Aftermath of Maui wildfires weighs down Hawaii economy

The ongoing hit to Maui’s economy from the devastating Aug. 8 wildfires will continue to drag down Hawaii’s overall economic forecast heading into the new year.

The Valley Isle will see a welcomed boost from the Sentry Tournament of Champions golf tournament Jan. 4-7 at The Plantation Course at Kapalua, but several Maui conventions have subsequently canceled or delayed their plans through the first six months of 2024, said Lisa Paulson, executive director of the Maui Lodging and Hotel Association.

“Group business is being severely impacted, and that is our bread and butter,” Paulson said. “Group business is what we count on.”

Multiple campaigns are underway to encourage tourism to Maui with the message that the Valley Island wants visitors, including one aimed at local residents, said Mufi Hannemann, president and CEO of the Hawaii Lodging and Tourism Association and a member of the Hawaii Tourism Authority.

“It’s still a long road to recovery, but I’m cautiously optimistic,” Hannemann said.

Some local residents and visitors from the mainland and Japan are still avoiding travel to Maui out of respect for wildfire survivors and a sense that the “timing isn’t right,” Hannemann said.

Instead, Maui and its hospitality workers — including those working for rental car companies, hotels, restaurants, whale-watching tours and others — “across the board need to come back to work,” Hannemann said.

“Yes, people (visitors) have angst,” he said. “But we need to blow a conch shell to send the message that the vast majority of people want to get back to work. It’s the visitor from afar that’s having second thoughts that (visiting Maui) just doesn’t feel right. But we also have to talk to local residents who still may be having second thoughts. We want them to travel and definitely do their staycations on Maui. We want people to go to Maui.”

Some Maui hotels are already offering incentives such as a fifth night’s stay for a four-night booking, along with kamaaina rates. Hannemann said hotel rates after the holidays are also likely to dip in early 2024.

Following the wildfires, Hannemann said, “People ask, ‘How can I help?’ Go visit Maui” and especially support Maui’s ocean recreation industry and golf courses.

Unlike fire relief workers and survivors who continue to stay in West Maui hotels, Paulson said convention travelers to Maui tend to bring their families, book whale-
watching tours and go on group hikes led by companies “that are permitted and do everything by the book and follow the rules. That’s a significant loss for us, and that does concern me.”

Before the global COVID-
19 pandemic that devastated Hawaii’s economy beginning in March 2020, Hawaii saw record visitor arrivals of more than 10 million tourists.

The state Department of Business, Economic Development and Tourism said in its fourth-quarter forecast released Monday that this year it expects 9.6 million visitors, lower than originally forecast. DBEDT forecasts 9.8 million visitors in 2024 before jumping to more than 10 million in 2025.

Gov. Josh Green continues efforts to help wildfire survivors and help Maui recover overall, including repeated visits to Japan to encourage Japanese travel to Maui.

In a statement to the Honolulu Star-Advertiser, Green said:

“This more optimistic short term economic forecast will help us with our near term priorities on housing and affordability. Our fundamentals are good, people love Hawaii and we have been making the right investments in our people’s future, specifically education and healthcare, so we should expect positive developments going forward as well.”

Looking ahead to 2024, DBEDT said it expects a 73.7% increase in Japanese travel for the first six months compared with the same period in 2023, which “is promising given that the current level of air seats from Japan is at 60% of the 2019 capacity.”

The difference in economic performance between Maui and the rest of the state remains “significant,” according to DBEDT.

The “wildfires have had a significant impact on the state’s economy,” DBEDT said. “Between August 2023 and October 2023, visitor arrivals by air to Maui County decreased 51.4% compared to the same period in 2022, reflecting a 52.3% decrease in domestic flight visitors and a 41.3% decrease in international flight visitors. Though declining in Maui County, visitor arrivals on other major islands increased to offset most of the decrease on Maui.”

Between August and October, visitor arrivals increased 12.7% on Oahu, 6.5% on Kauai and 1.9% on Hawaii island.

But the drop in visitor arrivals on Maui meant that Hawaii saw an overall 6.2% decline from August through October. Compared with the same period in 2022, the drop meant that state general excise tax collections fell 1.7%.

In a statement, DBEDT Director James Kunane Tokioka said:

“The Maui wildfires have had clear impacts on our state’s economy. … We encourage everyone to support our local businesses and communities, especially during this holiday season.

“While we see visitor arrivals from the U.S. mainland continue weakening, we expect international arrivals will pick up in 2024,” Tokioka said. “During my recent visit to Japan with Governor Josh Green, we were encouraged by leaders in both the government and private sectors that travel to Hawai‘i will increase in the near future.

For the three months between December and February, total air seats from international destinations are expected to increase by 22.4%. Specifically for Japan, the number of air seats is forecast to increase by 60.8%.

For residents, Hawaii’s population is expected to decrease by 0.2% this year and by 0.1% in 2024, then increase by 0.1% in 2025 and 2026.