Aloha HVCB Ohana,

The year 2005 is already well documented as the best in the history of Hawaii tourism. By every measure, from numbers of arrivals, to occupancy, average daily rate and spending per person, we surpassed our collective goals. Phew!

Congratulations are in order for all concerned. The success of Hawaii tourism is truly a collaborative effort, a complex symphony that requires tremendous coordination and precision by all elements of the orchestra.

Can we stay on top of the mountain in 2006?

We believe this will be another good year, though the rate of growth will not be as strong as 2005 given the following caveats:

• Limited growth in air capacity will make it increasingly difficult for potential visitors to find air  

  seats to Hawaii. A modest increase from U.S. West in the first quarter is offset by a double-

  digit decline in seats from U.S. East. The result is an overall 0.1 percent decline.

• Hawaii is being challenged to offer increasingly high standards of service and product in 

  keeping with efforts to attract higher spending visitors. A dilemma exists in that the more  

  business we have, the more wear and tear on employees, facilities and community, and the

  tougher it becomes to please every customer.

• Much will depend upon the federal government’s domestic and foreign policies and their impact

  on the economy. A recent Travel Industry Association (TIA) Traveler Sentiment Index

  highlighted consumer concerns about the affordability of travel.

The bottom line: The TIA Annual Travel Forecast predicts leisure travel by U.S. residents will slip from the 4 percent jump in 2005 to a modest 2 percent gain in 2006. That’s not terrible news. Hawaii tourism has a strong competitive nature. We’ll keep our focus on improving that position in the year ahead.

Mahalo,

John Monahan
President/CEO