Decreases in tourism on Maui, caused by the Covid pandemic in 2019 and the wildfire destruction in Lahaina on Aug. 8, 2023, continue to challenge Valley Isle businesses. Many Maui businesses and their workers have been scrambling with reduced staff, and many have been struggling to work while coping with the lack of permanent housing.
Numerous businesses who lost their Lahaina locations from the wildfires have moved their operations to other areas on island, with many moving to South Maui and significant interest in Paia and Makawao town. Yet, Maui’s business community still faces an uphill battle on many fronts.
The visitor industry, our major economic engine, was down for the first five months of 2024. Maui’s visitor count went from 1,209,621 to 916,169 or 24.3% compared to the same period in 2023 and down 25.3% from 1,226,608 visitors for the same first five months in 2019. State chief economist Eugene Tian said the decrease in Maui visitor numbers has a rippling effect on tourism statewide, since about one third of the visitors to Maui also visit other islands. Tian notes that tourism usually accounts for 38% of the Maui economy and that its contribution has decreased to 28%. Tian said restoring Maui visitor counts to prior levels will take a while.
While businesses connected to the visitor industry hoped to see recovery in March (as we did coming out of COVID), their hopes did not materialize and March through May were still challenging. However, Dr. Tian noted a pickup in tourism occurred in June where daily domestic passenger counts were down 13%, far less than 24% in previous months. Average daily domestic passenger count to Maui in June 2024 was down by 6,223, compared to 7,030 for the same period in 2023. Tian said the June passenger count is “a good sign.”
Economic observers say the increase in daily passenger count in June was mainly due to the increase in flights to Maui. In May 2024, total number of flights to Kahului was 928 and in June 2024, the number of flights increased to 1,042. Tian said the number of flights will further increase to 1,140 in July.
Additionally, residents are stressed by rising prices in Hawaii, especially in the rental housing market. According to a May, 2024 report from UHERO, a University of Hawaii research organization, information from Zillow shows a 20% increase in rents on Maui in the first quarter of 2024, compared to the same period in 2023. In 2023, a typical three-bedroom unit commanded a rent of $3,800 and for four-bedroom, the median was $5,200. Additionally, as projected in the Maui Chamber of Commerce’s housing summit in October, 2019, Maui exceeded the median home price of $1.2 million in 2024. In continuing the projection, the Chamber estimated that by the year 2042, the median home price would be over $2 million, which would forever change the character of Maui and make it next to impossible for many of our children to raise their families on island or return home. Housing is a critical factor to our workforce and overall economic and social health.
While some work is being done to increase housing inventory, like an 88-unit temporary housing village, operated by a non-profit, in Kahului, and 1,008 housing units planned by the federal, state and county, UHERO said the plans do not come close to meeting the local demand for housing, especially for those displaced from the wildfires who want to live in Lahaina. While movement on housing has been slow, according to a Maui Now report in early July, approximately 28 permits had been issued for people to rebuild their homes in Lahaina.
As a result of housing insecurity, Maui’s population has been decreasing as well. In the first five months of 2024, Maui lost approximately 2,500 people in the labor force. This exodus greatly impacts employment and many businesses are dealing with severe worker shortages. The Maui Island unemployment rate for June 2024 was 4.5%, which increased by .9% from May 2024, and 1.5% from June 2023. Dr. Tian notes the decrease in the labor force may be due to individuals no longer applying for unemployment or from them leaving the state.
We have just passed the 1-year anniversary of the August 8 wildfires and housing and economic recovery remain the top priorities for our community and to have economic recovery and move forward with needed diversification, we must first have housing.