UH Economists Say Coronavirus Poses Danger To Hawaii Tourism

Feb 24, 2020

University of Hawaii economists expected 2020 to be a better year for tourism than 2019, but that may not be borne out because of the coronavirus outbreak.

The University of Hawaii Economic Research Organization released its latest quarterly forecast Monday on the state's visitor industry and the outlook is cloudy.

Carl Bonham, the organization’s executive director, said last year, visitor spending dropped three-tenths of a percent; this year, researchers expected no decline.

The spread of COVID-19 has changed that calculation.

“In our last forecast report, the story was really, 'Well, we think 2020 is going to be better than 2019,'” Bonham said. “I think if it hadn't been for this virus outbreak, it probably would have been better -- mostly because the global economy was sort of repairing itself. Trade tensions had eased up a little bit. We were expecting some recovery in 2020, and now that hope has sort of been dashed.”

In the organization’s most recent report -- headlined "Coronavirus Presents Danger To Hawaii Tourism" -- economists used what happened during the 2003 SARS epidemic to predict the effects of coronavirus on the state’s tourism.

“The scenario that we run, everything that happens in terms of how tourism performs and how the overall Hawaii economy performs over the next year, is going to depend on how this virus progresses,” he said. “If the virus dies out quickly, like it did in the SARS episode, then the rebound can happen very, very quickly as well.”

Under that scenario, arrivals from Japan could bottom out in the second quarter at nearly 30 percent below year-earlier levels but fully recovery by the first quarter in 2021.

A sharp economic downturn lasting for two or three months followed by a rebound will mean employers won't rapidly lay off workers or cut wages, according to Bonham. Much depends on how long the virus outbreak lasts.

Bonham expects that the state would lose the most visitors from places like Asia and Australia, but as with the SARS epidemic, he does not think Mainland tourism will be heavily affected.

Although Bonham said the virus’ spread and economic effects are changing rapidly, the tourism industry is not yet seeing widespread cancellations.

Bonham said the university will have a better understanding about coronavirus’s impact on the state in March.

More than 79,000 people have been infected by coronavirus globally, with about 2,600 deaths reported, most of them in China. In Hawaii, there are still no confirmed cases of coronavirus, according to state officials.

UHERO State Forecast Update, February 24, 2020