The states of Alaska, Hawaii, Oregon and Washington, which comprise the Pacific Region, are linked by the sparkling waters of the Pacific Ocean, robust fishing industries and a shared interest in tourism. But while some of these states are breaking visitation records, others are still recalibrating in this post-pandemic period.
Revenge travel revved up the region’s tourism and hospitality industry in 2021 and 2022, leading to overwhelmed hotels, airports and car rental services. In 2023, travel moderated, especially among international travelers bound for the U.S., and visitor numbers are still below pre-pandemic levels for many locations. Industry leaders are watching the regional hospitality sector carefully this year because it impacts many aspects of the local economy, from job creation to hotel revenues and tax collections.
Alaska’s small but mighty tourism industry welcomed 2.7 million visitors between May of 2022 and April of 2023, generating $5.6 billion in economic impact. Most of its visitors come by cruise ship, and the state’s most popular port – Juneau – reported a record 1.65 million cruisers in 2023, a 23% increase from 2019.
Alaskan tourism officials are optimistic about the prospects for 2024, with cruise numbers up, winter tourism rising and an increase in highway border crossings. In Anchorage, hotel occupancy was at 61% in February, with the spring and summer season still to come. Hotel revenue for the month was up 16% compared to February 2023, another good sign for the year to come.
Some hotels in Alaska are also taking on new lives as permanent housing. A public/private partnership between the city of Anchorage and local nonprofit organizations has added hundreds of units of affordable housing to the city by converting three hotels. A fourth was converted into a long-term shelter to help reduce homelessness in the region.
Nearby Washington is a workhorse when it comes to housing tourists; the state welcomed 102.2 million visitors in 2022 (the most recent data available), a 7.3% increase from 2021 but still just 93% of 2019 levels. Visitors spent more, though, increasing expenditures 24% from the previous year to $22.1 billion. Most tourists visit the Seattle area, the “Volcanoes” region housing Mt. Rainier and Mt. St. Helens, and the state’s wine country.
Seattle hotels are performing well, and in January, CoStar numbers showed Seattle leading in year-over-year growth, with an occupancy increase of 9.6% from last January. Seattle’s summer tourism season will boost numbers further, and Alaskan cruises leaving from Seattle will bolster hotel and air travel as well. CoStar data noted that luxury travel is seeing a boost, and upscale hotels in Seattle are expecting up to double-digit growth in 2024.
Washington’s southern neighbor had a good year in 2022, with travel to Oregon exceeding 2019 levels. 29.7 million people visited the state, spending $13.9 billion. In 2023, Oregon faced a dilemma – Portland was gaining notoriety from negative media coverage deeming it unsafe. Despite a robust lineup of events downtown, hotels didn’t see the growth they desired last year, according to the hospitality news service HTrends. But outlooks are cautiously optimistic in 2024 as luxury offerings increase, and a new airport terminal is set to bring in more visitors this spring.
Of all the states in this region, Hawaii depends most on tourism for its economy. Outlooks and trends for 2024 are mixed for the archipelago, where overall visitor spending has fallen slightly across the state. The islands of Oahu, Kauai and Hawaii saw increased tourism in 2023 from the previous year, with Oahu reporting increases of 15.6%, Kauai saw a 5.3% jump, and Hawaii Island a 5.9% rise. Traffic in Oahu was still down from 2019 levels, while Kauai and Hawaii Island met or surpassed 2019 levels. Overall hotel occupancy was just under 75% for 2023, a good rate – but still below 2019 levels, which saw about 81% occupancy.
The Lahaina wildfires in Maui last August will have significant repercussions on the state’s tourism, economy and real estate sector for years to come. The state estimates a five-year timeline to rebuilding Lahaina, and 5,000 displaced families are now seeking long-term housing solutions in an already expensive, housing-strapped area. Hawaii Gov. Josh Green vowed in January to put pressure on the owners of short-term vacation rentals to help solve the housing shortage, offering tax credits to property owners who will sell or lease units long-term to fire victims.
What the Locals Say
We used to joke that The New York Times had a crush on Portland. They would run articles about the food, the wine, the scene and the hipsters and the whole thing. Portland was the darling of the media. And I was helping people move here.
As much as Portland has become, I think, unfairly the poster child for the issues that a lot of big cities are struggling through — homelessness and the opioid crisis — those are ills that are going on everywhere. What’s lost in that is this is still an amazing place to live with an incredible quality of life.
Every week I talk to clients who are relocating to Portland from other cities on the West Coast who are moving here because it’s more affordable and because the quality of life is nicer and it’s where they wanna raise a family.
We started the year in Portland with a debilitating ice storm. It sounds like a silly thing to talk about, but even if we have a snowstorm, that can slow the market. When you have an ice storm and people are trapped at home and their pipes are bursting, it’s a whole thing.
I’m optimistic for the year. We’re hitting our stride. I talked to a couple friends the other night, and we all are preapproval machines right now. Higher interest rates for the past two years pushed transactions into the future. People deferred buying, deferred selling, deferred moving. You can delay a move or a home purchase for a while, but at a certain point life goes on.
Matthew Akers
Vice President and General Counsel
Juniper Capital Corporation
Sources: Alaska Beacon, Alaska’s News Source, Alaska Public Media, Associated Press, CoStar, Cushman & Wakefield, Forbes, HTrends, NPR, Oregon Public Broadcasting, Pacific Business News, Puget Sound Business Journal, State of Hawaii, State of Washington Tourism, Visit Anchorage
