Tourism & Hospitality

Pent-up Military Travel Expected to Boost Hawaii Hospitality in 2026

·4 min read·👀 Watch

Executive Summary

Delayed federal travel assignments are projected to resume in 2026, creating a surge in demand that could strain lodging capacity and increase revenue for tourism operators. Hospitality businesses should monitor booking trends and consider staffing adjustments. Tourism Operators: Expect increased occupancy and potentially higher rates starting mid-2026. Real Estate Owners: Monitor demand for corporate or long-term rentals catering to government personnel. Small Business Operators: Prepare for increased foot traffic and demand for services near military installations. Action: Watch booking lead times for military contracts and monitor local hotel occupancy rates.

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Watch & Prepare

Medium Priority

While the demand return is expected in 2026, planning for increased capacity or marketing efforts should begin soon to capture the returning demand.

Watch booking lead times and inquire directly with government travel coordinators or TDY lodging platforms about anticipated contract volumes for 2026. If booking lead times for military contracts consistently extend beyond 6 months, begin re-evaluating staffing and inventory levels for potential shortfalls. Monitor local hotel occupancy rates reported by industry associations; a sustained rise above 80% may signal opportunities for rate adjustments or increased marketing efforts.

Who's Affected
Tourism OperatorsReal Estate OwnersSmall Business Operators
Ripple Effects
  • →Increased military/federal lodging demand → reduced availability for leisure tourists → higher hotel rates for general visitors
  • →Higher visitor numbers → increased demand for local services & F&B → potential wage pressure on small businesses
  • →Strain on lodging capacity → potential for increased costs for TDY assignments → impact on government travel budgets
  • →Increased foot traffic near installations → higher revenue for retail and restaurants → potential need for increased inventory and staffing
Military aircraft landing near Hawaiian coastline with cityscape backdrop.
Photo by Roy Kim

Pent-up Military Travel Expected to Boost Hawaii Hospitality in 2026

Delayed federal travel assignments due to past government shutdowns are projected to resume throughout 2026, expected to significantly increase demand for lodging and associated services across Hawaii. TDY Lodging anticipates this surge as postponed military and government personnel begin their assignments. Businesses reliant on visitor volume should prepare for an upswing in occupancy and revenue, though proactive planning is crucial to capitalize on this return.

Who's Affected

Tourism Operators (Hotels, Vacation Rentals, Tour Companies):

  • Impact: Expect a notable increase in bookings, particularly for extended stays and government-contracted lodging. This could lead to higher occupancy rates and potentially allow for rate increases, especially if supply remains constrained. Businesses that cater to TDY (Temporary Duty) travel should be prepared for an influx starting in mid-2026.
  • Timeline: Demand is expected to grow throughout 2026, with activity building from Q2 onwards.

Real Estate Owners (Property Managers, Landlords):

  • Impact: The return of military and federal personnel could create increased demand for off-base housing, apartments, and potentially short-term rentals marketed to government travelers. Property managers should be aware of potential increased interest in properties located near military installations or key government offices. This could also impact the long-term rental market.
  • Timeline: Demand may increase incrementally throughout 2026.

Small Business Operators (Restaurants, Retail, Services near Installations):

  • Impact: An increase in military and federal personnel on the islands will likely translate to higher consumer spending at local businesses, especially those located near or frequented by military families and government employees. Restaurants, retail shops, and service providers can anticipate increased foot traffic and sales.
  • Timeline: The effect will likely be felt in conjunction with the increase in lodging demand throughout 2026.

Second-Order Effects

Increased military and federal travel demand is likely to exert upward pressure on Hawaii's already tight lodging market. Higher occupancy at hotels and a potential shift in short-term rental inventory to government contracts could reduce availability for traditional tourists, potentially driving up prices for leisure travelers. This increased demand also means more spending on food, goods, and services, potentially leading to increased labor demand in the hospitality and retail sectors. As labor demand rises, wages may be pushed higher, impacting operating costs for small businesses. Furthermore, increased visitor numbers can strain local infrastructure and resources.

What to Do

Tourism Operators:

  • Action: Begin monitoring TDY lodging platforms and government travel agencies for early booking indicators for 2026. Review current staffing levels to ensure capacity can meet potential demand surges. Consider updating marketing materials to highlight proximity to military bases or government centers.
  • Monitor: Lead times for military contract bookings. A significant increase in bookings made 3-6 months in advance would be an early indicator.

Real Estate Owners:

  • Action: Assess current rental inventory for suitability for TDY or government personnel, paying attention to location and amenities. Update listings on relevant government housing portals if applicable. Be aware of potential shifts in long-term rental availability and pricing.
  • Monitor: Inquiries related to government or military relocation. A sustained increase in such inquiries signals growing demand.

Small Business Operators:

  • Action: Evaluate current inventory and staffing to prepare for increased customer volume. Consider targeted promotions or partnerships with local military bases or government offices if feasible.
  • Monitor: Local foot traffic patterns and sales volumes, particularly in areas with a strong military or federal presence. Any consistent upward trend should be noted.

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