It's tough being a hotelier in Hawaii. Sure, you're living in American Paradise, but the vagaries of the marketplace make it impossible to forecast where your business is headed. Consider these recent development that dramatize the ups and downs of the Hawaiian tourism industry:
• In late February, the Hawaiian legislature passed and Gov. Neil Abercrombie signed a law allowing same-sex and heterosexual couples to enter into civil unions. The law is bound to have a positive effect on the state's tourism business as potentially thousands of lesbian, gay, bisexual and transgender couples hold their civil union ceremonies in the state. One study from UCLA says the law change could have an economic impact for the state of up to $50 million in the next four years.
• Just 16 days later, a massive earthquake hit Japan, followed by a devastating tsunami and then the ongoing crisis at multiple nuclear reactor facilities in the country. The tsunami even had a direct, but minimal effect on Hawaii, hitting the Big Island and closing several resorts and other facilities. Not surprisingly, the state saw an immediate and significant drop-off in the number of visitors from Japan, a trend that probably will continue for the foreseeable future.
The state's tourism authority reacted immediately, announcing a $3-million marketing plan to drive more business from Japan, other Asian countries and even the mainland U.S. Hawaii has reason for concern, given that 1.2 million Japanese visit the islands on the average year, accounting for 18% of the state's tourism revenues.
Unfortunately, given its geographic isolationism, Hawaii will probably always be susceptible to political and natural forces in its feeder countries. The only answer may come from other parts of Asia. The growing and potentially massive middle classes in China, India and other emerging economies may someday ease the island's reliance on Japanese tourists. Once that happens, disruptions in one feeder market shouldn't be as crippling as they are today.