A University of Hawaii economist on Thursday predicted only about half of Hawaii’s hotel rooms will be filled with travelers over the next few months “if we’re lucky” as the new coronavirus depresses tourism.
Carl Bonham told members of an advisory committee to the House of Representatives that he expects tourism industry workers will soon start losing jobs and having their hours cut.
Normally, Hawaii hotels experience an average of about 80% occupancy. But Bonham said this figure will likely drop by 30 to 40 percentage points.
Hawaiian Airlines CEO Peter Ingram says his airline is considering reducing its flights to the U.S. mainland to better match lower demand, after already having cut flights to Asia.
Ingram said it’s impossible to predict the timing and pace of a recovery or how much worse the situation will get before recovery begins.
“Until then, considerable damage will be absorbed by large and small businesses that rely on tourism and their employees. The tax base will be reduced, and the entire state will suffer economic pain,” Ingram said.
Bonham predicted COVID-19 will pitch Hawaii and the United States into recession.
“The short-term economic effects will overwhelm the state’s ability to counteract them. We don’t have that capability,” Bonham said.
But the state could soften the blow through steps such as extending and increasing unemployment benefits, he said. He also stressed the importance of investing in preventing the circulation of the virus.
“One of the worst possible scenarios is that we have widespread outbreak in Hawaii,” Bonham said.
The visitor industry accounts for 17% of Hawaii’s economy and 19% of the state’s jobs.
House Speaker Scott Saiki formed the committee to help avoid the kind of problems Hawaii experienced when plummeting tax revenue forced lawmakers to slash spending during the recession a decade ago. At the time, budget cuts led to a four-day week at public schools and sharp reductions in spending on mental health care and homelessness.
“We are still feeling the effects of those cuts,” Saiki said at the beginning of the meeting.
Lawmakers would look at accelerating construction projects that have permits and are ready to begin, Saiki said. There are public school maintenance projects that would meet this criteria, he added.
“It will put money back into the economy and also employ people in construction work,” Saiki said.
Lawmakers could also consider exempting unemployment benefits from income taxes, treating infection as a worker compensation claim and potentially mandating paid sick live on a temporary basis, Saiki said.
So far, two residents of Hawaii have tested positive for the disease.
Senate President Ron Kouchi said the chamber would take steps to prevent the virus from spreading, including reducing seating in conference rooms so people can stay a reasonable distance from others and encouraging electronic testimony submissions. Lawmakers are asked to avoid handshakes and hugs.
Around the state, institutions cancelled events and moved activity online. Organizers called off this year’s Merrie Monarch festival, the world’s biggest hula competition. It was scheduled to be held in Hilo the week of April 12.
University of Hawaii President David Lassner said all campuses will move classes online when spring break ends on March 23. The school will refrain from scheduling public events with more than 100 people in enclosed spaces, Lassner said.
The two athletic conferences the university is a part of have cancelled tournaments and conference competition.