The emergence of the COVID-19 pandemic brought about devastating consequences on economies. With businesses shutting down to flatten the curve and prevent the spread of the virus and economic activities generally crippled, there was a global decline around the world. One of the most affected sectors was tourism. As a major tourist destination, Hawaii recorded huge economic declines across major sectors during the pandemic. In fact, because its economy is heavily driven by tourism, the city was one of the most hit in the US.
According to University of Hawaii Economist Sumner LaCroix, at least 23% of Hawaii’s economy is generated by tourism. By April and May 2020, the unemployment rate surged to more than 24%, up from just two percent by January of that same year. The situation was at the “Great Depression” levels. While the pandemic has eased globally and economies have largely reopened, what exactly is the State of Hawaii’s economy now? How has the economy fared post-pandemic? We’ll look at this by reviewing some key indices.
Hawaii’s unemployment rate has continued to decline since after the pandemic. In fact, by the fourth quarter of 2020, unemployment had declined to 11.2 percent and by the first quarter of 2021, the unemployment rate dropped further to 6.8 percent. And just when we thought this was impressive, there was a further drop by the end of the fourth quarter of 2021 to less than 4.7 percent and then 3.8 percent by the first quarter of 2022. These statistics provided by the Department of Business, Economic Development, and Tourism (DBEDT) clearly show an impressive resurgence that came two years earlier than analysts expected.
There is also a clear sign of a resurgence in the tourism industry of Hawaii. Records of visitor arrivals in the city in the first quarter of 2022 showed an increase of more than 120% from the same period in 2021. The Island welcomed 1.97 million visitors between January and March 2022, up from less than 850,000 people in the same period of the previous year. Daily average visitor figures also went up almost 99% in the same period. The DBEDT further reported that there were 818,268 visitors to the Hawaiian Islands in April 2022, which represented a 96.3% recovery from April 2019.
This was also the highest recovery rate recorded in the archipelago since the pandemic began. The visitors spent a total of $1.6 Billion in April alone compared to $1.32 Billion spent in April 2019. This doesn’t just represent great recovery post-pandemic, but also shows growth compared to pre-COVID figures. It does appear the tourism sector in Hawaii has bounced back and put the broken pieces together.
The last two and a half years have put immense pressure on Hawaii’s hospitality industry, following COVID restrictions. Hoteliers found renewed hope in the fourth quarter of 2021 as momentum picked up again with revenue per available room figures rising to $145.39 on a 59% occupancy and a daily rate of $246 on average, per STR data. Although this was not yet at par with 2019 figures which stood at $202.62 at an occupancy of 84%, Hawaii’s fourth quarter RevPAR was America’s third highest behind only New York and Miami.
- Agriculture and Other Sectors
Agriculture is yet another important sector in the Aloha state, taking up almost 30% of the entire land area. Even though its contribution to GDP ranges between 0.3% and 1%, it is a means of livelihood for a significant portion of the state’s population. The pandemic caused a major setback in the sector disrupting activities and forcing farmers to stay at home. Despite this situation, the sector generated around $366 million, and things are getting much better now. Other segments of the economy such as car rentals, travel, trade services, and so on are other very important sectors in Hawaii that have regained momentum.
Though the pandemic led to large-scale job losses, revenue losses, and other devastating effects, it appears the Oahu state is launching back to the path of recovery and growth, with experts projecting record performance for major sectors, including tourism, and travel, hospitality, and trade services.