Hawaii’s tourism landscape is definitely shifting. In May, Governor Josh Green signed a new general fund levy to address climate change through increased tax revenue. Next year, a replacement levy will go into effect. It will re-establish a prorated passenger fare tax on cruise ship passengers, calculated according to the number of days passengers spend in Hawaiian ports. The implementation of this levy has bubbled up surprisingly contentious debate. For that reason, the Cruise Lines International Association (CLIA) has already sued the federal government to declare its provisions unconstitutional.
The new cruise-related tax would affect tourists the most. Opponents claim that the new surcharges will prevent visitors from choosing Hawaii as their cruise destination. This might cause them to look at alternative destinations in the process. As demand for cruise vacations hits all-time highs, the timing of this new levy has many in the industry worried.
Stewart Chiron, a cruise industry expert and CEO of the Cruise Guy, observed that this was an unprecedented tide of interest in cruising. “What’s happening right now is there’s more people that are wanting to go on cruises,” he stated. He further elaborated that many travelers are increasing their cruise frequency, saying, “Some that have maybe taken one or two cruises and now they’re doing three, four or five cruises in a year.”
The CLIA lawsuit is an effort to prevent the new law from being enforced upon cruise ship passengers. A hearing is currently scheduled for October 31. The plaintiffs are seeking a preliminary injunction due to upcoming travel plans and limited booking windows for the next year. Whatever the outcome of this legal challenge, it will have profound implications on the state’s tourism based economy.
As demand continues to increase, Hawaii might not be the only state looking to implement fees on visitors. Other destinations across North America are following suit. Chiron explained that the competition among destinations is fierce, stating, “There’s the ships — but the real arms race, let’s call it — are in the destinations.”
The timing for the new levy couldn’t be better, as the cruise industry is in the midst of a boom. Royal Caribbean’s recently inaugurated Star of the Seas is home to what’s billed as the best waterpark at sea, complete with a whopping 55-foot high waterfall. It features a musical version of “Back to the Future,” including an actual, full-size version of the classic flying DeLorean. Virgin Voyages’ Brilliant Lady is next in line, preparing to sail away on its adults-only maiden voyage later this week. It will feature frequent excursions from around North America, from New England and Canada to the Caribbean.
Chiron really underscored the trends here, which is that people’s preferences are changing. Cruises are appealing to travelers these days, as they are upset with the increasing costs of hotels. “The demand is tremendous and people are going. The satisfaction rates are unbelievable and the future outlook with, especially with the new ships that are coming in, it’s gonna make it even more exciting,” he said.
Hawaii’s new tourism levy has caused a big uproar among the legislators who passed the bill, tourism industry leaders, and would-be Hawaii visitors. As the state continues to lead on climate issues and seeks new revenue streams, the direct effects of this tax on cruise passengers are yet to be determined. The upcoming hearing will be key to deciding if this levy is going to go through or be held up in court hassles.
