Since the last newsletter, I attended PATA’s Annual Outlook and the AHLA Hospitality Show. Two rooms, different badges, same uncomfortable math.
At PATA, DBEDT’s forecast showed flat arrivals but stronger spending, largely driven by higher-income U.S. travelers. As previously discussed, the recovery is “K-shaped,” with affluent households driving premium travel while middle-income consumers pull back.
Japan remains challenged, and although total air seats are projected to inch up, virtually all of that growth is mainland-driven as international lift continues to erode. 2026 looks more like a holding pattern than a recovery, with any meaningful rebound not expected until 2027 or 2028.
At AHLA, the conversation turned to labor and affordability. We heard that hotel bartenders with tips can make $180K and housekeepers $72K, among the highest in the country, yet still not enough to comfortably live in Hawaiʻi. And for every $1 in wages, operators are layering on another $0.78 in benefits. Only luxury properties are meaningfully outperforming pre-2019 real ADR levels, reinforcing that same “K-shaped” divide we previously covered and also covered at PATA.
Jerry Gibson, Mayor Bissen (Maui), Mayor Kawakami (Kauaʻi), and Governor Green all discussed the housing crisis and doubled down on cracking down on illegal vacation rentals. The number floating around? 30,000 illegal units, with roughly 52 percent owned out of state.
I also learned a new acronym, and I love my acronyms! ALICE, Asset Limited, Income Constrained, Employed. In other words, working, but still struggling.
We can’t just keep raising wages and hope the math works itself out. At some point, affordability, housing, and structural cost pressures have to be addressed. Governor Green acknowledged that directly and said it remains the key focus of his administration.
We love blaming one side or the other. Labor wants too much. Owners are too greedy. The government regulates too much. But hospitality still runs on a three-legged stool: fair wages for employees, fair returns for owners, fair rates for guests.
The problem isn’t the legs. It’s the weight. Housing costs. Tax policy. Insurance. Airlift. When those pressures stack up, the stool doesn’t wobble because one leg failed. It wobbles because the load became too heavy.
You can raise wages. You can push rates. You can trim margins. But if the math keeps deteriorating, something has to give.
BTW – We have a lot of great associations here in Hawaii focused on Hotels and Tourism, the two mentioned in this article are the Hawaii Hotel Alliance (HHA) and Pacific Asia Travel Association (PATA). To see a list of industry-relevant associations, click here.
