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Hawaii Hotels Occupancy Keeps Declining

With July occupancy at 70.3% Hawaii hotels having "worst summer" ever

Sep 10, 2009

Hawai'i hotels posted a sixth straight month of record low occupancy in July despite slashing prices to lure visitors in a down economy.

The July occupancy rate dropped 3.8 percentage points from last year at this time to 70.3 percent.

"It's the worst summer we've seen," said Joseph Toy, Hospitality Advisors LLC president and chief executive officer, whose company has tracked these statistics since 1987.

"Normally, we get a summer swell. This time we're just seeing ankle snappers," Toy said.

He did say that O'ahu luxury hotels did better than expected, but he saw that as a reflection of travelers trading up and trying out properties they couldn't previously afford.

Keith Vieira, senior vice president and director of operations for Starwood Hotels and Resorts in Hawai'i and French Polynesia, said hotels here have felt the boost from travelers making last-minute vacation plans.

"The bad news is that you're getting them at rock-bottom prices," Vieira said.

And both Vieira and Toy expect a long slow climb back up from the discounts and specials once the worldwide economic downturn shows continued signs of recovery.

Toy's report showed average daily room rates fell by 16.4 percent to $176.48 for July. The combined decrease in occupancy and room rates resulted in a 20.7 percent decrease to $124.07 in revenue per available room, a key industry profit measure.

He noted that most of the gain in visitors came from those staying with friends and relatives (17.3 percent), cruise ships (12.6 percent) and time-shares (12.4 percent).

O'ahu posted the highest occupancy of all islands at 78.1 percent, representing a 3.7 percentage point loss from the prior year, and also achieved the lowest state- wide average daily room rate of $149.11 due to a higher share of economy and budget accommodations.

Maui reported the highest average daily room rate at $237.90, but suffered the highest average daily rate loss of 18.8 percent, while the occupancy fell 3.7 percentage points to 64 percent. The island of Hawai'i recorded a 1.4 percentage point drop in occupancy to 57.2 percent, the lowest occupancy in the state.

Kaua'i saw the largest drop in occupancy of 8.7 percentage points to 66 percent.

The state's upscale hotels reported the only increase in occupancy with a slight 0.2 percentage point gain to 73.6 percent, while all other segments continued to post year-over-year declines.

The hotel survey is compiled by Smith Travel Research in conjunction with Hospitality Advisors.

For March 2009, the survey included 155 properties representing 45,866 rooms, or 81 percent of all lodging properties with 20 rooms or more.

"Hopefully, the preliminary signs of the recession finally reaching some bottom will help the first quarter of 2010," Toy said, "but unfortunately we continue to believe that it won't be until summer 2010 at the earliest before we see a stronger foundation for a more sustained recovery."

With July occupancy at 70.3% Hawaii hotels having "worst summer" ever
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