Hawaii’s economy is poised for a significant recovery over the next six months, as pent-up demand for travel coincides with vaccinations on the mainland and an expected new wave of federal stimulus money in March, two leading Hawaii economists said during an interview with Civil Beat’s editorial board.

“There’s a heck of a lot of money that makes a real difference in basically holding people up while we simultaneously see what we think will probably be an acceleration in the visitor recovery, mostly in the summer,” said Carl Bonham, executive director of the University of Hawaii Economic Research Organization.

Bonham was joined by Sumner La Croix, a professor emeritus of economics at the University of Hawaii, for a wide-ranging interview on COVID-19 and the state economy. Perhaps the most notable theme, which Bonham kicked off with, was the relatively sanguine outlook on the economy for the next several months.

The bottom line: stimulus money plus tourism income will help Hawaii significantly.

“Those two together really paint a much brighter picture in my mind than anything we’ve seen since the start of the pandemic,” he said.

Carl Bonham, executive director of the University of Hawaii Economic Research Organization, said Hawaii needs a better communications plan, especially concerning travel policies and tourism. “No successful business would try to run their business without a solid communications plan,” he said. Screenshot

Bonham tempered his rosy forecast by pointing to things that could hinder a bounce.

The unknown effects of the so-called COVID-19 variants, which some have warned could lead to a new surge of cases in the spring, could affect how much Hawaii’s key tourism industry can rebound, Bonham said. Another risk: that pharmaceutical companies could botch vaccine manufacturing, he said.

But generally, Bonham said, the summer looks bright. Already, he said, February has turned out even better than November, which was boosted by the Thanksgiving holiday and the state’s then-new travel testing program. The program, known as “Safe Travels,” has been a boon to tourism because it lets travelers sidestep a 10-day quarantine imposed on arriving travelers, including tourists and returning residents.

Bonham said February is shaping up to be a strong month, and he expects tourist arrivals to keep growing.

“The February numbers are actually really good,” he said.

He estimated Hawaii’s income from tourism in February would be almost 28 to 29% of 2019’s levels.

“So that’s better than any month since the Safe Travels program began,” he said.

The Valentine’s Day-President’s Day weekend was bigger than Thanksgiving for Hawaii tourism, he said. And spring break is coming.

“As more and more people get vaccinated and the case counts plummet, there’s going to be a much greater willingness to travel,” he said.

One question is when will the state be willing to tweak Safe Travels. Such changes, Bonham said, could include relaxing restrictions on interisland travel, using more readily available rapid tests for travelers and creating a “vaccine passport” that lets travelers who have been vaccinated skip quarantine the way those who have been tested can.

“Let’s say it’s the end of April and we haven’t changed interisland travel rules. Well, then we just threw away weeks and weeks and weeks of potential economic activity,” he said. “That’s my concern with the slow response. We should have very, very hard plans in place for changes to Safe Travels.”

Bonham is fairly certain Gov. David Ige will change the travel restrictions. Ige has been noncommittal on travel changes and has said he wants to see what the federal government recommends on vaccine passports.

“The question is, when is it going to happen?” he said. “Are we one week away, or are we six months away?”

Sumner La Croix, a professor emeritus of economics at the University of Hawaii, said the Summer Olympic Games could help Hawaii by opening Japan to travel. Screenshot

It’s important to get something in place soon to take advantage of the summer bump, Bonham said. That’s because Hawaii’s international markets, especially Japan, have been slow to begin vaccinations, so there might not be as much to fill the void when the summer ends.

“If you look at our major international markets, Canada, Japan, South Korea, Australia, the only one that has been vaccinating for a while is Canada,” he said. “All the other ones just started.”

“And Canada was orders of magnitude behind the U.S. in terms of percentage of their population,” he continued. “So that means that once you get, say, 70% or 80% of U.S. visitors back, there’s no place else to go until you get the international visitors back. And we think that’s going to be a little bit of a lag.”

La Croix said he is optimistic Japan will move quickly to vaccinate its population because it is scheduled to host the Olympic Games, beginning July 23.

“You can only hold the Olympics if you’re opening up travel,” he said. “They might try to do it without spectators. But my guess is they’re still oriented toward opening up travel.”

Finally, Bonham and La Croix both said it’s important to communicate clearly where Hawaii is going, especially concerning travel and tourism.

“The state really doesn’t have a communication strategy, right? Not an overarching communication strategy,” Bonham said. “So that is harmful.”

“No business would behave this way, right?” he added. “I mean, well, no successful business would try to run their business without a solid communications plan.”

But does that hurt the economy?

“I think the biggest place where it can hurt is in terms of messaging around tourism,” Bonham said.

It’s not helpful to have media reports about glitches with Safe Travels that cause travelers to spend their trip to Hawaii in quarantine simply because their negative test result came back late, he said. So tweaking Safe Travels is just one step.

“Not only do we need to execute on them, but we have to communicate them,” he said. “And this is all going to be happening at a time when demand for travel is ramping up.”

Hawaii’s Changing Economy” is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.

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