Hawaii’s tourism market has roared back in 2022, with prices in some locations like Maui rising 120% compared to 2019, but this may yet come at a cost to the islands and their communities.
The post-COVID recovery for Hawaii’s local travel and tourism industry is remarkable, with arrivals from the US exceeding even pre-pandemic demand levels. This is creating soaring prices for accommodation on the island, along with increasing pressures on local infrastructure.
We can take a look under the hood of this surge using our proprietary data and deep dive into one of the most remarkable resurgences in modern global tourism.
Hawaii is back with a bang
Given the numbers streaming through the gates of Hawaii’s airports at the midpoint of 2022, you’d be forgiven for thinking that it passed through the pandemic relatively unscathed. However, it suffered just as other destinations, with the state’s tourism authority posting that arrivals to the islands declined by 73.9% in 2020 and visitor days fell by 68.3%.
Given that the industry is the biggest sector in the local economy, this was a major blow and one that it was hoped wouldn’t leave a permanent scar.
It wouldn’t take long for that trend to be reversed, though. In 2021, arrivals to the state rapidly increased, totalling 6.8 million across the year and days rose to 65.3 million. These numbers still represented Year-on-Year (YoY) declines of 34.7% and 27.7%, respectively, but represented a more rapid return to something approaching business as usual than most major global tourism destinations.
Jump forward again to the middle of 2022 and the situation is nothing short of staggering.
Percentage change in Hawaii hotel prices - 2019 vs 2022
Demand for accommodation on the islands has exploded, particularly Maui, pushing prices up by triple digits compared to pre-pandemic.
For Maui, prices exhibit high growth over 2019 levels throughout the year, demonstrating extremely robust demand. However, it reaches a stratospheric peak from March to May 2022, with prices for hotels double what they were in 2019.
Honolulu looks comparatively poor performing by contrast, but in the context of the overall travel industry in 2022 experiencing prices 16% above pre-pandemic levels in March and May, and 24% in April, represents a market in good shape.
The spike in demand has largely been driven by domestic arrivals from the continental US. While international passengers continue to lag behind 2019 figures, tourists from the mainland have steadily increased in number throughout 2022.
From a very small 0.1% YoY bump increase in domestic arrivals to Hawaii in January 2022, this peaks for the year so far in April. In this month arrivals were a quarter higher than in 2019, which clearly coincides with the high point for price increases in accommodation on the islands.
These figures underline how American travellers are letting off pent up demand from the pandemic era by booking trips to archetypal tourist destinations, with Las Vegas and New Orleans also performing well in our data.
Obviously, these prices are driven fundamentally by the underlying supply and demand dynamics. However, it is also relevant to note that hotel strategy is behind this exceptional pricing rollercoaster.
Overall arrivals are not yet quite at the same level as 2019 for the state as a whole, although they are rapidly approaching those numbers and in Maui have exceeded them.
In this context, it shows that hoteliers have been aggressively chasing returns and profitability after the lean years of 2020-21.
Our data shows that there are exceptionally low percentages of hotels in Hawaii offering any discounting on their room rates. This other side of the pricing dynamic shows the importance of competitive set influence and having forward looking data to price confidently.
That forward looking data continues to bode exceptionally well for the hospitality sector in Hawaii.
Even though demand for trips to the islands has been elevated for some time, there continues to be rising interest in flight searches to both Maui and Honolulu according to our search evolution index.
Compared to 2021, searches for flights to Honolulu have more than doubled in 2022 so far according to our index and in the busiest period in the year to date in May 2022, interest has more than quadrupled. Maui is more subdued comparatively speaking, but is firmly in positive YoY territory and it is also worth remembering that there are far more flights from the mainland US to Honolulu, which acts as the main point of entry.
Flight Search Evolution Index
Percentage change in future prices compared to 90 days prior
This continued demand is leading to confident pricing strategies from hoteliers. Consistently hoteliers are pricing their rooms above where they were 90 days ago according to our data. In the period up to August 2022, rooms are typically being priced nearly a fifth higher than they were 90 days prior.
It therefore seems that there is not going to be any let up in passengers descending from the steps of their planes and looking forward to beaches and luaus any time soon.
The return to a healthy tourism market for the state’s most important industry is definitely a cause for celebration, but, this isn’t to say that there aren’t concerns that take a shine off of this sudden turnaround.
In particular, Maui has had to institute water restrictions in 2021 and this year. While tourism is far from the sole factor behind this, it is a thirsty industry to support and one factor that is driving these measures.
The County of Honolulu has also been battling to cut illegal short-term rentals that are mostly targeted at the travel sector. Studies of short term rentals in Hawaii estimate that they now account for a significant amount of the residential property in the state, varying between 5% up to 25% of homes in tourism hotspots.
Some locals have been vocal about their opposition to a return to high tourism numbers and there is potential that exceeding the previous levels of 2019 will once again bring into question the issue of overtourism on the islands.
Hawaii will need to try and manage this new tourism landscape for the better - turning this exceptional demand into not just high-performing hotels, but a better relationship between travellers and locals.
Using OTA Insight’s predictive market intelligence hoteliers can break down and analyse market conditions, and visualise future demand for their region.