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Hotel occupancy rate in Isles at 10-year low  Sep 10, 2008

Reflecting the deepening downturn in tourism, the occupancy rate at Hawai'i hotels tumbled to a 10-year low in July, with the high-end market taking the biggest hit.

Average hotel occupancy fell to 74.2 percent in July, down 6.5 percentage points from the same month a year ago. It was the fifth consecutive monthly decline and marked the lowest occupancy rate for any July since 1998 when it was 73.6 percent, according to a report released yesterday by Hospitality Advisors LLC, an industry consulting firm.

The report showed average daily room rates declined by 0.8 percent to $211.53. Hospitality Advisors President Joseph Toy said the statistics reflect a 14.1 percent drop in July visitor arrivals reported earlier by the state Department of Business, Economic Development and Tourism.

Statewide hotel room demand fell by 10.3 percent to 1.3 million room nights sold, Toy said. And he said the higher-priced market felt a steeper impact from the decrease in visitor arrivals.

That's mainly due to substantial visitor declines in traditionally profitable tourism markets, including Japan (down 11.7 percent); corporate meetings (down 26.7 percent), and honeymooners (down 24.2 percent).

"With such weakness during our traditionally high summer season, we will likely see a very sharp drop for 2008 when compared to last year," Toy said.

Looking ahead, he said there is reason to be concerned about the state's No. 1 private industry.

"The fall shoulder season also looks troubling with a lot of uncertainty for the first quarter 2009," Toy said.

Overall, statewide hotels suffered an 8.8 percent decrease in a key industry measure, revenue per available room, which declined to $156.87.

The fall-off in July room demand was largely felt in the luxury and upscale segments, the top two price categories.

Hawai'i's luxury hotels suffered a 6.2 percentage point decrease in occupancy to 77.5 percent and a 1.9 percent drop in average daily rate to $304.83. Upscale hotel occupancy fell by 6.7 percentage points to 72.4 percent, while room rates slipped by 0.6 percent to $210.39. Hawai'i's premier luxury resort regions of Wailea, Maui, and the Kohala Coast of the Big Island also reported steep declines due to decreases in both occupancy and room rates.

Although properties across all class segments saw occupancy declines, Hawai'i's budget through midpriced properties showed modest gains in average daily rates. Rates at midprice hotels rose 2.2 percent to $137.33.

Economy and budget hotels enjoyed room rate gains of 3.3 percent and 4.8 percent to $113.52 and $106.08, respectively.

O'ahu hotels achieved slight occupancy and average daily rate gains for the month. O'ahu occupancy improved by 0.3 percentage points to 81.8 percent. Room rates on O'ahu also increased by 0.7 percent to $177.07.

Neighbor Islands reported double-digit occupancy declines and slight average daily rate gains in July. Maui experienced a 12.5 percentage point occupancy decline to 67.8 percent and a 0.2 percent daily rate increase to $293.39.

Hotel occupancy on the Big Island fell by 16.6 percentage points to 58.6 percent; the average daily rate improved by 0.4 percent to $204.69. Kaua'i occupancy dropped by 11.1 percent to 75.1 percent, but managed a 2.9 percent room rate increase to $222.14.

The survey included 161 properties representing 46,571 rooms, or 83.1 percent of all lodging properties with 20 rooms or more including hotels and condominium hotels.

Hotel occupancy rate in Isles at 10-year low

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