Virus likely to sicken economy — Economist: County could see over 1,100 job losses
Tourism forecast to fall 10 percent in 2020 due to coronavirus
Maui County faces losing nearly 1,100 jobs and absorbing a more than 10 percent drop in visitor arrivals by air this year as the coronavirus takes its toll on the economy.
The University of Hawaii Economic Research Organization released its study on the impacts of COVID-19 on Hawaii’s economy on Tuesday, but by Thursday, the forecasts were deemed too optimistic, said UHERO Executive Director Carl Bonham on Friday. In just the two days, the stock market experienced record declines, President Donald Trump instituted a travel ban from Europe and more bleak data on passenger bookings were released.
UHERO produced high, baseline and low forecast scenarios; Bonham said the low scenario currently is the most realistic.
In the low scenario, total payroll for Maui County was predicted to drop by 1.4 percent or 1,100 jobs. Compared to other counties, Maui’s job loss percentage was the highest; Honolulu and Big Island were forecast to see a 1.3 percent reduction, and Kauai, a 1.2 percent drop.
“If you look at the job impacts in the low scenario, Maui is actually slightly worse than Honolulu, which is a result of the greater dependence on tourism than say Honolulu,” Bonham told The Maui News.
Maui jobs taking the brunt of reductions will include those in accommodations, food service, retail/trade and transportation, which includes airlines, tour buses and excursions, he said. Oahu is boosted by federal and state government jobs, which will be less impacted when compared to the heavily tourism-reliant Neighbor Islands.
Neighbor Island economies are bolstered by visitor accommodation and spending dollars from events and conferences, Bonham said.
“If you have a large event with several hundred people attending in April and it’s canceled, it’s pretty darn hard to get them to come back in October, unlike the leisure traveler, who can choose not to travel until later in the summer,” he said.
Recently, Maui saw a slew of cancellations and postponements, including the Hawai’i Energy Conference and Maui Matsuri, events that attract substantial out-of-state participants. The energy conference next week and Maui Matsuri in May were canceled due to COVID-19 concerns.
Those visitor losses contribute to UHERO’s forecast of a 10.3 percent reduction in total visitors by air — a 321,463 visitor decline — for 2020. While occupancy already has been dropping in local hotels and other accommodations, each property faces different impacts.
“Some have seen a dip in occupancy, others are business as usual, and still others may have to look at reduced hours for their personnel,” said Rod Antone, Maui Hotel & Lodging Association executive director.
He said hotels are working hard to ensure lodging is safe and sanitary for staff and guests.
“Some properties have said that sick guests have taken the time to go to the doctor and self-report their symptoms just in case,” Antone said.
In late February, Bonham told The Maui News that Maui was forecast to weather the coronavirus storm and could have a strong year because “the initial effect was predominantly international.”
“But, we don’t believe that’s the end of the story,” he said.
The worsening job outlook comes amid a tumultuous week filled with cutbacks and cancellations.
President Donald Trump announced Friday that four major cruise ship companies — Carnival, Royal Caribbean, Norwegian and MSC Cruises — have agreed to suspend trips from the U.S. for 30 days, effective at midnight Friday.
Cruise ships have been a breeding ground for coronavirus in Asia and Hawaii. The Grand Princess, which had passengers and crew who later tested positive for the virus, anchored off Lahaina on Feb. 28 with passengers coming ashore.
Princess Cruises shuttered all voyages Thursday for the next two months and will cut short some current trips after two of its ships had coronavirus outbreaks.
Norwegian Cruise Line Holdings’ three brands, NCL, Oceania and Regent Seven Seas, halted cruises with embarkation dates from Friday to April 11. The company plans to go to sea again April 12. NCL runs a weekly seven-day Hawaii cruise that visits Maui and other islands.
Hawaii lawmakers have requested a moratorium on cruise ships to Hawaii, and the State Department advised Sunday against any travel on cruise ships, especially for those with health conditions.
Cruise ships brought 18,772 visitors to Maui in January, according to the Hawaii Tourism Authority.
Bonham, who serves on the newly created House Select Committee on COVID-19 Economic and Financial Preparedness, said during its meeting Thursday that the U.S., along with Hawaii, is heading for recession.
“I have heard economists say locally we’re not going to have a recession, and the U.S. economy is going to be fine. That’s all very backward looking analyses,” he said Friday. “That’s based on surveys released last week, opinions provided to surveys several weeks ago, things are changing so fast it just doesn’t hold weight.”
Calling it a recession may just be a matter of semantics, Bonham added.
“To some extent (using the word recession) matters, but a 1 percent or so job loss and a 1 percent drop in income, it will feel the same,” he said.
Committee members Thursday detailed steps to boost economic activity and safeguard workers, including extending unemployment benefits for people who are laid off and funneling money toward construction projects.
Bonham said it’s hard to predict a recovery. Hawaii visitor arrivals could remain below previous peaks until the end of 2022.
“It depends on what happens with the virus,” he said. “There are some scientists who are predicting how far it’s going to spread. We really don’t know.”
As dismal economic forecasts roll in, Maui County Mayor Michael Victorino is preparing his next fiscal year budget, which takes effect July 1. He said Friday that he’s mulling real property tax rate adjustments that take into consideration possible revenue losses from coronavirus impacts.
The mayor is finalizing his proposed budget for fiscal year 2021, which will be submitted to Maui County Council on March 25.
“In finalizing my proposed budget, I have carefully considered the impacts of COVID-19 on our entire community,” Victorino said Friday. “The situation is quickly changing, and it is important that our budget provides the flexibility to respond to future impacts, given that the budget will take effect on July 1, 2020.”
Specific property tax rates and estimated revenues will not be available until submission, he said.
Victorino has instructed all county departments and agencies to take inventory of supplies and operate conservatively — including stopping nonessential travel and freezing hiring for nonessential vacancies.
Grant recipients also have been advised to operate with budgetary concerns in mind.
The administration Thursday requested a $4 million budget amendment for the current fiscal year for plans, mitigation, response and recovery relating to the coronavirus.
In other COVID-19 related news, Hawaiian Airlines said Friday that it is reducing flights and enacting a hiring freeze to curb costs. Hawaiian plans to reduce its flights by 8 to 10 percent in April and 15 to 20 percent in May. The carrier said it would make schedule changes over the next week.
* Kehaulani Cerizo can be reached at firstname.lastname@example.org.