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Tourism And Its Discontents

In 1993 Hawaii welcomed 6,070,995 visitors. Among them were me, my spouse, and our daughter, then 5 months old. We also contributed to another statistic — the 2,212,129 visitors who arrived in Maui that year.

Our first trip to Hawaii acted like a gateway drug. We were enchanted. But we were also practical. On subsequent trips we visited other islands, slowly exploring the idea of relocating from Tokyo.

We eventually did so a decade later, by then a family of four, lured by the opportunity to raise our children in a welcoming and multicultural environment. We bought a house on Oahu from a couple needing to downsize after having raised two daughters who had left the state to pursue their own careers.

Hawaii became our home.

While much has changed since 1993, Hawaii’s appeal as a destination and place to live has not. When our daughters moved on, we downsized as well. The Makiki condo tower where we now live is mostly occupied by owners, with some of the units occupied by long-term renters, many of whom have also downsized.

I include this detail about where we live, surrounded by other families also content to approach or enjoy retirement, because at first glance we are largely untouched by an industry that so dominates discussion today — tourism.

The reality is that Hawaii remains hugely affected by and reliant on tourism. In one way or another, we all are.

Like New Year’s resolutions, plans to diversify the economy beyond tourism seem to get mentioned annually and have similarly fleeting impact. A first step in reducing that reliance, if it is possible, is to better understand tourism’s components and impacts.

Repeat Visitors

Because economists are still struggling to gauge the effects of the coronavirus pandemic, this analysis employs 2019 visitor data as a benchmark. The fact that 2019 saw Hawaii visitor numbers exceed 10 million for the first time is significant, but so is another reality: over 68% of visitors to Hawaii were repeat visitors. The figure for repeat domestic visitors approached 72%.

This ability to attract repeat visitors is hardly new — it certainly describes my family’s experience before we finally moved here.

In 2019, visitors spent $17.8 billion in Hawaii, a remarkable figure and one which excludes the costs of getting here. It also doesn’t include the money invested in the businesses that support tourism.

Reducing visitor numbers isn’t a recipe for increasing visitor spending; complicating the construction of new visitor capacity or renovations isn’t either. Limiting hotel construction and renovation, as Maui County has proposed, misses an important point: statewide, only 42.8% of 2019 visitor spending was on lodging. Food and beverage spending accounted for 20.8% of the total, shopping 13.3%, transportation 9.7%, and entertainment and recreation 9.1%.

As Covid has already shown, reduced visitor numbers and spending will ricochet throughout the service economy, reducing both jobs and revenue longer term.

Industry Infrastructure

A less obvious part of our reliance on tourism involves property taxes. Because each county uses different property designations and tax rates, calculations of reliance levels differ. Properties which cater to visitors account for an outsized share of property tax revenues statewide, but it is most extreme in the two counties which rely most on visitor traffic.

Hotel and resorts, time share properties, and short-term rental units together account for 40.4% of Kauai property tax revenue, based on the most current valuations. For Maui the level is 54.6%.

Put differently, visitor industry infrastructure is doing much to fund county activities.

One other metric makes the visitor industry’s impact frighteningly clear: dividing visitor spending in each county by resident population. In 2019, spending in Kauai came to $26,406 per resident. For Maui, the level was $31,616. The numbers for Oahu and the Big Island are less striking, but they are significant, and no county faces a situation where increased spending by residents will offset a significant reduction in visitor spending.

The tourism industry affects us all. It had a role in many of us coming here. Less obviously, it supports the state’s finances.

While we often point to jobs created, its impact extends much further. We’re lucky to live Hawaii, but lucky to be living in a place that attracts visitors as well.

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