Who benefits from international tourism in small Pacific islands? Value capture in the hotel industry in Hawaii

Abstract

There is a consensus among small Pacific islands that the extent to which they benefit from international tourism largely depends on how much of the value created by tourism remains in the local economy. This study examines how the value created in the hotel industry is distributed among the key stakeholders in a small Pacific island context. We used aggregated income statements of full‐service and limited‐service hotels from the STR Inc., a hotel industry data company, to calculate the value distribution among the key stakeholders in the hotel industry of a small Pacific island. We found that labour and owners captured most of the value created, whereas hotel management companies and franchisors captured a small share of the value. Our results suggest that tourism workers' ability to take united action and hence to negotiate higher wages will result in higher value capture by local labour and less value leaking out of the local economy. Our results also reveal that foreign ownership in the hotel industry is the single largest cause of economic leakages. The study has several implications for the tourism‐based growth policies in small Pacific islands.