Hawaii welcomes a staggering 10 million visitors annually, yet the islands seem to have little to show for this influx of tourists. It’s a paradox that leaves both locals and visitors scratching their heads: where is all the money going? For years, travelers have watched iconic spots like Waikiki Beach deteriorate—shrinking, hardening, and losing their luster. Finally, the state has allocated $7 million specifically for restoration efforts at the Halekulani sector, marking the first time tourism revenue has been formally directed toward rebuilding Hawaii’s most famous shoreline. But is this enough?
Tourists flock to Hawaii, paying some of the highest hotel rates, taxes, and rental car prices in the nation. Meals that were once affordable now cost double what they did just a few years ago. Billions of dollars pour into the islands each year, almost entirely tied to tourism. Yet, the reality on the ground tells a different story—one of neglect and stagnation. Potholed roads, dilapidated public restrooms, and worn-out facilities are the norm. Even high-end properties struggle to maintain service standards, leaving visitors and residents alike wondering: Where is the return on this massive investment?
And this is the part most people miss: Hawaii’s economy isn’t just stagnant—it’s falling behind. Despite the constant flow of visitors, the state’s infrastructure is crumbling, and its workforce is stretched to the limit. Ten million visitors should translate to thriving communities, improved infrastructure, and stable jobs. Instead, workers juggle multiple jobs just to make ends meet, and the economy feels more like it’s treading water than surging forward.
A groundbreaking report from the University of Hawaii Economic Research Organization (UHERO) sheds light on this disconnect. Titled Beyond the Price of Paradise: Is Hawaii Being Left Behind?, it reveals that, after adjusting for inflation, tourism spending peaked decades ago and has never fully recovered. Visitor numbers kept climbing, but the economic output tied to those visits stagnated. Hawaii didn’t fail to attract tourists—it failed to translate those numbers into sustainable growth.
But here’s where it gets controversial: When adjusted for the high cost of living, Hawaii’s economy resembles not California or Washington, but regions like Appalachia, the rural South, and the Rust Belt. Lead author Steven Bond-Smith notes that Hawaii residents experience economic stress similar to those in former coal-mining towns. Co-author Carl Bonham warns that without change, the gap between Hawaii and the rest of the country will widen dramatically over the next 30 years. How can a destination with 10 million annual visitors feel more like a struggling Rust Belt state than a thriving paradise?
The answer lies in what economists call Dutch disease. Tourism has dominated Hawaii’s economy for decades, crowding out other industries and leaving the state with no meaningful backup plan. While flights filled and hotels expanded, real economic output stopped growing in the early 1990s. The activity continued, but the returns did not. This vulnerability was exposed during the Great Recession and again during COVID, when Hawaii’s economy collapsed more severely than most other states. Each recovery returned to the same plateau, with visitor numbers rebounding but the underlying structure unchanged.
On the ground, the effects are impossible to ignore. Beach park restrooms remain closed or barely functional, roads degrade faster than they’re repaired, and services tied to tourism operate short-staffed. Hotels charge record rates but struggle to staff housekeeping and food service, leaving guests to notice the gaps. Workers commute longer distances, juggle multiple jobs, and accept housing conditions that were once unthinkable. It’s a system running at full capacity yet falling further behind.
UHERO’s report highlights that Hawaii’s high cost of living isn’t new, but the stagnation of wages, productivity, and economic growth is. For decades, the state relied on rising visitor numbers to mask the lack of real growth. That strategy no longer works, and the gap is growing. The report calls for long-term economic diversification, but whether this will lead to meaningful change remains uncertain.
Here’s the question we can’t ignore: What should come next for Hawaii? How can the state break free from its reliance on tourism and build a more resilient economy? And what role should visitors and residents play in this transformation? The data is clear: Hawaii’s current path is unsustainable. The question is, will anyone listen before it’s too late?
What do you notice when you visit Hawaii that feels out of sync with the volume of people and money flowing through the islands? Share your thoughts in the comments—let’s start a conversation about what the future of Hawaii should look like.
