Many small businesses in Honolulu are poised for remarkable growth by 2025, but what factors will drive this transformation?
In Honolulu, small business growth is expected to flourish by 2025, with an overall economic growth rate projected at 2.0%. The tech sector will be a significant contributor, growing by 12% and generating 5,000 new positions. Visitor spending is projected to increase from $20.6 billion in 2024 to $23.2 billion by 2027, further benefiting local businesses. Support initiatives like the Hawaii Business Pivot Grant and loans from the CNHA Loan Fund will assist startups. Additionally, the emphasis on sustainable practices will attract eco-conscious tourists, enhancing local economic development. Further insights into these trends may provide a thorough overview.
As Honolulu gears up for 2025, economic growth is set to pick up steam, with projections showing a rise in the growth rate to 2.0%. This anticipated growth follows a revised economic growth rate of 1.6% for 2024, up from a previous estimate of 1.3%. The steady increase is supported by significant recovery in key sectors such as construction, real estate, and tourism. Economic indicators suggest that real GDP growth reached 1.8% in the first half of 2024, signaling a robust recovery since Hawaii's economy fully rebounded to pre-pandemic levels by the third quarter of 2023.
While the labor market is improving—with non-agriculture payroll jobs projected to grow by 0.9% in 2024 and 1.2% in 2025—challenges persist. The unemployment rate is expected to decrease to 2.9% in 2024, reflecting tighter labor market conditions. However, the impact of inflation cannot be overlooked; the inflation rate is projected at 4.3% in 2024, higher than the national average. This inflation impact may influence consumer spending, although personal income growth is also expected to remain strong, with nominal increases of 5.6% in the first half of 2024. Additionally, the state unemployment rate is forecasted to improve to 2.5% by 2027, indicating ongoing labor market enhancements. Visitor expenditures are anticipated to rise from $20.6 billion in 2024 to $23.2 billion by 2027, further solidifying the economic landscape. Overall, as Honolulu approaches 2025, the combination of these economic indicators and growth projections paints a promising picture for local businesses.
Honolulu's business landscape is ripe with industry-specific opportunities, especially in tech, fintech, and sustainable agriculture. The local tech startup scene is thriving, with companies like TeraVault and Oceanit spearheading innovative projects that include AI-powered platforms and aerospace advancements. TeraVault's recent initiatives, such as the Tripian travel platform and the ALPATP® EduTech platform, exemplify the region's focus on cutting-edge technology. Meanwhile, Deloitte's investments in data analytics and digital transformation contribute greatly to Honolulu's tech ecosystem, which is projected to grow at a remarkable 15% over the next five years. The tech industry is experiencing a 22% annual growth rate, ensuring that new startups have ample opportunities to thrive.
In the fintech sector, companies like Instant Teams and Accuity LLP are revolutionizing financial innovation. Instant Teams offers a user-friendly app that disrupts traditional wealth management, while Accuity LLP focuses on AI-driven solutions for financial crime compliance, enhancing security and transparency across the industry. Support systems such as local accelerators, venture capital investments, and government grants bolster these fintech initiatives, ensuring a robust foundation for growth.
Sustainable agriculture also presents unique opportunities, with startups like Blue Ocean Barns integrating robotics and AI to promote indoor farming practices. This sector's focus on environmental sustainability aligns with Honolulu's broader goals of innovation and community impact.
The job market in Honolulu is set for a considerable boost in 2025, particularly within the tech sector, which is experiencing a promising 12% growth. With over 5,000 new tech positions expected to open, the demand for skilled professionals is substantial. This surge contributes to overall job market stability, as Hawaii's economy has already exceeded pre-pandemic levels by 0.7%. The job openings rate stands at 3.9%, indicating a robust demand for tech roles.
Key sectors driving this growth include construction, real estate, and the recovery of tourism, but the tech sector remains a standout. Major employers such as Hawaiian Electric, Jacobs, and military contractors are actively hiring, alongside tech giants like Amazon, Microsoft, and Google, who are expanding their presence in the region. Local firms like Hawaii Pacific Health and Hawaiian Telcom are also seeking talent, while startups like Vannevar Labs are emerging as attractive opportunities for high-paying tech roles.
In-demand skills include cybersecurity, software development, and data science, with specific roles such as Cloud Architects and Security Engineers in high demand. Certifications like CISSP and CEH enhance employability in the cybersecurity field. The average salary for tech professionals in Honolulu is around $92,000, with top roles earning considerably more. As the tech sector employs about 30,000 people and comprises 12% of the city's GDP, it plays an essential role in the overall economic outlook, projected to grow by 2.0% in 2025. The anticipated 3.5 million unfilled cybersecurity jobs by 2025 highlights the growing demand for cybersecurity professionals in the job market.
Small businesses in Honolulu are poised to benefit from a range of support initiatives designed to foster growth and resilience. Various financial resources are available to entrepreneurs, ensuring they have the necessary capital to adapt and thrive in a changing market environment. For instance, the Hawaii Business Pivot Grant offers up to $10,000 to businesses adjusting their operations due to disruptions like the COVID-19 pandemic. Additionally, the Hawaii State Trade Expansion Program (HiSTEP) assists businesses in entering international markets through export readiness programs, counseling, and training, partially funded by the SBA.
In addition to grants, diverse loan programs cater to different business needs. The Council for Native Hawaiian Advancement (CNHA) Loan Fund provides loans ranging from $10,000 to $250,000 for startup capital and expansion. The Lei Ho'Olaha Working Capital Loans offer amounts from $25,000 to $50,000 for refinancing and cash flow management, demonstrating a commitment to supporting local businesses.
The state also promotes entrepreneurship programs that focus on innovation and business development. The Hawaii Small Business Innovation Research Program (SBIR) provides grants for innovative research with commercialization potential, while the Accelerator and Small Business Training Program allocates $1.9 million for extensive training and support. In addition, the Hawaii SBDC offers free business advising services, enhancing strategic planning and financial management capabilities. Collectively, these initiatives form a robust framework of support for small businesses, positioning them to capitalize on emerging opportunities and navigate market challenges effectively.
Recognizing the vital role tourism plays in Honolulu's economy, businesses are gearing up to capitalize on the recovery of visitor arrivals and spending. As of August 2024, visitor arrivals have rebounded markedly, reaching 88.4% of pre-pandemic levels from August 2019. This resurgence in tourism is further highlighted by total visitor spending, which soared to $1.72 billion in August 2024, marking an 11.4% increase from August 2023 and a remarkable 14.7% higher than in 2019.
In the first seven months of 2024, Oahu experienced a total visitor spending of $5.36 billion, an increase from $4.77 billion in 2019. While there was a slight decline in total visitor arrivals compared to 2019, the projected growth in visitor spending to $23.2 billion by 2027 indicates a positive trend. High visitor satisfaction levels play an essential role in sustaining this growth, as they encourage repeat visits and enhance the overall appeal of Honolulu as a travel destination.
As Honolulu's economy continues to recover, small businesses should focus on leveraging the increase in tourist spending. Strategies that prioritize exceptional customer experiences will not only foster visitor satisfaction but also guarantee long-term sustainability for local enterprises. With continued emphasis on tourism management and community benefits, businesses can thrive in this evolving landscape, positioning themselves to benefit from the anticipated growth in visitor numbers and spending in the coming years.
In conclusion, while Honolulu's small business landscape faces challenges, such as fluctuating tourism rates and evolving job market conditions, it simultaneously presents significant opportunities for growth within specific industries. Support initiatives are on the rise, aiming to bolster local entrepreneurship and adapt to changing economic dynamics. By leveraging these opportunities and resources, small businesses can navigate the complexities of the market, fostering resilience and innovation that align with the projected economic growth in 2025.
