Hawaii’s tourism and hospitality industries have had to paddle hard to navigate the waves of both travel demand and COVID during the past two years. As COVID numbers recede and the spring and summer travel seasons approach, there is optimism for a full rebound of tourism to the islands.
Signs of a recovery were evident in fourth quarter hotel performance data, and hoteliers hopes have been buoyed by the state government's decision to relax COVID-related restrictions.
Oahu’s hotels in the fourth quarter of 2021 achieved revenue per available room of $145.39, based on 59% occupancy and average daily rate of $246, according to data from STR, CoStar's hospitality analytics firm. While those figures still lagged full-year 2019 performance — when Oahu’s RevPAR was $202.62 and occupancy was 84% — Oahu’s fourth-quarter RevPAR more than tripled from a year earlier and was the country’s third-highest behind New York and Miami.
“There have been ebbs and flows of business the last couple of years. It’s one of the things that’s been very difficult for the industry,” said Jeff Wagoner, CEO of Outrigger Hotels and Resorts. “But we’re in the mode where things are starting to pick up a little bit. The summer will propel us to get back to some normalcy.”
For the past year, Wagoner has helped lead a group of hoteliers in the Hawaii Hotel Alliance, an advocacy group focused on issues such as the state government’s travel restrictions and COVID protocols as well as pre-COVID concerns such as illegal vacation rentals. The group's members represent about two-thirds of the state's hotel rooms.
Earlier this month, Hawaii's government announced it would not require inbound travelers to show proof of COVID-19 booster shots, and today, Hawaii Governor David Ige announced the state will end rules requiring travelers to quarantine for five days beginning March 26. Ige cited decreasing COVID cases in relaxing the rules.
Hawaii Tourism Authority President and CEO John De Fries praised the governor's decision to relax restrictions when he announced a change in vaccine rules in early February.
“Today’s decision by (Hawaii) Governor (David) Ige strikes a good balance between protecting public health and safety, and continuing the recovery of our economy which supports so many of our kamaaina families," De Fries said in a Feb. 8 statement. “While booster shots are not required to travel, we encourage visitors to stay up-to-date on their COVID-19 vaccines, wear their masks, and travel responsibly throughout our islands.”
Hawaii appears to have addressed COVID slightly better than the mainland states. Whereas about one in four Americans have caught the virus, about one in six Hawaii residents have contracted COVID, according to data compiled by The New York Times. And as of Feb. 23, the seven-day average of new COVID cases in Hawaii was slightly less than that of the U.S., where the seven-day average of new cases was down almost 90% from the Omicron-fed peak of mid-January.
Still, balancing public health and tourism has been a source of contention between the state government, hoteliers, restaurateurs and residents since the pandemic began just months after the state welcomed an annual-record 10.4 million tourists in 2019. Tourism accounts for more than 20% of Hawaii’s gross state product, compared to approximately 8% of gross national product in the U.S.
COVID-19 precautions have significantly curbed travel to Hawaii. The first wave of the virus forced the state in March 2020 to enact a mandatory 14-day quarantine on all inbound travelers that lasted until October 2020. By that holiday season, the coronavirus surge in California had practically eliminated one of Hawaii’s most valuable feeder markets, and the state finished 2020 with just 2.72 million inbound tourists.
“Between March and October (2020), most hotels shut down operations,” said John Berean, a director at hotel-consultant HVS who splits time between San Francisco and Hawaii. “I can only think of a handful that stayed open, and they were accommodating the national guard and FEMA response.”
In 2021, as the number of new COVID cases receded from a January peak, inbound tourism numbers surged throughout spring and summer, and hotels ramped back up operations amid social-distancing requirements and capacity limitations.
Meanwhile, travel demand wasn’t evenly distributed.
In Oahu, tourism providers coped with a dearth of higher-end inbound travelers from Asia due to travel restrictions, while tourism on neighboring islands, where mainland U.S. travelers account for about 80% of tourism dollars, was challenged by rental-car shortages and reservation requirements for non-resident visitors to some of the national parks.
Then, as COVID’s Delta variant was spiking last August, Hawaii Gov. David Ige hit the brakes on get-togethers by limiting social gatherings to a 10-person maximum indoors and a 25-person maximum outdoors. Two weeks later, Ige called for “all residents and visitors alike to restrict travel, curtail travel to Hawaii to essential activities only.”
In October, Ige reversed course and opened the islands up for non-essential travel.
“Our hospitals are doing better, and we have fewer COVID patients in them," Ige said. "Most importantly, our health care system has responded, and we have the ability to move forward with economic recovery.”
Inbound tourism rebounded in 2021 to 6.78 million visitors.
“Over half of the [restaurant] businesses couldn’t pay rent during COVID. They were literally limping along,” said Hawaii Restaurant Association incoming chair Ryan Tanaka. “In June and July, everybody had blockbuster numbers. By September and October, we were back to square one.”
Wagoner said he wants to ensure the safety of travelers moving forward and hopes the worst of the crisis is in the past.
“There were comments that did create a lack of travel coming into the islands,” said Wagoner, whose company opened its Outrigger Kona Resort and Spa last August. “There’s a balance. We want people to be safe, but we think there’s a way to travel and be safe.”