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How Many Tourists is Too Many?

Posted January 26, 2017 | Categories: Hawaii's Economy, Hawaii's People, Blog

Honolulu Star Advertiser columnist, Lee Cataluna, recently asked: “How many tourists is too many tourists?”1 Apparently, she already knew the answer. To her, the 8.5 million plus tourists coming to Hawaii each year is way too many. She laments that nobody seems to be talking about limiting the number “…like maybe we’ve all become accustomed to being crowded. Like maybe we lost the fight.” Tourists used to stay in designated tourism zones like Waikiki, but now they are everywhere. Indeed, Hawaii Tourism Authority’s (HTA) 2015 study of vacation rental units “show that there were vacation rentals available in almost every zip code across the state.”2 We are receiving record number of tourists, but 2016 visitor spending per Hawaii resident is expected to fall 31% below its 1988 peak, after adjusting for inflation. Cataluna concluded: “It would be one thing if the explosion in tourism meant better living for everyone, nicer schools, cleaner parks, spiffy roads, but we’re getting all the tourism problems without the tourism benefits.”

Recent surveys show a growing percentage of Hawaii’s residents agree with Cataluna. Still, most people in Hawaii “strongly/somewhat agree that tourism has brought more benefits than problems.”3 HTA’s 2015 Resident Sentiment Study noted that 66% of Hawaii’s residents surveyed felt that way. But the percentage of residents who agree with the quote has been slipping in recent years. The percentage used to be in the 70s, going as far back as 1975. However, the percentage of respondents who perceive “Tourism has been ‘mostly positive’ for you and your family,” has slipped quite a bit from 60% in 1988 to 40% in 2015. The less positive responses at the individual/ family level might be explained by the fact that we are much less dependent on tourism than we were 25 to 30 years ago as tourism’s imprint on Hawaii’s economy—measured by its share of the state’s gross domestic product (GDP)--has declined. Tourism’s (direct) share of Hawaii’s gross domestic product peaked in 1988 at 24.7%4; by 2010 it had fallen to 12.3% (16.4% in 2010 if tourism’s indirect effects are included, and 16.7% in 2015).5

The surveys show a more disturbing trend; the majority (58%) of the respondents to HTA’s survey in 2015 agreed with the statement: “This island is being run for tourists at the expense of local people.” The first year this happened was in 2005. Yet, no follow-up studies have been done to find the reasons for the response and hence how to reverse the perception. If residents in growing numbers feel their wellbeing is not the state’s priority in developing tourism, how might that affect the “Aloha Spirit” which is so important to the industry? HTA conducts a resident sentiment study almost every year; I wonder how many people pay any attention to them.

Cataluna is not the first to inquire about Hawaii’s tourism carrying capacity. In the late 1960s and the entire decade of the 1970s, many in Hawaii felt that tourism was growing way too fast.6 The average annual rate of increase in visitor arrivals in Hawaii was 20% in the 1960s and nearly 9% in the 1970s. In response, the Legislature passed Act 133 (The Interim Tourism Policy Act) in 1976 which required the State to craft a 10-year strategic plan to chart the course of tourism development for the next ten years. It became part of Hawaii’s first (overall) State Plan in 1980. In 1980 Hawaii had 3.9 million visitor arrivals compared to less than 300,000 in 1960, and the number kept rising. As the count of visitors approached 7 million in 2000 the 2001 Legislature directed the Department of Business, Economic Development and Tourism (DBEDT) to conduct a tourism sustainability study “to begin looking to how Hawaii can better monitor and manage future growth in tourism.” The $1.2 million study was completed in 2006.7 By then the number of visitors had increased to 7.5 million. Except during the Great Recession (2007-2009), even more visitors would come. Hawaii Tourism Authority (HTA) announces the ever-increasing numbers of tourists with pride since HTA is charged with promoting tourist travel to Hawaii. With the Great Recession, attention has focused more on how to bring more tourists in, and not how to keep them out.

Even if we wanted to, Hawaii has few weapons available to control the inflow of visitors. We can raise taxes on tourism to make it more expensive to visit Hawaii; spend less on tourism promotion; tighten and enforce land use and zoning laws; or make Hawaii a less attractive place for tourists (and, unfortunately, for us as well!) Unlike in some countries, Hawaii cannot (on our own) limit the number of people who can travel to Hawaii. An entry tax, imposed in many countries, would not be legal here.

Indirectly, Cataluna recognizes that there is no magic number of tourists that’s best for Hawaii. Eight million visitors might be o.k. “if the explosion in tourism meant better living for everyone, nicer schools, cleaner parks, spiffy roads.” We might welcome more tourists if we can increase tourism’s benefits and reduce its problems. In my 2004 book, I discuss some of the tools that can be used to achieve this.8 However, the burden is on us collectively to get it done. Hawaii doesn’t have nice public schools, clean parks and public bathrooms, and spiffy roads not because tourism has failed us, but because we have, for too long, come to accept that nothing works here. Ainokea! A term (meaning “I don’t care”) that columnist David Shapiro once described as “our official state attitude—not only in popular culture but also in officialdom.”9 What state and local governments everywhere are supposed to do well (i.e. the core functions of government), they are not done well here. Limiting the number of tourists won’t change that.

Money, or lack of it, is frequently given as the main reason why things don’t get done in Hawaii or why it takes so long to get things done. The U.S. Census Bureau reports that in 2014 Hawaii’s state and local governments received $14.5 billion in general revenues, or $10,239 per resident.10 (That amounts to nearly $9,300 available to spend on every man, woman, child and tourist present in Hawaii on a given day.) Hawaii ranked 10th among the 50 states and the District of Columbia.11 As a group, Hawaii’s state and local governments are not poor when compared to other states. According to the Tax Foundation, Hawaii has one of the highest state-local tax burden as a percent of state income among the 50 states and the District of Columbia. Why aren’t we getting more for our tax dollars? Some residents who find the “price of paradise” too high choose to leave. Even as more tourists are pouring into Hawaii, there is a net (and growing) exodus of Hawaii residents to the mainland even though the local economy is humming along and structural unemployment is non-existent.12

Lee Cataluna reminds us that in developing tourism the wellbeing of residents must come first. What should be done about tourism’s problems? Rather than trying futilely to limit the number of tourists, a better strategy is to attack the problems directly. That requires leadership and effort.

- James Mak 

1Honolulu Star Advertiser, "Foundering canoe is full already, yet more get in,” January 11, 2017.

2Hawaii Tourism Authority, 2015 Visitor Plant Inventory.

3Hawaii Tourism Authority, 2015 HTA Resident Sentiment Study.

4Andrew Kato and James Mak, “Technical Progress in Transport and the Tourism Area Life Cycle,” in Clement A. Tisdell (ed.), Handbook of Tourism Economics: Analysis, New Applications and Case Studies, 2013.

5Eugene Tian, James Mak and PingSun Leung, “The Direct and Indirect Contributions of Tourism to Regional GDP: Hawaii” in Clement A. Tisdell (ed.), Handbook of Tourism Economics: Analysis, New Applications and Case Studies, 2013; also 2015 State of Hawaii Data Book.

6James Mak, Developing a Dream Destination: Tourism and Tourism Policy Planning in Hawaii, 2008.

7DBEDT, Planning for Sustainable Tourism, Project Summary Report, 2006.

8James Mak, Tourism and the Economy: Understanding the Economics of Tourism, 2004, Chapter 11.

9Honoluluadvertiser.com, “Why you should care about ‘ainokea,’” January 4, 2010.

10U.S. Census Bureau, State and Local Government Finances by Level of Government and by State: 2013-14.

11DBEDT, 2015 State of Hawaii Data Book, Table. 9.11.

12Honolulu Star Advertiser, “Census: Growing exodus of residents to mainland,” December 22, 2016.

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