Dramatic Decrease in Tourism Spending in Hawaii Affecting Small Businesses

Real visitor spending as of today is actually below where we were in the late 1980s. Hawaii keeps adding more and more visitors, but they spend less and less. A whole slew of different reasons--but mix of visitors has changed the landscape, however, repeat visitors are up, and construction is up which is keeping the economy in balance.

News Release from Liberty Capital Group, Inc.

HONOLULU, Hawaii, Nov. 11, 2024 /PRNewswire-PRWeb/ --  A sharp decline in tourism spending in Hawaii is placing unprecedented strain on the state's economy, particularly affecting small businesses that rely heavily on the visitor industry. Recent data shows that Hawaii is experiencing a drastic downturn in tourism revenue, reminiscent of the late 1980s, with no clear signs of recovery in sight.

"We've lost over a billion dollars in visitor spending, which is a hard hit for the economy," said a spokesperson during a recent economic report. According to the UHERO Report, despite the state's gradual recovery from the pandemic, current visitor spending remains well below historical levels, even as visitor numbers increase. "We keep adding more and more visitors, but they spend less and less," the spokesperson noted (video on UHERO report).

Hawaii's economic resilience is being maintained primarily through government-supported construction projects, including federal contracts for infrastructure improvements. According to the report, construction spending has reached record levels, driven largely by federal investments. "The thickness of that wedge is government contracts," the spokesperson explained, referring to the substantial federal funds being allocated to infrastructure and rebuilding projects on Maui.

However, there are concerns about the future workforce to sustain these projects. Hawaii's natural population growth has declined sharply, particularly on neighbor islands like Big Island and Maui, where population decreases are forecasted. "If we just keep doing the same old thing, our labor force and economy will shrink," the report highlighted, underscoring the importance of diversifying Hawaii's economy beyond tourism.

Small businesses, already challenged by high costs and limited labor availability, are feeling the brunt of these economic shifts. ….

"Our long-term prospects for Hawaii's economy depend on diversifying our industries, improving job opportunities, and making housing more affordable," the spokesperson emphasized. With additional efforts to attract workers, support infrastructure, and create more sustainable economic pathways, Hawaii can better position itself to thrive despite declines in tourism spending. …

read … Full News Release