Hawaii hotels: Maui, Kauai and Oahu drive performance in July 2018

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Hawaii hotels statewide reported a 3.6 percent increase in revenue per available room (RevPAR) to $248 in July 2018, according to the Hawaii Hotel Performance Report released today by the Hawaii Tourism Authority (HTA).

This growth was driven by a 4.9 percent increase in average daily rate (ADR) to $296, which offset a slight decline in occupancy (-1.0 percentage points to 83.8%) (Figure 1). Statewide, all classes of hotel properties reported higher RevPAR and ADR in July, along with declines in occupancy, compared to a year ago.

HTA’s Tourism Research Division issued the report’s findings utilizing data compiled by STR, Inc., which conducts the largest and most comprehensive survey of hotel properties in the Hawaiian Islands.

Jennifer Chun, HTA tourism research director, noted, “The state’s positive hotel results in July were driven by the performance of properties in Maui County, Kauai and Oahu. This offset the declines reported by hotels on the island of Hawaii, as these properties continued to be negatively impacted by the Kilauea volcano eruption.

“July is one of Hawaii’s peak travel months and while statewide hotel occupancy was very good at 83.8 percent, it was a little disappointing to see a decline compared to a year ago.

“Maui County Luxury Class hotels, which includes luxury properties in Wailea and on Lanai, did particularly well during July. They collectively led the state in RevPAR at $564 and ADR at $675.”

Of the four island counties, Maui County hotels reported the highest RevPAR at $328 (+10.1%) in July, fueled by strong ADR growth to $404 (+8.8%) and a small increase in occupancy to 81.2 percent (+0.9 percentage points).

Kauai hotels also reported impressive growth in July, earning a 9.6 percent increase in RevPAR to $248, which was boosted by ADR of $315 (+8.1%) and occupancy of 78.8 percent (+1.0 percentage points).

Oahu hotels reported a small rise in RevPAR to $229 (+1.0%) in July due to an increase in ADR to $260 (+2.5%), which help offset a 1.3 percentage point decrease in occupancy to 87.9 percent.

Hotels on the island of Hawaii were impacted by the continued eruption of Kilauea volcano during July, with RevPAR declining 6.0 percent to $183. ADR was unchanged from last July ($247, +0.0%) and occupancy fell by 4.7 percentage points to 74.2 percent.

Of the state’s resort regions, Wailea properties led in RevPAR to $563 (+11.7%), ADR to $621 (+8.4%), and occupancy of 90.6 percent (+2.7 percentage points) in July year-over-year.

The Lahaina/Kaanapali/Kapalua region also reported growth in July for RevPAR (+8.9% to $284) and ADR (+8.5% to $346), with flat occupancy (82.1%, +0.4 percentage points).

Waikiki hotels in July performed similarly to a year ago, reporting an average RevPAR of $224 (+0.6%), with ADR of $255 (+2.8%) to offset lower occupancy of 87.9% (-1.9 percentage points).

Kohala Coast hotels reported a 7.0 percent decrease in July RevPAR to $249, which was the result of declines in ADR ($340, -0.9%) and occupancy (73.3%, -4.8 percentage points).

Hawaii Hotels Forecast for Growth in 2018 and 2019

The overall outlook for Hawaii’s hotel industry for the balance of 2018 and all of 2019 is positive, according to forecasts released by STR, Inc., which, in conjunction with economists at the consulting firm Tourism Economics, produces market forecasts for hotel performance.

These forecasts from STR are updated on a quarterly basis. HTA subscribes to forecast reports for the State of Hawaii, Oahu, Maui County, island of Hawaii and Kauai.

Hawaii’s hotels statewide are expected to end 2018 with RevPAR of $226 (+6.3%), with the increase resulting from ADR of $279 (+5.5%) and slightly higher occupancy of 80.9 percent (+0.7 percentage points) compared to what was reported in 2017 (Figure 8).

This upward trend statewide is projected to continue in 2019, with RevPAR growing to $238 (+5.5%) supported by increased ADR to $292 (+4.9%) and a small increase in occupancy to 81.3 percent (+0.5 percentage points) (Figure 9).

Chun commented, “The forecasts are rate driven with continued growth in RevPAR and ADR anticipated for all island counties through the end of 2019. This year, Maui County and Kauai are expected to continue doing well, Oahu to finish with modest growth, and the island of Hawaii to improve in the fourth quarter. In 2019, all island counties are projected to realize continued growth in RevPAR and ADR.”

Maui County hotels, which have led the state in performance through the first half of 2018, are forecasted to end the year strong with growth in RevPAR to $299 (+9.6%) and ADR to $385 (+9.0%), and occupancy of 77.5 percent (+0.4 percentage points). In 2019, the forecast for Maui County hotels sees continued growth in RevPAR to $315 (+5.7%) and ADR to $404 (+5.0%), with occupancy of 78.0 percent (+0.5 percentage points).

The forecast calls for Kauai properties to earn the highest rates of growth for RevPAR and ADR in both 2018 and 2019 among the island counties. Kauai hotels are projected to end 2018 with RevPAR of $225 (+12.4%), ADR of $291 (+10.3%) and occupancy of 77.2 percent (+1.5 percentage points). In 2019, Kauai hotels are forecasted to have increases in RevPAR to $241 (+7.5%) and ADR to $311 (+6.7%), with occupancy of 77.5 percent (+0.5 percentage points).

Oahu hotels, which reported lower occupancy rates in 2017 while the market absorbed new supply in Kapolei and reintroduced rooms on Kuhio Avenue, are expected to end 2018 with modest growth in RevPAR to $201 (+3.3%) and ADR to $238 (+2.1%) and a small increase in occupancy to 84.4 percent (+0.9 percentage points). In 2019, Oahu hotels are projected to see increases in RevPAR to $208 (+3.3%) and ADR to $245 (+3.0%), with occupancy of 84.7 percent (+0.3 percentage points).

Hotels on the island of Hawaii, which reported a strong start in the first five months of 2018, are forecasted to improve in the fourth quarter and end the year with a 5.5 percent increase in RevPAR to $197, a 5.3 percent increase in ADR to $262, and occupancy of 74.9 percent (+0.1 percentage points). In 2019, island of Hawaii hotels are forecast to realize increases in RevPAR to $207 (+5.2%) and ADR to $275 (+4.8%), with occupancy of 75.2 percent (+0.3 percentage points).