How Pricing of Vacation Packages Has Affected Hawaii's Economy

Hawaii Vacation Packages

Hawaii's visitor numbers are continually improving and the volume of Hawaii vacation packages sold by travel agencies, airlines, hoteliers and destination marketing companies is growing. Tourism, Hawaii's number one industry, is leading Hawaii's recovery out of the recession.

A recent survey done by Hospitality Advisors, LLC shows steady improvement in Hawaii's tourism. The company found statewide hotel occupancy averaged 75.7 percent in August 2010, a 6.3 percent increase over comparable period last year.

These numbers are also reflective of the growing confidence of airlines that serve the Hawaii market. Hawaiian Airlines is expanding its routes both domestically and internationally, most recently adding a flight from Las Vegas to Maui as well as launching service from Japan and from South Korea within the next few months. Alaska Airlines is expanding its routes to Hawaii; while Allegiant Air will be launching service to Hawaii from smaller cites on the US mainland, starting in 2011.

This recovery, led by improvements the state's ability to sell air travel, hotel rooms and Hawaii vacation packages overall, is helping to keep the state's unemployment rate figures down. Hawaii's unemployment rate currently stands at 6.4 percent, while the US national average rate stands at 9.6 percent. This is in dramatic contrast to other destination areas like Las Vegas, where unemployment is currently around 14%.

However, some are arguing that the news is not all that good for the Hawaii visitor industry by citing average room rate prices continue to be relatively unchanged. They claim most visitors to Hawaii book their holidays because they are attracted by heavily discounted pricing and that such discounts on Hawaii vacation packages are not good for the tourist industry in general, presumably because airlines, hotels and car rental companies are making less money.

Others believe that discounted Hawaii vacation packages are good for the tourist industry as a whole and that those who focus exclusively on the average price of a Hawaii vacation packages are missing the big picture. An increase in the sheer amount of tourists is beneficial to Hawaii because more packages are being sold and because of the spin-off benefits in other part of the economy served by the travel market. This includes increased spending on meals, souvenirs, tours and activities and so forth.

There's another important argument in support of the benefits of maintaining lowered pricing on packages, at least for the time being. Due to the recession, other major tourist destination areas that compete with Hawaii, like Florida, the Caribbean and Mexico, are struggling to maintain their share of the "fun and sun" market. As we head into the peak winter season, these traditional competitors to Hawaii are under a lot of economic pressure to lower their own vacation package pricing even more so than they are right now. So any increase in Hawaii vacation packages could exacerbate tourist losses to these alternative destinations to Hawaii.

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