Hawai'i's Tourism Decline Signals Looming Economic Challenges

Hawaiʻi's economy is facing significant headwinds as the tourism sector experiences a notable decline.

 

According to the University of Hawaiʻi Economic Research Organization (UHERO), the state is on the brink of a mild recession, driven by decreasing visitor numbers and spending.

 

In July 2025, visitor arrivals dropped by 4.4% compared to the same month in 2024, totaling 873,430 visitors.

 

Visitor expenditures also fell by 4.3%, amounting to $1.95 billion.

 

Despite these declines, spending remained 15% higher than in July 2019, indicating some resilience in the market.

 

However, the overall trend suggests a weakening tourism industry.

 

UHERO's third-quarter forecast for 2025 highlights that seasonally adjusted arrivals fell 8% between April and July.

 

International markets have been particularly affected, with Canadian visitor numbers down 9%.

 

This downturn is attributed to various factors, including U.S. trade policies and global economic uncertainties.

 

The labor market is also showing signs of strain.

 

Payroll job growth has stalled since March, leaving employment 15,000 jobs below pre-pandemic levels.

 

Federal job losses and declines in the tourism sector are leading contributors to this stagnation.

 

Inflation is another pressing concern.

 

Honolulu's Consumer Price Index (CPI) is projected to exceed 4% in 2025 and 2026, driven by tariffs and other economic pressures.

 

This increase will raise the cost of living for residents, adding to the economic challenges.

 

Despite these challenges, the construction sector remains a bright spot.

 

Major federal contracts and ongoing infrastructure projects are expected to sustain employment in this industry.

 

However, the overall economic outlook remains cautious.

 

UHERO anticipates a mild recession in Hawaiʻi, with recovery beginning in the latter half of 2026.

 

Residents and businesses are advised to prepare for potential economic challenges ahead.

 

Staying informed and proactive will be key to navigating this period of uncertainty.