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Worst Rate Since The Gulf War

February occupancy rate for Hawaii hotels worst since 1991  Apr 06, 2009

The global economic recession and consequent slump in tourism resulted in Hawaii hotels recording their worst "high season" February occupancy since 1991, during the Gulf War.

February also marked the sharpest drop in average daily room rates since the hotel room survey began in 1987, according to Hospitality Advisors LLC. February's 74.7 percent occupancy was the lowest since falling to 69.7 percent the same month 18 years ago. Average daily room rates plunged 12.4 percent to $187.21 for February, which was the sharpest decline since the survey began in 1987.

At Starwood Hotels & Resorts, Keith Vieira, senior vice president, operations Hawaii & French Polynesia, said he's not surprised even though Waikiki hasn't felt the pinch of the tourism slump as much as the rest of the state. Still, a year of double-digit declines in visitor arrivals hurts the state's no. 1 industry and the community, Vieira said.

"Maui and the Big Island have been the worst hit," he said. Even lots of discounts and added-value packages haven't been able to ease the decline. There's no way that we're out of the woods. We still don't see a turnaround," Vieira said. Still, he thinks the industry can keep marketing to help ease the decline.

Vieira added that Hawaii hasn't been as bad as some locations that have lost as much as 50 percent of their business. "While it is devastating for us, we're not as bad off as other areas," he said.

Hospitality Advisors president and CEO Joseph Toy said deterioration in both occupancy and rate resulted in a 21.6 percent decline to US$139.94 in revenue per available room, a key indicator of hotel profitability.

Properties statewide posted the worst revenue per available room decline since November 2001 following the September 11 terrorist attacks when the industry saw those levels plummet 26.9 percent to US$74.26, Toy said.

The Hawaii hotel industry continues to reel from the continuing global recession, which reduced visitor arrivals by 12.7 percent in February while total visitor expenditures fell 15.9 percent in February, according to the state Department of Business, Economic Development and Tourism.

Oahu posted the smallest occupancy decline of 6.6 percentage points to 78.3 percent, while the Big Island saw occupancy plunge 13.3 percentage points to 63.9 percent. Room rates on Oahu declined by 12.3 percent to US$154.36, while revenue per available room dropped 19.1 percent to US$120.81. The Big Island's room rates fell 12.0 percent to US$191.51, bringing down revenue per available room 27.2 percent to US$122.36 in February.

While hotels across the board reported year-over-year declines in occupancy, statewide budget properties fared the best with a 4.8 percentage point drop to 83.5 percent occupancy. Budget room rates fell 12.6 percent to US$98.41, while properties posted a 17.4 percent reduction in revenue per available room to US$82.20.

Economy hotels recorded the largest decline in occupancy — 11.1 percentage points — to 76.0 percent. Economy room rates fell 9.6 percent to US$111.49, while revenue per available room was US$84.70, down 21.1 percent from the year earlier.

The state's luxury resorts suffered significant declines in February, with the Kohala Coast posting the highest drop in occupancy, down 15.8 percentage points to 61.4 percent. Room rates tumbled 14 percent to US$257.75, while revenue per available room fell steeply to US$158.38, down 31.6 percent, the steepest decline statewide. Wailea's occupancy also slid 9.5 percentage points to 72.4 percent, while room rates took a 15.8 percent nosedive to US$369.43, resulting in a substantial 25.6 percent decline in revenue per available room to US$267.57.

"The market drops were significant, particularly in the month of February which is normally our busiest month of the year," Toy said. "Still Hawaii continues to be one of the strongest markets in the US given that the recession has impaired all destinations globally," Toy said.

The hotel survey is compiled by Smith Travel Research in conjunction with Hospitality Advisors. For February 2009, the survey included 164 properties representing 47,795 rooms, or 83.9 percent of all lodging properties with 20 rooms or more in the state of Hawaii, including full service, limited service and condominium hotels. The survey generally excludes properties under 20 units, such as small bed and breakfasts, youth hostels, single family vacation rentals, cottages, individually-rented vacation condominiums, and sold time-share units no longer available for hotel use.

February occupancy rate for Hawaii hotels worst since 1991
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