How vacation pricing has affected the economy of Hawaii

Vacation Packages in Hawaii

The number of visitors to Hawaii is constantly improving and the volume of Hawaii vacation packages sold by travel agencies, airlines, hoteliers and destination marketing companies is increasing. Tourism, Hawaii's number one industry, is leading Hawaii's recovery from the recession.

A recent study from Hospitality Advisors, LLC shows a steady improvement in Hawaii's tourism. The company found that hotel occupancy nationwide averaged 75.7% in August 2010, up 6.3% from the same period last year.

These numbers also reflect the growing confidence of airlines serving the Hawaii market. Hawaiian Airlines is expanding its routes both domestically and internationally, recently adding a flight from Las Vegas to Maui, and launching service from Japan and South Korea within the next few months. Alaska Airlines expands its routes to Hawaii; while Allegiant Air will launch Hawaii's smaller quote service in the continental US starting in 2011.

This recovery, driven by improvements in the state's ability to sell air travel, hotel rooms and Hawaiian vacation packages in general, helps reduce unemployment figures in the state. Hawaii's unemployment rate is currently 6.4 percent, while the national average in the United States is 9.6 percent. This is in stark contrast to other destinations such as Las Vegas, where unemployment is currently around 14%.

However, some argue that the news is not so good for the Hawaiian visitor industry, citing average room rate prices remain relatively unchanged. They claim that most visitors to Hawaii book their vacations because they are attracted by greatly reduced prices and that such discounts on Hawaii's vacation packages are not good for the travel industry as a whole, probably because airlines, hotels and rental companies are making money less money.

Others think Hawaii discount packages are good for the travel industry as a whole and that those that focus solely on the average cost of Hawaii vacation packages are missing out on the big picture. Increasing the large number of tourists is beneficial for the Hawaiian Islands as more packages are sold and because of discounts in other parts of the economy served by the tourism market. This includes increased costs for food, souvenirs, tours and activities, etc.

There is another important argument to support the benefits of keeping package prices lower, at least for now. Due to the recession, other major tourist destinations competing with Hawaii, such as Florida, the Caribbean and Mexico, are racing to maintain their share of the "fun and sun" market. As we head toward the peak winter season, these traditional Hawaiian competitors are under great economic pressure to reduce their vacation package prices even more than they currently are. So any increase in Hawaii vacation packages could increase travel losses to these alternative destinations to Hawaii.