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The Transformation of Tourism

The Transformation of Tourism. Hawai‘i Tourism Authority January 10, 2014 2014 Hawai‘i Thought Leaders Conference. Adjusting our sails. Three Levels of Tourism. $Money: State Tax Revenue. Note: Calendar Year 2002-2012 Actual 2013-2014 Estimation. $Money: Jobs. Note: Calendar Year

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The Transformation of Tourism

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  1. The Transformation of Tourism Hawai‘i Tourism Authority January 10, 2014 2014 Hawai‘i Thought Leaders Conference

  2. Adjusting our sails

  3. Three Levels of Tourism

  4. $Money: State Tax Revenue Note: Calendar Year 2002-2012 Actual 2013-2014 Estimation

  5. $Money: Jobs Note: Calendar Year 2002-2012 Actual 2013-2014 Estimation

  6. 2006/2007 2012 Record arrivals & expenditures Hitting Consumer Threshold Cyclical Pattern of Our Industry ATA & Aloha Airlines Bankruptcy Arrivals hit record high MCI Backlog 16, 17, 18 remains in ? MCI Backlog give false sense of continued demand Oil $150/barrel Wall St. Financial Crisis More Routes Added Housing Foreclosures Allegiant starts to Hawai‘i Stay 5 Nights get 2 Free R/T off East Coast $500 Airline Consolidations Arrivals start to increase Increase of Seat Inventory JAL Downsize Tsunami New origination ptsincr arrivals New carriers start flying to Hawai‘i, Asiana, Air Australia Increases in airfare Stifled Economy Other industries affected Further airseat adjustments 3 for 1 attraction offer Reduction in flights Adjustments in seat inventory 787 grounded New routes from various markets Stay 5 Nights get 4 Free Meet Hawai‘i organized Arrivals flattening out 2013 Efforts to recapture market share

  7. Visitor Industry Weathers Crises 2012: HTA Target

  8. Visitor Arrivals: 2007- Sept 2013 Tapering off of visitors since the Summer of 2013.

  9. Hotel Occupancy by Island

  10. Visitor Plant Inventory by type of visitor unit 2012 2006

  11. Visitor Units by Island (2012)

  12. “Supply Side” Implications: • Need to develop capacity where feasible • Also longer term: “capacity” may mean new infrastructure and not just new accommodations • Additional cruise product could support more arrivals within existing visitor plant

  13. Existing Resort-Zoned Future Development Sites • Ko‘Olina • Kaua‘i Lagoons • Mākena • Princeville • Turtle Bay • Various Kohala Coast Resorts • Banyan Drive • Various Single Property Development Sites Source: Hospitality Advisors LLC

  14. “Demand-Side” Implications: • Need to increase dispersion to the Neighbor Islands • Improve ease of access • Developing experiences (festivals, events, sports activities) especially in the off- shoulder seasons and at higher service levels • Utilization of technology

  15. Managing the Hawai‘i Brand

  16. Arrivals from Major Market Areas: Relative Size (2013)

  17. What are other destinations doing to compete with the Hawaiian Islands?

  18. Hawai‘i Logo • Competitor Logo Exercise • HTA believed that the rainbow brushstroke logo, while it had been unique and fresh when first introduced, had become lost among the competitor logos. It was believed that other destinations had copied Hawai‘i’s look and feel. • September 2010: MVNP gathered other rainbow destination logos to verify that this was indeed the caseand developed the existing bamboo font logo.

  19. Competitive Environment • Mexico • Mexico is Hawai‘i’s strongest competitor, with two out of every 10 U.S. visitors to Hawai‘i in 2011 also visiting Mexico within the previous three years. • Mexico welcomed 2.8 million U.S. visitors (by air) in the first five months of 2013 – an increase of +7.2% YOY. • Mexico promotes itself along similar marketing messages as Hawaii. Mexico’s current campaign, “Mexico, the Place You Thought You Knew” aims to show the diversity of the destination through unique experiences. • US City Destinations • Hawai‘i also faces competition from US city destinations such as Las Vegas, a destination with an advertising and marketing budget of nearly $115 million in FY2011-12. They target leisure travelers in the same domestic and international geographic source markets as Hawai‘i.

  20. Mexico • Los Cabos Tourism Board’s “Flip for Cabo” Consumer Blitz • June 26, 2013 from 11am – 7pm at The Grove Los Angeles • Through a partnership with popular luxury flip-flop brand, Havianas, the event aimed to drive consumer traffic to The Grove's central park area with live entertainment, cooking demos, trip giveaways and a series of authentic Cabo experiences.

  21. Mexico • Mexico Taxi Project • In 2011, theMexico Tourism Boardlaunched a $25 million campaign designed to overcome Americans’ perception that the country is unsafe. • An element of the campaign were testimonials shot in a style similar to the TV show “Taxicab Confessions” where visitors were given a transfer home from the airport to discuss their Mexican vacation on camera. • These testimonials can be found on www.visitmexico.com. $43.3 million by the Mexico Tourism Board + $10 million rebranding of Vallarta Nayarit www.youtube.com/watch?feature=player_embedded&v=LN15Q4kCJxw

  22. Caribbean • In March 2013, Jimmy Buffet announced his partnership with Wyndham to open a 262-unit timeshare resort in St. Thomas.

  23. Hawai‘i could fall into a deeper hole • No one leader for change  we have to do it together • Fighting for our piece of the pie  bake new pies • Create a shared vision; come up with solutions; commit to execute; see it through

  24. Future - Transition Management • Tourism must embrace Hawai‘i and its people – balance • Sustain tourism while fostering diversification of our economy – how to leverage existing strengths and infrastructure • Must assess the global environment: investments, hotel, competition • Succeed globally, but still be who we are • What policies and incentives are needed? • Execution is key

  25. ALOHA “The world will turn to Hawai‘i as they search for world peace because Hawai‘i has the key… and that key is Aloha.” — Auntie Pilahi Paki

  26. MAHALO The Hawaiian Islands is our Hōkūle‘a

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