State of Hawaii reveals pandemic impact on duty free revenues

US (HAWAII). The sharp early impact of the COVID-19 pandemic on the islands’ travel retail sector – a slump which later escalated – can be seen from the 2020 edition of the State of Hawaii Data Book released yesterday.

Duty free revenue at Hawaiin airports decreased by -25.6% for the contract year ending 31 May 2020 to US$78.4 million. That marked the first time since the start of data reporting that duty free revenues have fallen under US$100 million.

As the graphs below from the State of Hawaii show, passenger traffic collapsed from mid-March 2020 as the pandemic worsened. While domestic travel has enjoyed a solid recovery in 2021, international passenger volumes remain minimal.

From being a solid US$100 million + business from 2016 to  2019, duty free revenues fell to US$78.4 million in the contract year ended May 2020. Much worse was to follow as the islands’ vital tourism sector reeled from the impact of the pandemic. The chart above (click to enlarge) from the Hawaii State Department of Tourism offers an interesting snapshot of DFS Group’s history in Hawaii. At peak in 1989, buoyed by strong Japanese visitor numbers and spending, the business was worth US$451.2 million. That success was complemented by an even more vibrant downtown operation in Waikiki.

DFS Group is the long-time retail incumbent at Hawaii’s airports, led by Daniel K. Inouye International Airport (Honolulu International Airport) on the island of O’ahu, where it has operated for 60 years. DFS was granted a ten-year contract extension in 2015.

The travel retailer reopened select food and gifts shops in at the airport on Friday, 13 August.

As reported in May, DFS vehemently denied reports that it permanently closed its downtown T Galleria by DFS, Hawaii building in Waikiki.

DFS noted at the time: “Our store is currently in a state of dormancy in view of the continued halt of international travel to Hawaii. Our Honolulu airport operations also remain temporarily closed until international flights resume. As yet we have no visibility on when that will happen.”

In March DFS reopened two of its stores in Maui’s Kahului Airport which had been temporarily closed due to the crisis. The stores, which serve passenger traffic between Hawaii and the US mainland, and are branded as Kahului Trading Company, offer a range of goods including local souvenirs, food and gifts.

Hawaii’s ten-day mandatory self-quarantine remains in place for all trans-Pacific passengers but from July travellers entering the state from the US and its territories who have been fully vaccinated in the US/its territories may bypass quarantine without a pre-travel test. That change has prompted a surge in domestic travel. Click here for latest official information.


[Local TV station KHON2 News reports in late June on a domestic travel boom prompted by eased health restrictions]

While DFS has temporarily closed stores, it remains committed to Hawaii in the long term
These charts underline the drastic international passenger slump since March 2020 prompted by the pandemic. Source: Department of Business, Economic Development & Tourism (Click on all charts to enlarge)

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