WAIKAPU - University of Hawaii economist Carl Bonham told a gathering of Maui business leaders on Friday afternoon that he expected the island's economy to continue growing in 2011, but not nearly at the rate experienced last year.
He predicted that the 2011 Maui economy would grow by 2 percent, with an increase of 1.8 percent in the key area of jobs. (Coincidentally, jobs numbers were actually down 1.8 percent last year, he said.).
And while several negative factors, like rising fuel costs, were a drag on its economy, Maui had a great first quarter in places like tourism and consumer spending that should help buttress the island against tougher times this year, he said.
Last year, Maui's tourism arrivals grew by 10 percent after bottoming out following the 2008 closures of Aloha and ATA airlines. He said he anticipates a 6 percent increase in airline arrivals to Maui. Another 10 percent jump is very doubtful, he said to some hopeful members of his audience.
That's probably because higher gas prices mean less disposable income for Mainland residents, who make up 79.4 percent of Maui's visitors, he said. Rising fuel costs could also translate into a reduction of designated airline flights to Maui, he said.
Still, he said: "At some point, the hotels are going to be full (during the tourism seasons). Maui needs to find ways to attract people during the shoulder months (when school usually is in session)."
More good news, Bonham said, is that he thought Maui should expect peak tax and business revenue returns sometime in 2012.
American Savings Bank, the U.S. Small Business Administration and the Maui Chamber of Commerce sponsored the luncheon and awards banquet Friday at the King Kamehameha Golf Club in Waikapu. The SBA and Mayor Alan Arakawa presented five businesses with awards, such as small business exporter of the year.
And Jane Sawyer, Hawaii district director of SBA, said Maui has a strong, high-quality small-business presence, which is a driver of economic activity in the United States.
Bonham, of the UH Economic Research Organization, presented a fast-paced preliminary yearly report for Maui. He admitted that he tends to be pessimistic and last year predicted 4 percent growth for the Valley Isle while Maui had a 10 percent burst.
However, he said that, overall, he has pause with rising fuel costs as well as stagnant home prices, potentially increasing interest rates, the Japanese earthquake and tsunami disaster, Europe's nearly bankrupt countries, a possible federal government shutdown and the state's predicted $200 million deficit. (A last-minute deal later Friday averted the shutdown of the government.)
However, twice as many Canadian tourists arrived since 2000 and additional travelers from other Asian countries, Korea in particular, continue to come to Maui, he said. Only about 3 percent of Maui's visitors are from Japan, he said, meaning that the fewer visitors from there would have less of an impact on the Valley Isle.
As for the real estate market, it appears to be stabilizing, he said. But on the minus side, home prices are "nearing the bottom."
"We're basically where we were at the end of the 1990s," Bonham said about home prices.
He asked: "Why does this matter?" Because Maui has to put contractors back to work. And existing homes tend to cost less than what it would to build one, he said.
But another good sign is that available property listings on Maui are currently at 560, he said. That's down from almost 920 properties for sale at the same time last year.
"This was the worst economic downturn that Maui has ever seen," he said to a room full of nodding heads.
Now, though, Maui is neither in a bust or boom year, Bonham said.
"You're basically OK," he said.
* Chris Hamilton can be reached at chamilton@mauinews.com.
