{"id":279,"date":"2024-12-13T21:08:27","date_gmt":"2024-12-13T21:08:27","guid":{"rendered":"https:\/\/waileaekahi.com\/blog\/?p=279"},"modified":"2024-12-13T21:08:33","modified_gmt":"2024-12-13T21:08:33","slug":"slow-progress-ahead-for-maui-countys-economy-with-tourism-lagging","status":"publish","type":"post","link":"https:\/\/waileaekahi.com\/blog\/?p=279","title":{"rendered":"\u2018Slow progress\u2019 ahead for Maui County\u2019s economy with tourism lagging"},"content":{"rendered":"\n

By\u00a0Brian Perry<\/a>
<\/strong>December 13, 2024 \u00b7 5:10 AM HST<\/p>\n\n\n\n

With visitors choosing to go elsewhere, Maui County can expect \u201cslow progress\u201d in its economic recovery in the wake of the August 2023 wildfire disaster, according to economics professor Carl Bonham, executive director of the University of Hawai\u02bbi Economic Research Organization.<\/p>\n\n\n\n

\u201cThe recovery is ongoing, and the place we think it\u2019s going to be slowest, besides housing, is tourism,\u201d said Bonham, who spoke with reporters via Zoom Thursday in advance of today\u2019s release of UHERO\u2019s fourth quarter economic forecast for Hawai\u02bbi<\/a>. \u201cAt the moment, tourism is really suffering. And, you know, there was some optimism around the tournament, the (November) basketball tournament. But if you looked at the daily passenger counts, and you just barely could see any impact of that.\u201d<\/p>\n\n\n\n

The UHERO forecast predicts \u2014 in rounded numbers \u2014 2.6 million visitors in 2025, 2.7 million in 2026 and 2.8 million in 2027. Those visitor arrivals compare with other, previously more robust years: 2.8 million in 2017, 2.96 million in 2018, 3.1 million in 2019 and 2.97 million in 2022. (The COVID pandemic year saw 807,308 visitors to Maui County.)<\/p>\n\n\n\n

Aside from visitor arrivals to Maui, hotel occupancy rates have been anemic too, he pointed out.<\/p>\n\n\n\n

In October, Maui County had the lowest hotel occupancy rates in the state at 54.9%, according to the state Department of Business, Economic Development and Tourism\u2019s Hawai\u02bbi Hotel Performance Report<\/a>. Statewide, hotel occupancy rates were 70.4% \u2014 77.5% on O\u02bbahu, 65.7% on Hawai\u02bbi Island and 74% on Kaua\u02bbi.<\/p>\n\n\n\n

The Maui hotel occupancy rates \u201chasn\u2019t been this low in many, many years,\u201d he said. It would be necessary to \u201cjust probably have to go back to, I would say, maybe even the Great Recession, to see occupancy rates this low. And, essentially, what\u2019s going on is just after the residents moved out of the hotels, you know, we haven\u2019t seen the push to bring visitors back in a way that\u2019s adequate to fill the rooms back up.\u201d<\/p>\n\n\n\n

Regarding the vacation rental phase-out proposed by Mayor Richard Bissen, Bonham said UHERO is working on a report on the subject, and he didn\u2019t want to discuss it in much detail. (The report is expected in the first quarter of 2025.)<\/p>\n\n\n\n

However, \u201cit\u2019s not rocket science to know that if you take in 2025, 30% of the visitor plant off of Maui, it\u2019s going to have a negative impact on the number of visitors who are on island and the amount that they will spend. And that will then impact the recovery of Maui employment, of jobs, particularly in areas like food service and retail, in restaurants. These are the places that have been hit the hardest by post-fire loss of visitor spending, and so you know . . . that policy will make available from housing, and it will have an impact on housing costs, and it will also have an impact on holding down job growth and overall recovery.\u201d<\/p>\n\n\n\n

Bonham acknowledged that some visitors would stay in hotels, rather than vacation rentals if they\u2019re unavailable.<\/p>\n\n\n\n

\u201cIf you lose say, 20% of your visitor plant, your accommodations, it doesn\u2019t mean that visitor spending falls by 20%, and that you know, then visitors necessarily fall by 20%; that some of the visitors will switch from short-term rentals to other accommodations.\u201d<\/p>\n\n\n\n

\u201cYou could also have some new short-term rentals popping up in areas where they are permitted, where they\u2019re already permitted in resort areas,\u201d he said. \u201cRoom prices will probably go up, so you would end up with some extra spending for that reason.\u201d<\/p>\n\n\n\n

\u201cSo, yeah, it\u2019s kind of a complicated mess, but it\u2019s pretty hard to come up with any analysis that would tell you that you won\u2019t end up with too many negatives,\u201d Bonham said of forecasting the impacts of a vacation rental phase-out on Maui. \u201cAny way you slice it, you know, even with additional spending because of higher prices and because of people staying in hotels or resort condos that are legal, you\u2019re still going to end up with a decline in spending and therefore some impact to jobs and overall household income. Just no way to avoid that.\u201d<\/p>\n\n\n\n

The UHERO report summarizes Maui\u2019s economic forecast, saying: \u201cVisitor numbers remain subdued, with occupancy rates at historic lows and labor force participation constrained by post-fire disruptions and outmigration. Maui has regained more than half of the jobs lost to the wildfires, but employment remains well below pre-fire levels. Rebuilding efforts will provide ongoing support, but a full tourism recovery is years down the road.\u201d<\/p>\n\n\n\n

The UHERO report says \u201cHawai\u02bbi\u2019s labor market is softening, shaped by both the Maui wildfires and broader national trends.\u201d<\/p>\n\n\n\n

The total number of new hires statewide fell from 74,000 in the first quarter of 2022 to 62,000 by the third quarter of this year. Also, fewer employees are leaving jobs, with job departures down 26% from the first quarter of 2022.<\/p>\n\n\n\n

\u201cThis reduced labor market activity reflects slower economic conditions on Maui since the wildfires, as well as softer overall Hawai\u02bbi economic activity,\u201d the report says.<\/p>\n\n\n\n

It points out that Maui County\u2019s seasonally adjusted unemployment rate has gone down from a high of 8% in September 2023 (a month after the wildfires) to just more than 3% in October.<\/p>\n\n\n\n

\u201cWhile declining unemployment can indicate an improving labor market, in this case it primarily reflects workers leaving the labor force,\u201d the report says. \u201cSince the fourth quarter of 2023, the number of employed workers in Maui County has fallen by 200, while the labor force has declined considerably more, losing 2,700 potential workers over the same period. Some of these workers appear to have relocated to other islands or left the state entirely. Estimates from our Maui Recovery Dashboard suggest that nearly 5% of West Maui residents have relocated to the Mainland or another country. Additionally, 3% have moved to another island within the state.\u201d<\/p>\n\n\n\n

For Hawai\u02bbi overall, the UHERO report\u2019s main takeaway is that there\u2019s \u201cbroad uncertainty\u201d about the impacts of the incoming administration of President-elect Donald Trump.<\/p>\n\n\n\n

\u201cUnder the assumption of policy changes that are sharp but limited in scope, we will see a short-term boost to Mainland tourism and local income, but there will be medium-term supply challenges and an uptick in inflation. State tax cuts will provide local support. Maui rebuilding will add to an already-buoyant construction cycle, even as home affordability woes continue,\u201d the report says.<\/p>\n\n\n\n

The report says UH economists are adopting policy assumptions of \u201climited magnitude.\u201d<\/p>\n\n\n\n

\u201cThe Tax Cuts and Jobs Act will be extended, and the corporate tax rate will be reduced,\u201d it says. \u201cTariff hikes will be more limited and targeted than many expect, resulting in a 5 percentage point increase in the tariff rate. Other countries will retaliate with similar tariff hikes. Through deportations, the administration will be able to reduce the number of unauthorized immigrants by 350,000 per year. The policies as a whole will provide a moderate near-term US economic boost, but will result in higher inflation and slower growth in the medium term.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

By\u00a0Brian PerryDecember 13, 2024 \u00b7 5:10 AM HST With visitors choosing to go elsewhere, Maui County can expect \u201cslow progress\u201d in its economic recovery in the wake of the August 2023 wildfire disaster, according to economics professor Carl Bonham, executive director of the University of Hawai\u02bbi Economic Research Organization. \u201cThe recovery is ongoing, and the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-279","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/waileaekahi.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/279","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/waileaekahi.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/waileaekahi.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/waileaekahi.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/waileaekahi.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=279"}],"version-history":[{"count":1,"href":"https:\/\/waileaekahi.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/279\/revisions"}],"predecessor-version":[{"id":280,"href":"https:\/\/waileaekahi.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/279\/revisions\/280"}],"wp:attachment":[{"href":"https:\/\/waileaekahi.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=279"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/waileaekahi.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=279"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/waileaekahi.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=279"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}