Hawaii Island Commercial Real Estate Sectors Hit by Pandemic
As we near the start of the third year of the global COVID-19 pandemic, it appears that each new coronavirus variant placed a crimp in our return to normalcy. The Delta and Omicron variants pushed back our return to the office workplace, curtailed our dining-out habits, and postponed vacations for many. Immunization passports, masks, temperature checks, and hand sanitation became accepted norms for nearly every activity outside our homes.
Hawaii Island’s economic vulnerability to shifts in travel behavior resulted in immediate declines to hotel, airline, and travel service sales with the drop in visitor arrival counts and a reduction in tourism expenditures. Despite having achieved a record-high in 2019, air passenger arrivals in 2020 fell 72.3% to its lowest level in more than thirty years.
While 2021 visitor counts enjoyed a rebound, the total visitor arrival count remains 33.4% below pre-pandemic 2019 levels. Occupancy levels of Hawaii Island’s hotels, which dipped to 26.3% for December 2020, recovered strongly with a 73.5% occupancy rate for December 2021. While this upward trajectory in hotel occupancy provides optimism that Hawaii’s tourism is poised to recover, there remains concern about whether future coronavirus variants would impede the pace.
The combination of fewer jobless claims coupled with the addition of 300 new non-agricultural wage and salary jobs contributed to the steady improvement to Hawaii Island’s unemployment rate. As a result, the unemployment rate fell from a record high of 23.3% for April 2020 to 4.9% for December 2021. The island’s retail sector was the hardest hit and lost 1,600 jobs during the past year, whereas the accommodations jobs category gained 2,200 positions since December 2020.