Hawai’i’s Ongoing Tourism Woes: July 2025 Statistics Continue to Trend Down
When most people picture a Hawaiian vacation they’re imagining warm, golden sand beaches, sparkling aquamarine waters, friendly locals, and a hefty price tag. The cost associated with visiting Hawai’i means that for many, a trip to the islands is a once-in-a-lifetime opportunity. Everything from airfare and food to lodging and excursions is significantly more expensive than most places in the continental United States, and it has begun to seriously deter visitors, especially as budget options for accommodation diminish in numbers. Hawai’i visitor rates were down across the board in July 2025, and vacation rental owners are beginning to feel the downturn. Unfortunately, the response for many has been to increase nightly rates to attempt to maintain a positive cash flow, which could be another reason why visitors are choosing to spend their PTO days elsewhere, and stretch their dollar further.
Visitor Statistics Down From 2024: Higher Supply, Lower Demand
Preliminary visitor statistics from the Department of Business, Economic Development and Tourism (DBEDT) were recently released for July 2025, and unfortunately they showed a continuation of declining visitor rates from previous months. Fewer visitors isn’t necessarily a concern for the state, since Hawai’i has been slowly shifting to a “high value visitor” tourism model (fewer visitors who are willing to spend more money), however overall visitor spending was down in July 2025, too. Compared to this time last year, the number of visitors fell 4.4%, while visitor spending fell 4.3%, reflecting a loss of hundreds of millions of dollars. Although visitor spending generally remains above 2019’s pre-pandemic numbers, the number of visitors to the islands has been steadily decreasing for months. And with July 2025’s numbers showing a new decrease in spending, it seems the “high value visitor” model is beginning to show its cracks.
Increasing Taxes, Airline Industry Woes: Other Reasons for the Downturn
Everyone knows that Hawai’i is an expensive destination. Everything on an island has to be shipped in from somewhere else, meaning an increase in base prices for nearly every good and service, the flights are longer, and therefore more expensive, and housing demand always far surpasses the limited supply. The sticker price of a trip to the island shouldn’t be a shock, then, for either first time visitors or seasoned vets. Why then, are prices rising to levels that visitors find unacceptable, when they were previously willing to spend what was required for a trip to paradise? One reason is the steady increase in lodging taxes visitors have to pay. Beginning January 1, 2026, the statewide Transient Accommodation Tax will increase .75 percent, bringing the total TAT to 11%. In addition, there is a 3% county surcharge, and a 4.25% general excise tax that brings the total bill to nearly 19% in additional taxes (up from under 15% pre-pandemic). This is coupled with higher average daily rates from hotels and short-term rentals, which in turn increases the tax burden on visitors. And with international visitor rates at an alarming all-time low, the weight of the Hawai’i tourism industry is being almost exclusively carried by mainland visitors on the East and West Coasts.
Another reason for ongoing tourism woes in Hawai’i is turmoil in the airline industry. Hawaiian Airlines, the main provider of inter-island flights and one of the top 3 for flights to/from the mainland, recently merged with Alaskan Airlines, which has led to much speculation and uncertainty as to how services to Hawai’i will be affected. Many visitors feel this merger will deal a huge blow to the islands, with more expensive inter-island flights, worse kama’aina discounts, decreased flight frequency, and a loss of the “aloha spirit” Hawaiian airlines was known for providing. Other mainland-based airlines have increased prices as well, while decreasing their non-stop flight options (goodbye Austin – Honolulu!). In July 2025, airlift (availability and frequency of flights) to the islands was down 6.8% compared to 2024’s numbers, with numbers expected to continue falling in the final quarter of 2025.
The final blow to the Hawai’i tourism industry comes from the ever-increasing nightly rates for hotel and short-term rental stays. The supply of visitor housing is certainly sufficient, but with visitor numbers decreasing, many hotels and short-term rental owners are raising nightly rates in order to try and recoup their costs with more vacancies. In an already-struggling market, it can seem tempting to simply raise the price of accommodations to make sure overhead costs are met, however we advise all short-term rental owners to exercise caution with this method, as it can easily backfire and cause more financial stress.
Moving Forward: What Can Be Done to Make Visiting Financially Sustainable?
If the numbers seem grim for the Hawai’i tourism industry, it’s important to remember that this is a frequently fluctuating market. Prices cannot increase indefinitely, and Hawai’i will continue to be a desirable destination for many. If you own a short-term vacation rental, instead of increasing nightly rates to cover vacancies, or conversely plummeting nightly rates to try and book every night, use any long vacancies as an opportunity to update your property. Kitchens and bathrooms are the most-utilized rooms of a vacation rental property, and therefore the areas guests complain about the most when they are outdated. A 3-week gap in your rental calendar can be the perfect time to schedule a remodel, and perhaps honestly command a higher price for an updated home. For guests, although the old adage is that booking in advance saves you money, when occupancy rates are low the reverse is true. Be on the lookout for last-minute bargains from owners hoping to fill any last-minute holes in their calendars, and don’t be afraid to ask if a discount is available. Whether you’re a repeat visitor to the islands, or a first-timer, we’d love to hear your feedback! Do you feel as though the price of a Hawaiian vacation is justified? If not, will you be taking your next vacation elsewhere in protest?
