The tourism industry may do more heavy lifting in Hawai'i's economy than previously believed and is key to the state's recovery from a nagging recession, a new report says.

The study for First Hawaiian Bank says tourism accounts for 35 percent to 40 percent of the state's gross domestic product when the visitor industry's direct and indirect economic contributions are considered.

It also found that about three-quarters of private employment here is linked to tourism in some fashion, including those in the industry and others whose jobs are indirectly or partially tied to it.

"Tourism is overridingly important to the Hawai'i economy," said Leroy Laney, the Hawai'i Pacific University professor of Economics and Finance who authored the study for the bank. "Everything else sort of feeds off of it."

Tourism's outsized role in Hawai'i's economy also means that special attention needs to be paid to it as legislators and others look at ways to pull the state out of a recession. The report forecasts a decline in tourism this year and a tepid recovery at best next year. Marginally better tourism growth can be expected in 2011.

"Because tourism is responsible for by far the largest outside injections into the state economy, that is the sector that should receive the highest priority in stimulus spending," the report said.

"Until tourism gets well, the rest of the economy cannot."

Laney said he isn't suggesting education and healthcare spending be cut to funnel money to tourism marketing or other visitor industry investments, only pointing out that when tourism recovers there should be more money available for other areas of government spending.

"A rising tide lifts all boats, so to speak," Laney said.

ECONOMIC ROLE

The report may seem to assert the obvious in tabbing tourism as the state's biggest industry. But it does attempt to quantify tourism's contribution, taking up where a World Travel and Tourism Council study left off a decade ago in discussing the visitor industry's place in the state economy.

At that time, the council determined it directly represented about 26 percent of Hawai'i's GDP and about a third of its employment.

Laney's study differs in that it looks at indirect effects of tourism, the economic activity that would not exist either wholly or partially if not for the visitor sector. He said a restaurateur who occasionally serves tourists would understand the link to tourism. A dentist whose patients include visitor industry workers would also be counted as having a link.

"Government also is very dependent on tourism because of the general excise tax that tourists pay and the taxes that corporations in tourism pay and even people that are indirectly associated with it," he said.

State Tourism Liaison Marsha Wienert described the report as "an affirmation of the importance of tourism to the state of Hawai'i, to jobs and the economy."

Wienert noted the report underscores the volatility occurring in the state's No. 1 industry "and the need to get tourism back on its feet so our overall economy will get back on its feet."

Advertiser Staff Writer Robbie Dingeman contributed to this report.