Published by the University of Hawaii Economic Research Organization, the study looks at the steps Hawaii’s state and local governments have taken to control the COVID-19 virus and offers predictions of how Hawaii’s economy might come out of the stagnation resulting from stay-at-home orders and travel restrictions that have shut down vast parts of Hawaii’s economy.
The study, by Sumner LaCroix, a UH professor emeritus of economics, and Tim Brown, a senior fellow with the East-West Center, looks at two main phases: a restarting of the non-tourism economy and the restart of tourism.
The visitor industry is the state’s largest single private sector employer, which before the COVID-19 crash provided some 112,000 jobs in the food service and accommodations sectors out of a total of about 655,000 non-farm jobs in Hawaii.
UHERO expects the total number of jobs in the state during the first quarter of this year to be about 140,000 lower than the same period last year. And a big chunk of those losses are expected to come from shuttered and empty hotels and restaurants that have been reduced to serving takeout only, if they’re open at all.
The more pessimistic view is the frozen tourism industry could take up to 18 months to begin thawing out.
And the more optimistic view?
“Tourism can resume very quickly if Hawaii is perceived as a safe place,” Carl Bonham, UHERO’s executive director, told the Hawaii House Select Committee on COVID-19 Economic and Financial Preparedness on Monday during a morning briefing.
If that happens, Bonham said, “Hawaii could be the premier destination for U.S. travelers over the next year.”
Bonham’s remarks echoed those of the UHERO report, which says a key to showing Hawaii is safe is a system that could test visitors using methods that would have to be scaled up quickly. These include so-called antibody tests that could show whether a person already had the virus and recovered, as well as rapid antigen tests that detect whether the person is carrying the virus.
“Tourism could resume quickly if two necessary conditions are met: (1) Potential tourists perceive Hawaii to be a safe place to visit and (2) Hawaii residents can be assured tourists are free of the coronavirus,” UHERO said in the report.
Gov. David Ige agreed in principle, but with caveats.
“Clearly testing in the future is the answer for us to restart the economy much, much quicker,” Ige said on Monday, during an afternoon news conference, in response to a question about UHERO’s proposal. “But those tests have to be proven to be accurate and reliable.”
Still, much has to happen before Hawaii is ready to roll out the welcome mat again for tourists, UHERO predicts.
First, governments will have to loosen stay-at-home orders, and local businesses will need to open up again, the study says. Some will find it easier than others: businesses that serve large groups, like restaurants, will have to adapt, UHERO predicts. But so will most others.
“We anticipate that almost all businesses will reorganize operations at least to some extent to increase the safety of customers and employees,” the study says.
And the challenges also will likely spur innovation.
“At the end of the day, the demand for additional safety measures by workers and consumers will be a drag on the Hawaii economy that could persist for several years,” UHERO predicts.
But it adds, “In the longer run the changed circumstances of firms, customers, and workers will encourage waves of innovation that will place the economy and society onto paths unknowable today.”