Economic Warning Signs From Coronavirus Already Appear In Islands

Mar 4, 2020

There are still no reported cases of the COVID-19 coronavirus in Hawaii. But a spate of canceled events and falling visitor numbers from abroad indicate the virus is creating economic headwinds. 

Major public events like the Honolulu Festival and the Festival of Pacific Arts & Culture have already canceled or postponed their dates for 2020.

Pop star Mariah Carey canceled her March concert at the Blaisdell Arena, citing global travel restrictions in the wake of the coronavirus outbreak as the reason. The promoter already confirmed she’ll be back for a Christmas show in November.

The global spread of COVID-19 began in Wuhan, China, and one of the first places in Hawaii to feel the effects of the global disruption was Honolulu’s Chinatown.

Chu Lan Shubert Kwock, president of the Chinatown Business & Community Association, says customer traffic to merchants in Chinatown is down 30% to 50%.

“We already had four or five big association events cancel. In some business, like restaurants, when we go, they’re empty,” Shubert Kwock said.

Honolulu Mayor Kirk Caldwell, in a public appeal, asked to Oahu residents to continue shopping in Chinatown, highlighting locally grown produce for sale. Caldwell called fear over catching COVID-19 in the neighborhood “unfounded.”

That effort does not appear to have produced a change in behavior. Two weeks later, Chinatown streets are still uncommonly quiet and Schubert Kwock says business owners are starting to worry about making the rent.

Those problems may soon extend to businesses outside of Chinatown.

Roger Dow, CEO of the U.S. Travel Association, says a predictive index from the industry group is forecasting a 6% decline in international visitors to the United States over the next three months. That would result in losses to the domestic travel industry of around $3.8 billion nationwide.

International arrivals to Hawaii.
Credit DBEDT

Dow adds that data from airline and hotel bookings indicate that decline is already underway. That is confirmed by data collected by the Hawaii Department of Business, Economic Development and Tourism. DBEDT’s twice-weekly count of airline passengers shows a nearly 23% drop in international arrivals, compared to the same week in 2019.

The decline is similar for visitors specifically coming from Japan, Hawaii’s most important foreign market for tourism and the third most significant source of both visitor arrivals and visitor spending.

However, there is good news. So far, the decline has been limited to international travelers.

Two-thirds of visitor spending in Hawaii comes from domestic travelers, separated into U.S. West and U.S. East by statisticians.

The Travel Association says domestic travel within the U.S. is still on a growth path. But Roger Dow says that may soon change.

“Coronavirus began to show itself in the United States just recently, so I expect we'll probably see a bit of a decline in domestic. Fortunately, we're ahead of their very busy travel season for leisure, which is April, May through September.”

If that important travel season is impacted by the COVID-19 outbreak, it will have ripple effects across the state.

Hawaii’s nearly 10 million annual visitors have a major impact on residents’ livelihoods and the financial health of state and local government.

State Senate Majority Leader J. Kalani English says lawmakers are looking for ways to minimize the potential economic disruption, while also addressing health concerns.

“That’s a delicate balance: the economy versus people’s health. I choose people’s health,” English said in an interview with HPR.

The Hana senator says lawmakers are focused on preventing the spread of COVID-19 to Hawaii, but are also looking at ways to minimize the impact if it does arrive.

He is supporting measures like remote working options for the government workforce and guaranteeing public employees receive pay, even if sent home.

Lawmakers won’t know until next week how much of a fiscal impact the virus could have on the state’s finances. The Council on Revenues, which generates projections on state tax revenue, is scheduled to meet next on March 11.