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Hotel occupancy falls to 63% in September  Nov 03, 2008

Hawai'i hotels in September experienced their worst performance since the months following the Sept. 11 terrorist attacks, according to the newest figures on hotel occupancy.

Hotel guests filled only 63.2 percent of rooms, or 11 percentage points less than September 2007, when nearly three-quarters of rooms were filled during the month, a report being released today from Hospitality Advisors LLC says.

We have a "severe economic period that's driving the occupancy and revenues downward," said Hospitality Advisors President Joseph Toy.

The report shouldn't be much of a surprise given the continued decline in visitor arrivals and layoffs occurring in the state's tourism industry. Last week the state Department of Business, Economic Development and Tourism reported September visitor arrivals plunged 19.5 percent during September, while DFS Group, the retailer targeting the visitor market, laid off 130, or 16 percent, of its about 800 employees.

The occupancy downturn was the worst in seven years and was the seventh consecutive month that statewide hotel usage had slid lower compared with a year earlier.

Hotel activity turned downward in April, shortly after the abrupt demise of Aloha and ATA airlines, two carriers that accounted for roughly one-sixth of the number of airline seats from the Mainland.

Since that time the Mainland and global economy has worsened, while oil prices have driven up the cost of airline tickets. The economic turmoil was heightened in September with the bankruptcy of Lehman Brothers and financial market crisis.

The Hospitality Advisor report shows hoteliers also suffered when it came to their financial statements, with total hotel revenue — composed of room, retail, food, beverage and other sales — dropping $58 million in September 2008 compared with a year earlier.

That worked out to a 17 percent decline in what hotels collect in receipts. Hotels tried to avoid lowering room rates and tried to entice bookings with offers of extra nights for complimentary spa treatments or free meals.

"I think the longer the downturn in the overall market lasts the harder it is to not discount rates," Toy said. "We're already seeing that deterioration."

The average daily room rate was $178.35, or 1.8 percent lower than September a year earlier.

In terms of occupancy the report also said:

Hotel occupancy on the Big Island fell to its lowest level in more than 10 years, dipping to 49.9 percent. In September 2007 it had been 59.4 percent.

Maui hotel usage fell to 56.8 percent from 71.6 percent. That represented a 14.8 percentage point decline, the biggest of any county.

O'ahu occupancy was the highest statewide at 69.4 percent. But that was 9.9 percentage points lower than a year prior.

Kaua'i occupancy dipped to 68.9 percent from 76.8 percent.

Occupancy fell at all types of hotels. It was down less than 10 percent for budget and luxury properties and more than 10 percent for upscale, midprice and economy hotels.

In terms of revenue:

The average daily room rate fell on O'ahu and the Big Island and rose on Maui and Kaua'i.

Between the start of tourism's troubles in April and the end of September, total hotel revenue was $2.12 billion. That was $215.4 million, or 9 percent, less than the same period a year a year earlier

Total revenue losses compared to a year earlier have generally been deepening each month since April, which was 4.9 percent.

September's statewide revenue per available room, a much-watched hotel measure, fell to $112.67 from $134.80 in the same 2007 month.

Average daily room rates fell in all hotel categories, from budget to luxury.

The report also includes third quarter results for the top hotel markets as provided by Smith Travel Research.

Hawai'i had the fourth-highest occupancy at 72.7 percent during the quarter. Only New York, Los Angeles and Miami had better room usage.

The state was No. 2 in terms of average daily room rate and revenue per available room. In both categories only New York was better during the quarter.

Hotel occupancy falls to 63% in September
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