Volatile volcano, incomplete information make tourism impact difficult to project

KAILUA-KONA — Deciphering just how much Kilauea’s current eruption has affected Hawaii Island and state economies is nearly as murky a prospect as watching a West Hawaii sunset through the vog.

Tourism boomed throughout Hawaii in April, which saw a 13.4 percent increase statewide in visitor spending, according to numbers released last week by the Hawaii Tourism Authority.

Where those numbers (and tourists) are headed now that Kilauea has turned the corner on a month-long eruption with no end in sight may be another story, however.

The University of Hawaii Economic Research Organization released its county economic forecast Friday, which was tinted with a relatively rosy hue.

The job market is strong, nationally and across the islands. Unemployment is down. Global economic strength and a new American tax policy have put more money in more pockets, facilitating travel to Hawaii from both home and abroad.

And with more seats flying into the state than ever before, airlines are equipped to accommodate.

The current eruption, though, has closed Hawaii Volcanoes National Park, Hawaii Island’s biggest tourist attraction. Tourists have grown leery of lava and apprehensive about air quality — resulting in lost bookings that have equated to a direct economic loss in the millions for the Big Island, in May alone.

Despite that, UHERO isn’t projecting a significant economic downturn statewide. At least not yet.

“The growth rates were set to be so large, rates in the double digits, that if we get a pause, as long as it’s not the 50 percent loss of business that some people are talking about all summer long, the Big Island will weather this,” said Carl Bonham, executive director of UHERO and professor of economics at UH-Manoa.

The 50 percent figure Bonham referred to comes from Ross Birch, executive director of the Island of Hawaii Visitors Bureau, who reported, based on a survey he’d conducted of several lodging and activity companies, bookings on Hawaii Island from June through the end of August appeared as though they could drop by half.

Vacation rentals were hit, as well. Shane Peters of Peters Communications, which handles public relations for Airbnb in Hawaii, said 19 percent of the online platform’s bookings were canceled between May 3 and June 1.

Several tour companies have had to change their itineraries and some that are particularly reliant on Kilauea have already been forced into layoffs, Birch said.

The expected losses for local businesses, however, don’t necessarily mean an overall economic downturn from last year. Because of how massive expected growth was, the impact from Kilauea may simply erase the increase, or even just take a bit off the top.

“I expect them to be pretty flat, if anything,” Birch said of June through August booking numbers compared to last year, “and to be able to go to from there.”

Some numbers already available are actually encouraging. U.S. market arrivals to Hawaii didn’t drop in May, but kept pace with the 25 percent year-over-year growth also witnessed in April.

However, Birch explained that doesn’t account for missed ports from companies like Norwegian Cruise Line, which has skipped dockings on both sides of Hawaii Island.

NCL wrote Saturday in an email to local businesses that it planned to remove indefinitely both Hilo and Kailua-Kona from the itinerary for its ship, Pride of America, “until the situation is back to normal.”

What “normal” entails wasn’t made clear in the email and is hard to guess at, as Kilauea has been erupting to one degree or another for more than three decades.

Birch has estimated that each missed port in Kailua-Kona costs West Hawaii around $175,000 in visitor spending.

U.S. arrivals also don’t factor in Kilauea’s impact on foreign travel, specifically from Japan, the third largest travel market to Hawaii behind the U.S. West and the U.S. East.

Japanese travelers represent much of the increased air travel to Hawaii Island since Ellison Onizuka Kona International Airport (KOA) began welcoming international flights again in December of 2016, and any significant or protracted absence of tourism from Japan will hit Hawaii Island particularly hard.

Tourists from Japan, who Birch said tend to be more sensitive to issues like those associated with Kilauea, accounted for $155.9 million spent statewide in April and had the highest average spent that month at $232 per day.

Bonham said air travel to Hawaii in general, though, is holding up well.

“We’re still seeing strong growth in scheduled air seats … through the summer, up to 30 percent growth in total seats,” he explained. “And if (airlines) are having problems filling them, we know they’re going to discount them, which potentially brings another group of visitors.”

Alex Da Silva, senior manager of external communications for Hawaiian Airlines, wrote in an email that the company has “not felt the need to change our business plans” due to volcanic activity.

Alaska Airlines, though, has held a couple of flash sales, offering one-way trips to Hawaii Island for under $200, and as little as $149, at different points over the last month.

“Right when all the activity started with the volcano, we definitely received a lot of calls in regards to concern and requests for cancellation,” said Daniel Chun, director of sales, communications and public relations for Alaska Airlines. “We did see some softness in regards to booking. It was more immediate bookings through the middle part of June.”

Bonham warned even if airlines keep seats filled, that good news for the state may not mean exactly the same for Hawaii Island.

Travelers may be flying into Oahu, which still absorbs the majority of the state’s arrivals, and then canceling plans to travel to Hawaii Island. That hit to Hawaii County’s economy wouldn’t show up in statewide arrival data.

All things concerned, Bonham said, the volcano is too volatile and data on lost bookings isn’t uniform or reliable enough to accurately project yet what summer tourism might look like, or precisely how drastically the Kilauea eruption will affect the economies of Hawaii Island and the state.

But, he explained, if Hawaii does see something like a worst-case scenario, now would be the most fortuitous time for such catastrophe to occur, as the job market could absorb those unemployed by the rippling impacts of a natural disaster.

“If there’s a time to have an economic disruption, it’s when you’re growing very robustly,” Bonham said. “Whereas if this had happened back in 2011-12, it could have very easily taken what was a fragile recovery and tipped it back into recession.”