Future of Hawaiian Hospitality Industry
Paul Brewbaker, a leading Hawaii economist, Frank Haas, an owner of a Hawaii consumer product branding company, and James Mak, a research fellow at the University of Hawaii Economic Research Organization (UHERO) published a research paper on the UHERO website about the future of travel and tourism and what that could mean for the Hawaiian hospitality market and the Hawaiian economy. The authors analyze the post-9/11 travel industry recovery and compare those circumstances to the events currently unfolding as the nation struggles with the COVID-19 pandemic.
During the months after 9/11, many Americans were initially hesitant to travel and many Americans initially avoided iconic attractions with large crowds because those sites were deemed most at risk for a terrorist attack. The paper highlights “researchers have found that people make their travel decisions based on perceived risks rather than actual risks.” The cause of the latest travel industry collapse is different and there are some similarities and differences that the report emphasizes. Most Americans are currently uncomfortable with flying and the level of discomfort rises as the length of the trip increases. That differs slightly from 2001 when flying on a major airline was the concern independent of trip length. While international travel was initially discouraged in 2001, national borders were not closed like they currently are today. Hawaii visitor accounts were still 98% lower in August due to the 14-day quarantine requirements for trans-Pacific flights.
The authors note that working remotely is a viable option for many more people that originally thought as possible and working remotely is expected to triple even after the pandemic is over. The risk and opportunity for Hawaii is that supply and demand may be mismatched for future travel. The most glaring example is that experts expect high demand for vacation rentals, yet vacation rentals are prohibited in most neighborhoods on Oahu. Demand for places that families and guests can stay, work, and play for longer periods of time may increase as working remotely has become widely adapted during the COVID-19 pandemic. The City and County of Honolulu has promoted the development of Waikiki, Ko Olina, and Turtle Bay as tourist centric neighborhoods while prohibiting and aggressively trying to crack down on vacation rentals in residentially zoned neighborhoods. The city’s Ordinance 19-18 passed in June 2019 made it illegal to advertise unpermitted rentals for stays less than thirty days while promising to approve approximately 1,700 bed and breakfast permits as a compromise. The city council recently delayed implementation of the licensing program until the beginning of 2021 and the mayor has prohibited vacation rental operations in his COVID-19 emergency orders.
While the state of Hawaii’s tourism industry is currently bleak, the study may provide some opportunities to entrepreneurial property owners if the trio’s forecast proves true. Furnished rentals with dedicated office space and with high speed internet service that has sufficient bandwidth to work remotely and video conference with colleagues could offer leases of 30 days or longer to families or groups of employees to work remotely while enjoying the natural beauty that Hawaii has to offer. Bookings.com and Airbnb are capitalizing on the growing demand for “workations” by introducing longer stay rates (lower daily rates for longer stays). The type of rental that will attract families or groups is different than the properties that will be licensed under Ordinance 19-18 where a owner-occupant will be allowed to rent two rooms in their home with a maximum number of four guests for stays under 30 days. Therefore, the floorplans that support stays of 30 days or more will have to provide quiet spaces for people to work and children to attend classes remotely. Tim and Tracey have spoken with clients that have come to visit their second homes for several months since they had to work from home and their children’s schools are not currently offering on-campus instruction.
Only time will tell if the authors’ forecast comes true. Hawaii’s tourism industry and economy will suffer if the state fails to effectively adjust to the changes to work, school, and travelers’ tastes that seem that have accelerated due to the COVID-19 pandemic.
Post a Comment