In 2009 Hawaii recorded 6.4 million visitor arrivals. Eight years later the number had swollen to 9.3 million, an increase of 45 percent. During this period the number of units available to accommodate Hawaii visitors increased by only 7 percent, to 80,336.

This imbalance in growth in visitors and places for them to stay has had major repercussions for Hawaii residents, many of them negative. The situation, particularly for those seeking housing, threatens to get worse.

Local tourism officials are quick to point out the benefits of visitor spending in Hawaii, which include the creation of more jobs and tax revenue. The underlying numbers are less convincing.

Hawaii Convention Center wide. 21 june 2016

The Hawaii Convention Center, where the HTA’s offices are housed.

Cory Lum/Civil Beat

Measured in constant (2017) dollars, visitor spending increased by 29 percent from 2009 to 2017, with per-person per-day spending declining slightly, to just under $200. Visitor industry-generated employment is trickier to measure, but jobs in the combined accommodations and food services sector increased by a not immodest 23 percent.

The state Department of Business, Economic Development and Tourism reports average daily visitor census data; in 2009 the figure was 177,900, but by 2017 it had risen to 228,800. Hawaii’s insufficient capacity to house its visitors in traditional facilities (hotels, condo hotels) has led to a rapid increase in the number of vacation rental units (VRUs).

“Priced Out of Paradise,” a recent report by The Hawaii Appleseed Center for Law and Economic Justice, estimates that there are 23,000 VRUs in Hawaii, a number nearly double the one reported by the Hawaii Tourism Authority. The number itself is staggering, since it means a reduction in actual housing supply, increased competition for local residents seeking to rent, and upward pressure on rental rates.

HTA’s inability to get a handle on the state’s visitor infrastructure inventory is troubling. So is its being less interested in considering tourism’s broader impact than in promoting the message that “Hawaii is open for business!”

Look To Japan

The Hawaii Appleseed VRU estimate is equivalent to over 4 percent of the housing units in Hawaii, with 52 percent of the VRUs owned by nonresidents. Owning a VRU can be quite profitable — the report quotes a 2015 calculation that the revenue from an average Airbnb unit is about 3.5 times higher than what a long-term rental unit generates.

When it is planned and coordinated, tourism growth needn’t be deleterious. In 2009 Japan had 6.9 million visits by overseas residents, less than half the number of Japanese resident trips abroad. Eight years later, helped by an aggressive campaign by Japan to attract visitors and stimulate a moribund economy, overseas resident visits had surged to 28.7 million, most of them by first-time visitors. Visitor spending grew by a similar magnitude.

Japan’s success in attracting visitors has been accompanied by the addition of new visitor capacity, with close to 30,000 new rooms being added in 2017, and often sharply higher occupancy ratios. Japan plans to add an additional 80,000 hotel rooms in eight large cities by 2020, a number equal to HTA’s estimate of Hawaii’s total visitor unit inventory.

One gets little sense that there is a plan behind the tourism growth Hawaii seeks beyond sustaining it. We live in a small state with limited capacity. Yet the announcements of new airline routes serving Hawaii get trumpeted in the press, the anticipated growth in visitor spending treated as if it is proof of the state’s unlimited potential and value as a destination.

We live in a small state with limited capacity.

Hawaii relies on repeat visitors. While some are content to retrace previous steps, others seek more diverse experiences outside of traditional visitor destinations like Waikiki, making VRU stays in other areas appealing.

Additional demand for VRUs clearly benefits owners. The degree to which local residents benefit from a thriving VRU market is less obvious.

From 2009 to 2017, the number of housing units in Hawaii increased by just over 25,000, or 4.8 percent. That number differs little from Hawaii Appleseed’s estimate of current VRU capacity. During the same period the combined increase in resident and average daily visitor census was 102,000, a number which points to how big a task, and arguably an opportunity, awaits Hawaii.

The greater the share of the visitor accommodations market VRUs occupy, the greater the need to increase the supply of workforce housing. For a variety of reasons, despite the obvious demand, Hawaii has struggled to build housing affordable for the majority of its residents.

Hawaii’s visitor and housing markets are intricately linked. The visitor industry won’t thrive long-term unless the workforce which supports it can afford to live here. Focusing on accommodating visitors at the expense of housing for residents across the income spectrum is a recipe for failure.

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