Here's Why Business Is Down to Hawaii This Summer — And How Marketing Clarity Could Help

Despite a fierce legislative push earlier this spring gunning for the complete dissolution of the Hawaii Tourism Authority (HTA) — and no dedicated funds set aside for its continued operation in the state budget  — it now appears the HTA will be around for at least one more year. 

Josh Green, governor of Hawaii, announced earlier this month that he and senior members of the legislature’s leadership agreed on a compromise to fund HTA for the next fiscal year — although exactly how much money will be set aside for the tourism organization, which oversees the state’s visitor promotion efforts, has yet to be decided. 

Following the governor’s funding compromise announcement, the HTA board decided last week to move forward with plans to announce the awardees of its lucrative but separate U.S. marketing and destination management contracts — a pair of multi-year agreements worth more than $66 million — later this month. 

“HTA has been assured by the governor and legislative leadership that funds will be available to contract for destination stewardship in Hawaii and for marketing and visitor education in the U.S.,” said T. Ilihia Gionson, the HTA’s public affairs officer, in an interview last week. “And the award of those two procurements is scheduled for May 22.”

Business to Hawaii Has Been Down

That news was applauded by Melissa Krueger, the CEO of Classic Vacations, who said,  “we can see that the lack of marketing to the destination is taking its toll.” 

Classic’s business to Hawaii is down double digits year-over-year on a percentage-point basis, Krueger added.

So, any help that HTA can give to marketing the destination in the next 30 to 60 days is critical and timely.

“Feedback from our partners is that summer pace is down significantly,” she said. “So, any help that HTA can give to marketing the destination in the next 30 to 60 days is critical and timely.”

Jack Richards, the CEO and president of Pleasant Holidays, was also happy to hear that HTA has received funding assurances from the governor and plans to announce the awardee of its U.S. branding and marketing contract later this month. 

Richards said the current pace for Pleasant’s 2023 summer business to Hawaii is already off 25% to 30% from last year.  While he described the HTA’s plan to name a U.S. marketer as an important first step, Richards was not as bullish as Krueger on the short-term value of the move.

I just don’t see them having a material impact on the summer 2023 season, so we’re marketing the destination on our own, and we’re trying everything we can to salvage the summer because our Hawaii bookings are significantly down year over year.

“I think the impact for the peak summer season will be very little because they’re so late,” Richards said. “If you’re going to award the contract by May 22, by the time you get all the I’s dotted and T’s crossed, you’re probably into June. …  I just don’t see them having a material impact on the summer 2023 season, so we’re marketing the destination on our own, and we’re trying everything we can to salvage the summer because our Hawaii bookings are significantly down year-over-year.”

What’s Slowing Hawaii Sales?

Kari Mollan, a longtime Hawaii seller and a Stellar Travel advisor in Bellevue, Wash., said she’s been busy booking trips lately, but she’s not sending many clients to the Aloha State. 

“I have done very little Hawaii in recent months, sadly,” Mollan said. “And I think it’s just because the prices are inflated at the hotels.”

Kathy Takushi, owner of Captivating Journeys on Maui, said her inbound business to Hawaii is down 25% from last year and, like Mollan, she attributed that substantial drop to soaring room rates across the Islands, and especially on Maui.

It’s just super expensive — rooms in Wailea [on Maui] start at $1,000 a night. I’ve been saying to myself for a while: ‘They’re going to price themselves right out of the market.’

“It’s just super expensive — rooms in Wailea [on Maui] start at $1,000 a night,” Takushi said. “I’ve been saying to myself for a while: ‘They’re going to price themselves right out of the market.’ I’ve heard a little feedback from my hotel friends that they’re starting to see that. Nobody wants to be the first to drop pricing, but someone is going to have to make the first move.”

Through the first quarter of this year, average daily room rates (ADRs) across Hawaii were up 8.4% year-over-year, but had jumped 33% over the same three months in 2019, according to the HTA’s latest Hawaii Hotel Performance report. ADRs on Maui for Q1 2023, meanwhile, were up 7.5% year over year, but jumped nearly 49% over the same three-month period in 2019.

Still, Mollan and Takushi were both pleased when news broke about the HTA being assured funding by the governor, largely because the two advisors rely heavily on the state’s current U.S. brand and marketing contractor, the Hawaii Visitors & Convention Bureau (HVCB).  

“A place is needed for those of us in the travel advisor community to go and be able to get resources,” Takushi said of the current work HVCB does to provide North American advisors with training and sales tools, as well as keeping travel sellers up to date on key changes in the islands. 

“And they promote Hawaii in the right way, too, encouraging and educating visitors about being mindful,” Takushi added. “I send the mindfulness videos they’ve produced to all of my clients coming this way.” 

Hawaii tourism stakeholders won’t know until May 22, however, if the HVCB will be awarded the U.S. branding and marketing contract, which is worth $38.3 million over two and a half years. 

Who will be tasked with that responsibility has, of course, been quite a saga over the past year and a half. HVCB was the awardee in December of 2021, but subsequently lost the contract in late spring of 2022, following a protest by competitor Council for Native Hawaiian Advancement (CNHA). HVCB filed its own protest later last summer, which ultimately resulted in a decision by state officials to launch an entirely new contract Request For Proposal (RFP) process that HTA officials said last week they intend to wrap up this month. 

Pleasant’s Richards made it clear he supports the HVCB’s current effort to land the U.S. branding and marketing contract, pointing to the organization’s extensive experience and long running track record of marketing success. But like Mollan and Takushi, he said the current cost of a Hawaii vacation is a larger concern right now. 

“There’s no question we’re getting a lot of pushback on the pricing,” Richards said. “I don’t think Hawaii tourism is down from a lack of marketing. I think it’s down because of high prices.” 

Classic’s Krueger offered a slightly different view, however, indicating she’s seen ADRs come down 10% to 15% year over year at some of the luxury wholesaler’s Hawaii hotel partner properties. And she believes an increase in marketing that touts those price changes could move the needle for this summer’s peak season bookings.

“With the ADRs being so high, it’s caused some of the advisor community and some of the consumers not to circle back on Hawaii, and we need to let them know the hotels are ready,” Krueger said. “Our May data indicates bookings to travel for Hawaii has now decreased to 48 days. … And if the [HTA U.S. marketing] funds become available quickly, my industry peers and I have a chance to make an impact for the upcoming summer months.”