Hawaii faces difficult times, with the bottom nowhere in sight
Any doubts about whether Hawaii's new value-driven image is for real can be dismissed when considering GoHawaii's re-tooled tagline: "Discover more of Hawaii for less than you imagined."
November 25, 2008
With no end in sight to its plummeting tourism fortunes, Hawaii is now officially on sale.
“Blow Out!” “FREE! FREE! FREE!” “Hawaii up to 50% off.”
Such are the unabashed fire sales being offered by travel partners this month at GoHawaii.com, the Hawaii Visitors & Convention Bureau’s (HVCB) website.
Any lingering doubts about whether Hawaii’s new value-driven image is for real can be dismissed at a glance by considering GoHawaii’s re-tooled tagline: “Discover more of Hawaii for less than you imagined.”
Some of the offers are jaw-dropping. Pleasant Holidays, for example, offers packages to Oahu featuring three nights with air from $349. Three nights to Maui are promoted with air from $399.
What’s more, some of the deals are available even for the upcoming holiday high season. “I’ve never seen holiday deals like this year,” said Jay Talwar, senior vice president of marketing with the HVCB.
Hawaii tourism officials contend that the value- and price-oriented promotions, fueled in part by millions of dollars in supplemental funding, are helping prevent an extremely challenging tourism environment from becoming even worse. But they concede that even with the budgetary infusion and hard-sell tactics, Hawaiian tourism has taken a hard fall. And they acknowledge that the bottom, never mind a rebound, might not come soon.
“We’re really in uncharted waters here,” observed Joseph Toy, president and CEO of Hawaii-based consultancy Hospitality Advisors.
Noting that the negative impact of economic downturns tends to be magnified for long-haul destinations such as Hawaii, Toy added, “We don’t see a bottom yet.”
Hawaii tourism officials were similarly pessimistic.
“Hawaii is being challenged by the same worldwide economic conditions that other, similar destinations are facing,” said Marsha Wienert, tourism liaison to Hawaii Gov. Linda Lingle. “It seems that every time you turn around, there’s something else put in this pot of challenges.”
The magnitude of those challenges is reflected in recent Hawaii tourism figures. For September, the most recent month for which figures were available, visitor arrivals plunged 19.5% vs. the same month in 2007, to 461,051. Total expenditures by visitors arriving by air declined 15.5%, to $770 million.
Not surprisingly, hotel occupancy also took a hit, dropping 11 points in September, to 63.2%, according to Hospitality Advisors. Revenue per available room averaged $112.67, a 16.4% decrease, said Hospitality Advisors. The average daily rate fell 1.8%, to $178.35.
The slowdown was spread across all key origination markets. Visits from the U.S. West fell 21.5%. The U.S. East was down 26.2%. Arrivals from Japan dropped 19.8%. After six consecutive months of growth, Canada visitation declined 6%.
Wienert said September likely would prove to be Hawaii’s worst month this year. And like other officials and observers, she expressed concern about prospects for the coming year. She added that booking windows have shortened considerably, making projections more difficult.
Talwar said economic conditions had prompted a re-evaluation of Hawaii’s target audience, with a key conclusion being that there is “a shrinkage of the universe of those likely to travel in 2009.” Assessments of this smaller target audience are helping officials focus efforts on those consumers “still likely and able to travel,” he said.
Even as its traditional leisure visitor base is contracting, Hawaii is aggressively courting other sources of visitors. Talwar, for example, spent several days on the mainland this month visiting with partners that include event sponsors, such as the PGA.
But with leisure travel serving as a keystone of Hawaii’s economy, tourism officials and suppliers have taken what some might view as a drastic step: underplaying Hawaii’s traditional dream-vacation allure, which traditionally has helped support high rates, in favor of an all-out emphasis on value and price.
Previously, value “wasn’t a lead story for us,” said Talwar. “All that’s changed.”
As Lloyd Unebasami, interim president and CEO of the Hawaii Tourism Authority, put it, “We’ve gone right into the value message.”
And, he added, “We need to get that word out.”
Unebasami said that value messaging involved a combination of efforts by Hawaii’s tourism organizations, travel partners and suppliers. The Hawaii Tourism Authority’s promotional budget has received rounds of supplemental funding dating to March, including a $12 million boost over the summer. But Unebasami explained that much of the funding turned out to be replacement money: funds added to make up for budget shortfalls resulting from weaker tourism revenue.
Nonetheless, the supplemental funding is helping keep Hawaii’s marketing profile high, especially when coupled with promotions supported by travel partners, Unebasami said. He added that based on the budget supplements already committed, strong marketing spending is assured at least through April or May.
But is all that spending doing any good, given the difficult economic backdrop and declining visitor numbers?
Calling it a “fair question,” Unebasami contended that marketing efforts were generating more interest in traveling to Hawaii than would be occurring without the additional promotional dollars.
“We know there’s more activity when we go out with our campaigns,” he said, citing tracking done on website promotions and inquiry counts from call lines.
Wienert agreed. “We know it’s moved the needle,” she said, though she acknowledged that the impact has been more akin to “slowing the bleeding” than stopping it.
Even as Hawaii continues to buoy its promotional budget, its travel partners and suppliers appear poised to ensure that strong value stories continue into next year. In fact, said Melanie Lucardi, Hawaii and Tahiti product director at Libgo Travel, promotions for 2009 will be more carefully conceived than those appearing now.
Whereas suppliers were unable to anticipate the sharp drop now occurring in Hawaii tourism and found themselves playing catch-up, that’s not the case going into next year.
Suppliers are being much more proactive with contracts for 2009 by increasing inducements such as free meals, room upgrades and resort credits, Lucardi said. Hotels also are reducing the number of nights required to get a free night, which she said could prove especially popular with visitors by enabling them to earn free nights on separate islands during an extended visit.
In addition, she said, “Some of the packages they would typically promote in the low season, they’re now extending in the high season.”
Lucardi said she believed the notion of a lower-priced Hawaii would help. But she added that Hawaii should also continue to emphasize the quality of the experience that has served it so well for so long.
Hawaii, she said, should talk up “what makes it special, what makes it different -- but also affordable.”