State economists believe travel to the state could nearly return to 2019 levels by the end of this year, but a complete recovery will take more than three years.
At a Monday meeting of the Hawaii Senate Ways and Means Committee, Eugene Tian, economic research administrator for the state Department of Business, Economic Development and Tourism, and Carl Bonham, executive director of the University of Hawaii Economic Research Organization, described the economic challenges facing the state in 2021 after nearly a year of the pandemic.
While fallout from the COVID-19 outbreak slashed the total number of visitor arrivals to the state in 2020 to only 27% of 2019’s total, Bonham said an optimistic projection for the state’s economic recovery could see tourism numbers return to 80% of 2019’s total by the end of this year.
Bonham added that a more pessimistic projection would see visitor numbers only increase to 50% of 2019 levels, but said he was more inclined to believe recovery will be on the higher end of that scale.
The primary driver of that recovery will naturally be tourism, Bonham said.
As COVID-19 vaccines continue to be distributed throughout the country, more travelers will return to Hawaii and stimulate the state’s struggling economy. However, he added, the early months of this year likely will be dismal even compared to 2020, as the effects of the pandemic were not felt until the spring of last year when the lockdowns began.
The number of visitors to the state has been steadily increasing since the launch of the Safe Travels Hawaii program in October. Tian said the number of visitors to the state immediately after the program’s launch was about 16% of visitor totals during the same period in 2019, and last month had 29% of December 2019 arrivals.
A preliminary DBEDT forecast predicts that a little over 6 million travelers will visit Hawaii this year — a significant drop from the 10 million in 2019, but more than double the number who visited last year. That same projection predicts that visitors will spend $10.5 billion.
However, the projection does not foresee visitor rates matching, let alone exceeding, 2019 levels within the next three years.
In 2022, the forecast reads, arrivals will increase to 7.6 million, and again in 2023 to 8.7 million. Visitor expenditures are predicted to rise as high as $15.2 billion by 2023, falling short of the $17.8 billion spent in 2019.
Similarly, the state unemployment rate is expected to decrease to 7.9% by the end of this year — compared to 11.2% at the end of 2020 — but will not come close to the 2.7% rate in 2019 even by the end of 2023.
While unemployment has risen and Hawaii’s economic output has decreased, Bonham said the state had a spike in average personal income, which he attributed largely to unemployment insurance, the federal Paycheck Protection Program, federal economic stimulus payments, and other COVID-relief programs.
According to DBEDT data, total statewide personal income rose from $81.6 billion in the third quarter of 2019 to $91.8 billion in the first quarter of 2020, corresponding with an enormous spike in unemployment claims last spring. By the end of 2020’s third quarter, total statewide personal income was still higher than the previous year’s, at $87.5 billion.
Meanwhile, the number of jobs lost to the pandemic has decreased from about 130,000 to “only” about 100,000, Bonham said.