While the data released for 2022 is only through October, the trends are starting to stabilize. 2022 will be the best year financially Hawaii has seen as far as tourist expenditures outpacing 2019 by 8%. While this may sound positive, it is mostly the result of inflation. Visitor arrivals are down 10% from 2019, which was the best year Hawaii had previously seen. In looking at forecasts for 2023 by accredited sources, due to the varying forecasts 2023 seems as though it will be an interesting year.
Hawaii is estimated to see a total of 9.3 million visitors in 2023 and 9.8 million in 2024. While on the surface that sounds positive there are several questions that come to mind if it will be possible.
The first is can Hawaii handle service that many people? If you talk to any tourism related business finding employees is still extremely difficult and the unemployment rate in Hawaii is at 3.6%, which is over 1% higher than in 2019. Hawaii has also seen a decrease in population from 2022 as opposed to 2019. When you put those two factors together, it will be hard for the State of Hawaii to handle an increase in tourism.
The second is can the airlines handle an increase in tourism to Hawaii and will the pricing structure be favorable for visitors. Currently the answer to both of these is no. Currently airline prices are up 36% as opposed to last year when everything was in favor of tourism and up 9% as opposed to 2019. Looking forward, many experts believe the flights will increase even more just based on supply and demand. The airline industry is having issues on several levels that play a role in this. First, there are safety issues with the Boeing 737 and 787, which is keeping more planes grounded. Second, due to the first issue as well as overall demand there is a need for more planes. Due to unemployment issues, there are over 7,200 planes backordered. Third, there is still a shortage of airline employees.
How does all of this effect my vacation rental in 2023?
The first quarter of 2023 looks to be our strongest quarter we have seen. Most of the people that travel in this quarter will come regardless of economic factors unless they get really bad.
The summer is when many of these factors may come into play. We do have a decrease in occupancy for the summer of 2023 as opposed to this time last year for the summer of 2022 by 6%, but we do have an increase in rental prices of 11% so it is still favorable at this point.
We have had an increase number of people not willing to book this far out until they can find better airfare rates. Typically in the vacation rental and hotel industries when flights steadily increase, the rental rates steadily decrease. This is already happening in the hotel industry.
With so many factors out there it is hard to guarantee anything, but we do expect 2023 to be a good year probably within 5% of 2022.