Kauai Tourism Update

Last week at the meeting of the Rotary Club of Kapaa, Sue Kanoho of the Kauai Visitors Bureau (KVB)  provided some updates about our tourism numbers and the strategies being implemented by KVB to promote travel to our Garden Island. Sue has been the executive director of the KVB for ten years now. KVB maintains the Kauai Discovery website pictured below as part of their relationship with our larger statewide organization, the Hawaii Tourism Authority.

One of the challenges from the perspective of KVB is competing with all the other vacation destinations, many of which are less expensive to travel to. This includes destinations like Mexico, the Caribbean, and of course, Las Vegas. In the current economy, travel to all of these destinations is down and so is travel to the Hawaiian islands. However, Kauai is showing the most resilience in comparison to the other neighbor islands. Oahu’s numbers are slightly better because they have more LIFT. In the travel industry, lift is defined  as the number of airplane seats that travel to particular destination.

In July 2009, Kauai’s arrivals were down 4.1% from the previous year, and expenditures ( how many $$ are spent while visiting Kauai) were down 11%. In August 2009, arrivals were down 5.2% and expenditures were down 12.2%.  YTD, Kauai’s arrivals are currently down 14.2% from last year and expenditures are down 16.4%.  On the good news side though, the KVB which usually receives $150,000 for marketing our island, this year received $1,000,000 and KVB is putting that to work with some upcoming tours of the northwest promoting Westjet’s direct flights to Kauai from Vancouver which begin this December 1st.

How do these numbers play into the real estate market? Kauai has a number of visitor destination areas and often owners of property within these VDAs rent their homes and condos when the owners are not using the homes. If the number of visitors coming to the island of Kauai is down, then so is the revenue associated with the renting of these properties. When buyers are exploring the purchase of say a vacation rental in Princeville, It is quite simple to ascertain based on certain levels of occupancy and rental rates, what type of cash flow a property may be able to achieve. It is best to project conservatively as one never knows when another global event may have an effect on our travel habits. If you want to analyze the cash flow on a Princeville Condo, we have spreadsheets which make it easy for you to perform your due diligence. And when tourism starts to increase, it’s likely that vacation rental income may increase too.