and up. Of course, as they say, trees don't grow to the sky, so there has to be a limit, and I suspect we'll find it in 2007."

Amy Terada, vice president of marketing at Pleasant Holidays, says the wholesaler's deluxe and luxury bookings continue to show the greatest pace of increase, and its sales of activities are trending upward, as well. She says Pleasant's outlook is positive, and notes the company's return to the Hawaii cruise market with inclusion of sailings on the three NCL vessels serving Hawaii.


Hawaii Visitors and Convention Bureau General: www.gohawaii.com (with links to the various island chapters)

Agent-specific: agents.gohawaii.com (this password-protected site includes information and tools for agents)